The ‘Unaffordable Care Act’ Causing High Medical Bills for Insured PeopleCommentary by Devon Herrick
January 11, 2016
Liberal public health advocates and left-of-center health policy wonks have long thought every American needs health insurance (they don’t, but that’s another discussion). Lefties assume health insurance is the only way Americans access medical care. After all, the purpose of the Affordable Care Act was to insulate Americans from the financial hardship of medical care they couldn't afford to pay for out of pocket. Moreover, many pundits believe having to reach for one’s wallet during a medical encounter is unacceptable. So imagine my shock when I read a headline in The New York Times claiming that Obamacare is no guarantee against crushing medical bills.
In a survey of non-seniors, the New York Times/Kaiser poll found about one-in-five people struggle with medical bills even though they have insurance. Among insured people who reported crushing medical debts, about three-quarters reported putting off vacations, major purchases and cutting back on household spending. Nearly two-thirds used up all or most of their savings. Far fewer had to resort to second jobs, take on more hours or ask family members for funds (42 percent to 37 percent).
Why are these insured Americans having to reduce their standard of living and, in fewer instances, having to resort to more drastic measures? Was it entirely because they’re sick? A common refrain among those struggling with medical bills was that money was tight prior to a family illness. This includes high-income households as well as low income households.
Money is fungible; it can be spent on vacations or medical needs. However, there are trade-offs in life. Like it or not, medical care is a component of household budgets. Funds spent on vacations cannot be spent on medical care; and funds spent on medical care are no longer available for vacations. Yet, putting off a vacation to pay medical bills is certainly not a travesty. Most would consider vacations a luxury, not a necessity.
One final thought about polls. A couple weeks ago in an earlier Townhall commentary, I explained that people tend to report problems paying bills they don’t want to pay. Yet, they are seemingly willing to purchase items they should probably have left at the store. For example, people may report experiencing problems paying medical bills, but are unlikely to say they have trouble affording alcohol. They may report problems buying cigarettes but continue to buy them anyway. Americans report putting off vacations and major purchases because of medical bills. But why didn’t they report having no problems with medical bills, but problems paying for vacations or major purchases? It’s a reflection of their priorities. Consider this: in the survey the uninsured reported problems with medical bills at a much higher rate than those with insurance. Just over half of the uninsured people surveyed reported problems with medical bills compared to about 20 percent of the insured. But when asked what they’ve had to give up to pay medical bills, the uninsured actually had an easier time with medical bills when compared to the insured. Less than two-thirds of the uninsured put off vacations, major purchases and had to cut back on household spending. Only half used up savings. Those are smaller proportions than those with health coverage -- possibly because they had not sank money into coverage that provided little of their needs.
However, a growing problem that could increase the ranks of the uninsured is the cost of Obamacare policies -- even if you don’t experience an illness. Take the example of my family. Insurance for my wife and me costs approximately $12,000 per year. Annual deductibles for that level of coverage are nearly $13,000 per year. Suffice it to say that $12,000 in premiums and any health care spending we may encounter before our deductibles are met would buy a lot of amenities that would enhance our standard of living. Indeed, the cost of our health insurance would buy a months-long stay at a renovated farm house in the Spanish, French or Italian countryside.
The cost of Obamacare is undoubtedly straining other Americans’ household budgets just as it is straining ours. After paying $1,000 per month for family coverage, few families can afford any type of health complaints which requires another $13,000 annually in deductibles. As an earlier article in The New York Times explained, high premiums and high deductibles are causing many people to weigh the cost of forgoing coverage entirely and just paying the penalty. In many people’s minds, it’s already a given that they will have to pay out of pocket for all their day-to-day medical needs. So what good is expensive insurance if you have no funds left over to see a doctor?
Whether your priorities are medical care or vacations, Americans will increasingly find they cannot afford both Obamacare and a decent standard of living on the same budget. I have an idea: why don’t we take a vacation from Obamacare?