(Financial) health insurance

The following originally appeared on The Upshot (copyright 2015, The New York Times Company). A version of this article appeared in print on June 23, 2015, on page A3 of the New York edition.

People who have health insurance have less health-related financial stress. That’s a not-so surprising finding from a recent survey from the Centers for Disease Control and Prevention.

There’s good reason to expect the Affordable Care Act to reduce financial strain. Exposure to health care costs fell for those who gained coverage, as it has for those whose coverage became more generous, too.

But even those families whose health insurance coverage didn’t change may have benefited. In 2013, 32.2 percent of uninsured families had problems paying medical bills, but that dropped to 31.2 percent in 2014. There may have been less need for people to pitch in if their formerly uninsured family members obtained coverage.

Another possibility is that those who obtained coverage may have been in a better position to financially assist family members who still lacked it. This could partly explain why the financial condition of even the uninsured improved after the Affordable Care Act’s coverage expansion. Other factors, like an improving economy, could also help explain the changes.

The C.D.C. looked at data from more than 370,000 people collected through the National Health Interview Survey. It found that in the six months after the introduction of the Affordable Care Act in January 2014, the percentage of people under age 65 who were in families having problems paying medical bills was lower than it had been before — 17.8 percent vs. 19.4 percent in 2013. Smaller reductions in financial strain from medical bills had occurred in prior years, perhaps because of slow improvements in the economy after the end of the Great Recession.

The C.D.C.’s findings are consistent with another recent survey by the Commonwealth Fund, as reported by my colleague Margot Sanger-Katz. It found that the percentage of adults experiencing trouble with a medical bill or medical debt declined to 35 percent in 2014 from 41 percent in 2012.

Coverage expansions that predate the Affordable Care Act were also associated with reductions in health-related financial difficulty. After Oregon expanded its Medicaid program by lottery in 2008, out-of-pocket medical expenses exceeding 30 percent of income fell more than 80 percent, according to analysis published in The New England Journal of Medicine.

Massachusetts’ 2006 coverage expansion law, which resembles the Affordable Care Act in many respects, was also associated with better financial conditions for families, a Federal Reserve Bank of Chicago study found. For instance, when coverage expanded, the two-year bankruptcy rate fell by 20 percent, credit balance past due fell by 22 percent, fraction of debt past due fell by 10 percent and credit scores improved by 0.4 percent.

Despite the financial relief that accompanies coverage expansion, high medical costs remain for many families. Some families covered by exchange plans could face out-of-pocket costs as high as 40 percent of their incomes. More than a fifth of Americans have medical debt on their credit reports. A recent Commonwealth Fund survey found that 23 percent of insured Americans were “underinsured,” meaning their medical expenses were above 10 percent of household income the last year (5 percent if very low income) or their deductibles more than 5 percent of income.

This is also unsurprising. Deductibles and other cost sharing can be high for some plans. And they’re growing for employer-sponsored plans, cutting against the financial security health insurance might otherwise offer.

Yet the evidence is clear. Though it doesn’t offer complete financial security to everyone, health insurance expansion has decreased financial strain. Financial security, after all, is the point of insurance. Though we might expect more from health insurance expansion — like improvements in health as well — at least it reduces financial strain, even if incompletely.


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