Only 8.3% of Americans will be uninsured in 2021, down over 37% from 13.4% in 2013, the year the market created by the Affordable Care Act and Medicaid began The year before the expansion. So why are nearly half of working-age adults (46%) still not receiving care or medication? Uninsured is no longer our biggest problem, Uninsured is – when you have insurance, – pocket cost Still so high that you can’t use it.
What steps have been taken to address this issue?
President Biden and his administration spent their first two years in office improving health insurance and healthcare for millions of Americans Significant progress has been made on affordability. The American Rescue Act of 2021 increased premium subsidies for purchasing health insurance through HealthCare.gov and state-based marketplaces until the end of 2022, and the Inflation Reduction Act (IRA), passed earlier this year, extended it to the end of 2025. The IRA also includes a $35 monthly cap on insulin payments for Medicare patients starting next year, a $2,000 annual out-of-pocket cap on all prescription drugs starting in 2025, and introduces the plan’s framework for negotiating drug prices — opposed by Made by the pharmaceutical industry, but popular among Americans.
An amendment proposed by Sen. Raphael Warnock (D-Ga.) to limit the cost of insulin in all commercial health insurance plans, including employer-sponsored health insurance and market plans, which were removed from the bill but reflect the progress of the conversation. During the last presidential election cycle, current Transportation Secretary Pete Buttigieg pushed for a monthly cap on prescription drug costs for seniors.
These proposals reflect the larger reality that health care is increasingly unaffordable, even for those with “good” insurance – most below the federal poverty level 400% of families can’t afford their deductible.
What are potential solutions?
While Health Savings Accounts (HSAs) are often considered an option to improve healthcare affordability, the reality is that they are not — They mainly provide tax avoidance services for already wealthy Americans. Although their use has increased over the years, we’ve found considerable disparities in race, ethnicity, and income in HSA participation — reflecting those who are uninsured and struggling to afford health care — so they’re not a solution to the problem systemic solutions.
Two years ago, my colleagues and I began to mull over the pros and cons of an alternative solution to the underinsured: monthly caps. A health care cost cap on monthly out-of-pocket expenses could simplify our current more complex cost-sharing approach, which typically begins with a deductible, followed by a period of coinsurance, and then reaches a maximum out-of-pocket expense in a calendar year or so Value. Conversely, a monthly cap will provide the patient with a smaller monthly deductible, after which each charge will be paid in full. We could still keep cost-sharing waivers, like copays for preventive care and doctor visits, just change how often and how much people are obliged to pay up front before they get help from their plan. About one-third of American households can’t afford a $400 unexpected expense, so the trend toward higher deductibles is more than they can afford.
Those with chronic illnesses who leave behind some out-of-pocket expenses each month but avoid huge upfront costs each year. For young, healthy people, this alternate design can still be helpful when they go to the doctor in case they need to have some tests or MRIs that can be performed thousands of times. Plus, if the deductible is reset every month, people don’t have to worry about losing progress when they change jobs mid-year.
We went a step further and published a study recently conducted at JAMA Network Open that took this idea Applied to real data from health insurance claims. We found that assuming an out-of-pocket cap of $500 per month for in-network care lowers costs for nearly a quarter (24.1%) of U.S. commercial insurers, thereby lowering the median out-of-pocket cost for this group Almost halved (-45.5%) in one calendar year. Benefits were even greater for in-network care capped at $250 per month, with 36.8% of enrollees benefiting, and beneficiaries saw their median annual out-of-pocket costs drop by more than half (-50.8%). Costs drop even more for those in high-deductible health plans.
Of course, the money has to come from somewhere. As costs are shifted back to the plan, we expect premiums must rise 5.6% for the $500 monthly cap and 7.9% for the $250 monthly cap. It’s not for nothing, but the fact is that most Americans don’t pay the entire premium for insurance alone — often employers cover most of the cost, or people are in the market for financial help. A key point is that our study assumes that people don’t start using more care because of the monthly cap, which feels reasonable because you can only use so much care in the month before the cap resets.
What is the monthly cap limit?
Any policy, including insulin monthly caps or out-of-pocket costs, that only addresses how much patients pay will not address rising healthcare costs This is a more systematic question. In the oft-quoted words of the late economist Uwe Reinhardt, “It’s the price, stupid.” The numbers are expected to rise sharply as the health emergency draws to a close, now postponed until early next year.
Of course, we also don’t know what the exact monthly out-of-pocket cap would look like in practice. No one had really tried them on a large scale before. The insulin cap in Medicare won’t kick in until next year, but we’ll see how patients respond to it and how rates of diabetes complications change. More broadly, it will not be easy to move commercial insurers away from the annual cost-sharing model that has essentially been in use since the beginning of health insurance in the United States.
We hope that employers or insurers will be willing to pilot this model, see how patients respond to it, and then consider it as an option for their plan offering. Who knows, maybe they’ll even end up being insurance companies to actually make sure patients can seek care when they need it.
Dr. Paul Shafer is an Assistant Professor in the Department of Health Law, Policy, and Management at Boston University.
Disclosure
Research for this article was supported by Arnold Ventures. Over the past 12 months, Shafer has received research grants from the Robert Wood Johnson Foundation, Commonwealth Fund, Arnold Ventures and Renova Health. He is also an investigator for the VA Boston Healthcare System under contract with the Boston University School of Public Health.
