Financial burdens in the health exchanges

We’re less than a year away from the implementation of the health insurance exchanges. No one knows exactly what will happen. Massachusetts remains our best predictor, though. A new study in Health Affairs* looks at how the exchanges in Massachusetts are performing with respect to protecting people from financial burdens due to health care costs:

Health insurance exchanges created under the Affordable Care Act will offer coverage to people who lack employer-sponsored insurance or have incomes too high to qualify for Medicaid. However, plans offered through an exchange may include high levels of cost sharing. We surveyed families participating in unsubsidized plans offered in the Massachusetts Commonwealth Health Insurance Connector Authority, an exchange created prior to the 2010 national health reform law, and found high levels of financial burden and higher-than-expected costs among some enrollees. The financial burden and unexpected costs were even more pronounced for families with greater numbers of children and for families with incomes below 400 percent of the federal poverty level. We conclude that those with lower incomes, increased health care needs, and more children will be at particular risk after they obtain coverage through exchanges in 2014. Policy makers should develop strategies to further mitigate the financial burden for enrollees who are most susceptible to encountering higher-than-expected out-of-pocket costs, such as providing cost calculators or price transparency tools.

As I’ve said many, many times before, the ACA is mainly about access. It’s a law that is designed to reduce the number of people in the US who lack health insurance. I still believe it will succeed in that regard. But many also hope that it will reduce the cost of health care. I’m not as sure about that.

This study looked at people in Massachusetts’ health exchange and asked them about the issues they face due to health care costs. They found that 38% of patients reported a “financial burden,” defined as having problems paying medical bills, having to set up a payment plan to pay medical bills, or having trouble paying for things like food, heat, or rent because of medical bills. They also found that 45% of people reported higher-than-expected out-of-pocket costs for health care.

This isn’t great news. It means that a significant number of people are still finding health care costs to be a real problem. It gets worse, though. Families with more children had more problems. So did families who make less than 400% of the federal poverty line.

Now it’s important to remember that this is a study of the Massachusetts exchange, which is not the same as exchanges under the ACA. It’s possible that even the “bronze” level plans of the ACA will offer more coverage than some of the plans studied here. Subsidies are also more generous under the ACA than they are currently in Massachusetts. But not everyone will get subsidies in 2014. Those who make more than 400% of the poverty line will likely face many of the issues seen in this study.

Moreover, the fact that so many had “unexpected” out-of-pocket costs illustrates the need for better outreach and education. Families need to be aware of how much health care will still cost, even under the ACA. Myths about affordability abound. People need facts. Policymakers need to make sure they get them. Otherwise, too many will still face financial burdens in the future.


*Full disclosure – one of the authors is a close, personal friend of mine. I won’t embarrass the person by saying which one, but you should all know the conflict exists.


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