This piece originally appeared in Public Health Post and is coauthored by Elsa Pearson (@epearsonbusph) and Austin Frakt (@afrakt). Research for this work was funded by the Laura and John Arnold Foundation.
Health insurance is supposed to help us pay for expensive medical care, but what if the insurance itself becomes too expensive? What happens to our health?
Private health insurance premiums are ever increasing. Premiums for a family plan grew 25% nationwide between 2012 and 2018, increasing much faster than wages.
Higher premiums mean more people forgo insurance altogether. When individuals are uninsured, they use less health care—including preventative care—and even have higher chances of dying.
It is possible to make progress on taming health care cost growth, which often makes its way into insurance premiums. In Massachusetts, employer-sponsored insurance premiums are the highest in the country, and they keep growing. Yet, compared to the rest of the nation, the state has done a good job improving access to care and addressing spending growth. Two major laws are responsible.
Chapter 58—sometimes called RomneyCare—was passed in 2006 to expand access to affordable health insurance through state and federal subsidies. To address health care costs, Chapter 224 was passed six years later. Among other things, it established the Massachusetts Health Policy Commission, which sets health care cost growth goals and monitors the state’s progress.
Both laws were successful; the state boasts the lowest uninsured rate in the country and an annual health care spending growth rate below the national average for most of this decade. Still, health insurance costs—especially for private plans—are persistently high.
Premiums are only part of it. Out-of-pocket spending for private plans—deductibles, coinsurance, and copays—has also increased considerably nationwide.
The individuals hit hardest by this cost growth are those stuck in a coverage gap, with incomes too high to qualify for Medicaid but too low to comfortably afford a private plan. Massachusetts residents below 300% of the federal poverty level and enrolled in employer sponsored insurance spend nearly a third of their entire income on health care.
They are underinsured—they have insurance, but also deal with unaffordable out-of-pocket costs. In 2018, nearly 30% of insured adults in the United States were underinsured. Of that 30%, four in 10 admitted to delaying care because of cost.
Just like being uninsured, being underinsured has consequences. People who have to pay more out-of-pocket tend to delay or skip care because of the added cost. A study in JAMA Pediatrics found that some parents of children with asthma rationed their children’s medications and even delayed appointments when out-of-pocket costs were high.
Without change, health insurance will become even less affordable for more people over time, increasing the number who forgo coverage or care altogether. What could we do to fix this?
For one, Massachusetts has set the state’s health care cost growth benchmark at the national rate of 3.1%. If the state can stay below this, it could help prevent health care costs from getting worse. Other states could follow suit and establish or maintain annual growth benchmarks of their own.
But insurance is expensive now; what else could be done in Massachusetts and elsewhere?
For those who purchase insurance on the exchange, many states have good and modestly priced options. In Massachusetts, individuals with exchange plans spend the least amount of their income on health care spending compared to those with any other type of insurance.
For those with employer sponsored insurance, states could push employers to offer affordable insurance options. For example, Massachusetts could make permanent a law that penalizes employers who should offer affordable insurance but don’t. It’s set to sunset at the end of 2019, but allowing it to do so would be a step backwards, removing an incentive for employers to use their negotiating influence to reduce health care costs.
High health insurance costs are built into our system by years of uncontrolled spending growth. States have made progress in addressing the issue, but, for many Americans, insurance is still unaffordable. With unaffordable insurance comes skipped coverage, delayed care, and worsening health. Future reform must close the insurance coverage gap in which so many Americans are still stuck.
