June 19, 2018
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Glitches and all, Obamacare must offer quality insurance that doesn’t bankrupt you


Every day in Maine, about eight people file for Chapter 7 or 13 bankruptcy. That adds up to about 3,030 residents each year, on average, officially declaring they cannot pay the debts they owe. Why? Most file because medical bills have in some way made their livelihoods precarious. What’s more, many of those people have insurance.

That’s right. Even though they contributed to a health plan, they might not be able to afford the deductible. Or they may have a limited plan that doesn’t cover the medical services they need. Or perhaps they managed to pay their medical expenses, but the illness or injury means they can no longer work and pay their bills.

It’s not known exactly what percentage of people in Maine file for bankruptcy due to medical expenses. National studies range from 17 percent to 62 percent depending on whether medical bills are considered the main cause or one of several causes leading to bankruptcy. Anecdotally, Maine lawyers say it’s common for medical bills to contribute to personal bankruptcy.

What is clear is that the U.S. health care system has suffered for a long time from a major flaw that can lead to bankruptcy: exorbitant costs. The National Academy of Sciences reports health care costs have increased at a greater rate than the economy for 31 of the last 40 years. The U.S. outpaces comparable countries in terms of both per capita spending on health care and the rate of spending growth itself.

What’s more, a report by the Institute of Medicine determined about $750 billion of total health spending in 2009 — about 30 percent — went to unnecessary services, excessive administrative costs, fraud and other problems. And this country doesn’t even have better health outcomes to show for all its spending.

So when experts inevitably turn to measuring the success of the Affordable Care Act, they probably won’t focus on whether it was difficult at first for people to sign up or how many people signed up in the first month. Rather, they should be examining whether those people can actually afford care under their new plans. The whole point of the law is to make coverage more affordable. But will it be affordable enough? One way to measure will be through a reduction in medical bankruptcies.

The same question should be asked of politicians considering a substitute to Medicaid expansion: Will it really be affordable? Maine has no concrete plan to pursue an Arkansas-like alternative, where low-income residents will receive subsidies to help them buy insurance instead of enrolling in Medicaid. But Gov. Paul LePage’s office has said he is evaluating alternative plans like the one in Arkansas.

Lawmakers should proceed with caution. The point of expanding Medicaid was to ensure reasonably priced coverage for low-income individuals, to encourage them to seek care before medical problems became emergencies. Medicaid expansion relies on a program that often has better cost control; Medicaid’s administrative costs, for example, are less than 7 percent, which is half the rate usually seen in the private sector.

There’s no question the Affordable Care Act aims to improve the current health care system. For instance, it lays out essential health benefits — such as maternity and newborn services, preventive care, and mental health and substance use disorder services — that must be covered by certain plans starting in 2014. And it will cap the maximum amount someone will pay out of pocket, including copayments and deductibles, at $6,350 in 2014.

But the danger is that the middle class and people with low incomes will remain underinsured — meaning they will have insurance, but it won’t adequately cover their medical expenses — as premium contributions, copayments or deductibles increase relative to income. After Massachusetts expanded health care access with its Health Connector program, for example, medical bankruptcy rates didn’t change much. Will the Affordable Care Act be different?

There are serious glitches with HealthCare.gov, where people are signing up for insurance on the new marketplace exchanges, and they shouldn’t be overlooked. But don’t let the political bickering about the technical problems distract you from the broader question at hand, which extends beyond whether people will be able to successfully sign up — they will eventually — to whether those plans will convert to quality, affordable care.

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