It’s the time of year when the cost of health care – and the cost of health insurance – is a hot topic of conversation. Many of America’s 170 million workers will see cost increases in their open enrollment packets this fall, and those shopping on their states’ health insurance marketplace may be in for “sticker shock.”
The Patient Protection and Affordable Care Act is commonly called the Affordable Care Act (ACA). But that may be a misnomer. Even Mark Dayton, Minnesota’s liberal, Obamacare-supporting governor, recently said the law is “no longer affordable.”
Consider these facts to draw your own conclusion:
- More people have coverage. Today 20 million people have health insurance who didn’t have it before. Also, health insurers cannot deny coverage to individuals based on pre-existing conditions, like asthma or diabetes. And women cannot be charged extra based on gender.
- Health care costs keep rising. The cost of care for a typical American family of four has tripled since 2001, according to the Milliman Medical Index, although the rate of increase has slowed this year to 4.7 percent. Mercer also reports that employees’ health benefit costs (after employers make benefit changes) will grow 4 percent in 2017, which is well above inflation but not as high as previous years. For those on shopping on the exchange, price jumps are more extreme with a weighted average increase of 9 percent for the lowest cost silver plans, and rate increases of 30 percent or more for plans in some states.
- Innovations are underway. Health reform has been a catalyst for a significant amount of activity to change the fundamentals of health care delivery, from storefront health clinics to quality initiatives, accountable care organizations, bundled payments and more. So far there hasn’t been as much financial impact as hoped, but these may be steps in the right direction.
- Medicare’s donut hole is shrinking. Medicare Part D has a coverage gap, often called the donut hole, which requires beneficiaries to pay for drugs after reaching their plan’s initial coverage limit. For 2016, the gap begins at $3,310 and ends when beneficiaries spend a total of $4,850. Health care reform promises to shrink the donut hole year-by-year and close it in 2020.
- Out-of-pocket costs keep growing. Less generous insurance coverage over the past decade has increased typical employees’ out-of-pocket costs by 77 percent, according to the Kaiser Family Foundation. Among marketplace enrollees, 25 percent reported that their coverage was unaffordable when premiums, deductibles and out-of-pocket costs were considered.
- People still have unmanageable medical expenses. A Kaiser/New York Times survey found that one in five working-age Americans with health insurance reported problems paying their medical bills.
- Premium limits exist. The Affordable Care Act (ACA) restricts how insurers can vary premiums with a limit of a ratio of three to one. In other words, the premium for a 64 year-old is three times the premium for a 21 year-old. In the past, premium variations based on age were typically about five to one.
- Prescription costs are through-the-roof. According to Business Insider, we just experienced the largest rise prescription costs in 24 years, and nearly 8 out of 10 Americans say that prescription costs are unreasonable, according to a recent Kaiser Family Foundation poll.
- Preventive care is “free.” The ACA requires most health plans to provide a variety of preventive health services, like colonoscopy screening, well-child visits, flu shots, and more, without cost-sharing by enrollees. In theory, this should catch small problems before they become worse create a healthier population.
The future of the health reform is uncertain as we approach the November election, but it’s a safe bet that the topic will continue to receive a lot of attention in the upcoming year.