March 23, 2010 was the day the Affordable Care Act (ACA), also known as Obamacare, was signed into law, promising better coverage for all Americans. On that day, many believed healthcare would indeed be more affordable. But, despite government promises and citizens’ hopes, the Affordable Care Act is anything but affordable for most people.
A study from the Kaiser Family Foundation reveals that workers’ out-of-pocket health care costs under employer insurance plans are increasing at a faster rate than payments from insurers to cover those costs. Another Kaiser study has shown that, under Obamacare, the rate at which healthcare premiums are increasing has quickened significantly. These skyrocketing premiums combined with bigger out-of-pocket costs mean Americans are paying more upfront for insurance but getting less coverage in the end.
Why Are Out-of-Pocket (OOP) Costs Rising?
The most obvious reason for increasing OOP costs is increased cost-sharing by employers, though the issue is more complicated than it first appears. On one hand, employers themselves have been hit by rising premium costs charged by their insurers. This makes non-wage labor costs grow while making wage increases that more difficult, if not impossible. And on the other hand, employers are forced to pass along more of the total premium costs to their workers.
According to Kaiser, the average family premium (for those Americans whose employers provide insurance) is $17,545, with employees contributing $4,995. Many government officials on both sides of the aisle have argued that Obamacare’s “Cadillac Tax” – an excise tax on high-cost plans that is scheduled to take effect in 2018 – will incentivize employers to switch to plans that will increase “cost-sharing” with their workers.
Another factor contributing to rising OOP costs is that copays for doctor visits and prescription drugs, (which half of Americans and 90% of the elderly take) are also on the rise. Once deductibles are met, the average employee pays a $24 copay for a primary-care office visit and $308 for a hospital admission.
Insurance industry consolidation may also be contributing to rising premiums and OOP costs. “Back in the day” the insurance industry was made up of a collection of small, local companies. But the industry has been consolidated. Consider that UnitedHealthcare (UHC), Anthem, Aetna, Cigna, and Humana are all Fortune 100 companies, and these, together with the Blue Cross Blue Shield association of insurers, accounted for 83 percent of the market in 2014.
And finally, surging OOP costs are in no small part due to the increasing prices charged by providers. Prescription drug prices rose by more than 10% in 2015, while for-profit hospitals and nursing-home chains also raised their prices. One study revealed that hospitals mark up prices for common procedures anywhere from two-and-a-half to 12 times what Medicare has determined is an “allowable cost.”
While many see these ever-inflating healthcare costs as a crisis, some economists have argued that increasing OOP costs would rein in Americans “overconsumption” of health care, but this has proven not to be the case. In fact, untreated illness will reduce productivity, hurting the economy. And, if more Americans are unable to afford needed care and become indigent and critically ill, Medicaid (AKA the American taxpayer) will ultimately have to pay the bill.
A Hot-Button Political Topic
While this election cycle has seen issue like immigration and trade deals get much attention, it’s no surprise that skyrocketing OOP costs have also become a hot-button political topic. Last December a poll found that 62% of Republicans and 67% of Democrats want candidates to address the issue.
Hillary Clinton has been very clear about the fact that she plans to build on and expand Obamacare. As president, Clinton has promised to defend the law, keeping what works and adjusting what doesn’t.
She also supports offering a “public option,” which would create a government-sponsored health-insurance option to compete with private insurers. Additionally, Clinton advocates allowing those older than 55 to be covered under Medicare. Currently the cutoff is 65.
Clinton also supports:
• Making healthcare accessible to all – regardless of immigration status.
• Making healthcare affordable and accessible to rural Americans, who currently have fewer insurance options.
• Doubling the funding for community health centers and tripling the size of the National Health Service Corps, an organization that helps health professionals provide primary healthcare services to underserved communities. In exchange, participating health professionals are either given loan repayment or a scholarship throughout their medical education.
• Denying tax breaks to drug companies in order to restrict “excessive profiteering.”
Donald Trump is on the complete opposite side of the issue. He has called the Affordable Care Act “a terrible piece of legislation that was enacted by the most divisive and partisan president in US history.” He has continually criticized Obamacare as having “resulted in runaway costs, websites that don’t work, greater rationing of care, higher premiums, less competition and fewer choices.”
Trump has made it very clear that should he be elected President, he will repeal and replace Obamacare, suggesting that he will work with Congress to adhere to free-market principles as much as possible.
• Modifying laws currently on the books that prevent insurance companies from selling in different states.
• Creating an atmosphere where insurers can compete, thereby driving costs down.
• Amending current tax codes to allow consumers to deduct health insurance costs.
• Leaving Medicaid reform up to individual states.
• Relaxing current regulations around Health Savings Accounts and requiring price transparency from healthcare providers.
• Lowering barriers into the market for drug companies that can offer “safe, reliable and cheaper products.”
• Allowing consumers to receive prescription medications from safe overseas options.
With only weeks until the presidential election, it won’t be long until Americans learn the future of healthcare and whether or not they can truly expect to afford the care they need.