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Medical Debt Still a Problem Under Affordable Care Act

Insurers reluctant to curb cost-sharing

The Patient Protection and Affordable Care Act (PPACA) was intended to keep a surprise illness or injury from bankrupting Americans. It authorized states to expand eligibility for Medicaid and created online insurance markets where others without employer coverage can buy plans, with federal subsidies available. When calling for the law’s passage, President Obama declared that people shouldn’t “go broke because they get sick.”

But many states haven’t expanded Medicaid, and even those with insurance can rack up big bills, a problem exacerbated by the growing number of plans with high deductibles, according to a new report from Kaiser Health News. In 2013, medical debt was the largest cause of personal bankruptcy – 1.7 million people lived in households experiencing bankruptcy because of health costs.

The PPACA brought regulations to limit for the first time the cost-sharing in insurance plans. An individual plan sold on an online exchange can’t include out-of-pocket costs greater than $6,600. In practice, the average deductible varies based on how expensive a plan is. But the regulation still applies only to providers and specialists specified by the plan as “in-network.” The narrower the network, the more vulnerable consumers are to incurring medical debt by visiting unapproved doctors or hospitals.

The PPACA wasn’t supposed to eliminate health care cost-sharing; on the contrary, people are expected to have “skin in the game.” So there will always be a risk of incurring costs greater than people can afford to pay, said Dr. Melissa Jacoby, a professor at the University of North Carolina–Chapel Hill and an expert on debt and credit.

“Some of the forces that were in play prior to the passage of the Affordable Care Act are still in play,” added Mark Rukavina, who founded Community Health Advisors, a group that advises providers on how to comply with federal regulations. Inflation and rising health care costs –– especially compared with wages –– make care more expensive and weren’t necessarily addressed by the PPACA.

Still, some numbers suggest a decline in people facing medical debt. Approximately 64 million Americans struggled to pay their medical bills in 2014, according to a survey by the Commonwealth Fund –– that’s a drop of about 10 million since 2012. Experts have celebrated the decline but cautioned that high-deductible insurance plans could put a damper on those changes.

The same report found that 29% of the insured had medical debt or difficulty with medical bills, a drop from 33% in 2012 –– while the pool of insured adults grows larger. But analysts pointed out that, absent a significant change in industry or policy, even this group will likely continue to face the prospect of medical debt.

Moreover, deductibles keep growing. Last year, work-sponsored insurance plans had an average deductible of about $1,200 –– in 2009, the average deductible was $826. And this year, the “silver plans” sold through the federal marketplace require people to pay on average more than $2,500 or about $3,500 before they get coverage. Whether it is the higher or lower amount is determined by whether the plan groups medical visits and drug costs in a single deductible or in two separate deductibles. “Bronze plans,” known for being cheaper but less generous, have average deductibles of about $5,300.

“There’s wide acknowledgement in the health care community that high-deductible health plans in general are part of the problem,” said Jessica Curtis, who directs the Hospital Accountability Project at Community Catalyst, a nonprofit group that advocates on behalf of health care consumers.

But there is no incentive for insurers to curb cost-sharing, and they have no reason to widen the so-called narrow networks.

In December, the federal government rolled out a rule requiring that, by 2016, nonprofit hospitals actively publicize financial-assistance policies. But since hospitals determine who qualifies for aid, the rule is “like Swiss cheese,” Curtis said.

For-profit hospitals won’t have to comply, and unaffiliated outpatient facilities could remain essentially unregulated in terms of how they collect on debt.

Meanwhile, the federal Consumer Finance Protection Bureau has taken preliminary steps to craft rules on medical debt collection. But those will take time to write and probably wouldn’t go into effect for more than a year.

Source: Kaiser Health News; February 4, 2015.

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