I'm just going to be blunt: if the US were to impose Obamacare -- as a universal health care solution -- on any other rich country, the citizens would surely revolt: cars would be burned, Parisian cafe tables would be thrown threw windows, Italian espresso machines would be turned into bombs. Well, you get the idea.
Two recent articles from the New York Times and Yahoo News highlight two structural problems with no solution in sight: patients delaying needed care because of massive deductibles and patients being left with crippling, foreclosure-inducing debts because they can't afford to pay their bills -- particularly to out-of-network providers excluded from new narrow-network plans -- after undergoing major treatments.
Deductibles for Obamacare plans are high, really high. In a nation where the majority of the population -- over 75 percent -- is living paycheck-to-paycheck, there is little left over for a $1,000 deductible, let alone the $4,000 or $5,000 deductibles common with the cheapest Obamacare plans. (And, remember, once you hit the deductible, you still have cost-sharing.)
Deductibles for the most popular health plans sold through the new marketplaces are higher than those commonly found in employer-sponsored health plans, according to Margaret A. Nowak, the research director of Breakaway Policy Strategies, a health care consulting company. A survey by the Kaiser Family Foundation found that the average deductible for individual coverage in employer-sponsored plans was $1,217 this year.
In comparison, the average deductible for a bronze plan on the exchange — the least expensive coverage — was $5,081 for an individual and $10,386 for a family, according to HealthPocket, a consulting firm. Silver plans, which were the most popular option this year, had average deductibles of $2,907 for an individual and $6,078 for a family.
With deductibles this big, patients avoid seeking care in the same way as the uninsured.
But insurance plans with lower premiums generally have higher deductibles. Gina Brown, 37, of Nashville, was paying about $155 a month for a Blue Cross Blue Shield of Tennessee plan, after taking account of her subsidy. But her deductible was $4,000, she said, and so she avoided going to the doctor even when she got an ear infection over the summer.
“I attempted to treat it with over-the-counter and homeopathic meds,” she said. “Eventually it went away.”
But, what if it didn't go away? Or what if the ear infection was symptomatic of a much larger medical problem requiring complex care? A problem that could have ballooned out of control as Ms. Brown played around with "homeopathic meds"?
Sometimes, though, the massive deductible is the least of a patient's worries, because the plan with a massive deductible also comes with a narrow network of doctors that punishes Americans living in rural areas or plagued with uncommon diseases.
Dr. Rebecca Love, of Moab, Utah, is well on her way to passing that limit. Dr. Love, 63, who has degenerative arthritis and a host of other health problems, pays $422 a month in premiums for a plan that has a deductible of $6,000. But she has already paid more than $6,000 in medical costs this year that did not count toward her deductible because the doctors and hospitals — more than 100 miles away in Grand Junction, Colo. — were not in her network.
To see certain specialists in her network, Dr. Love said, she would have had to travel to Salt Lake City, which is much farther away and requires driving through a treacherous mountain pass.
“Medical care costs too much and health insurance as it stands doesn’t address this,” she said. “What have we become?”
Republicans attack Obamacare as "redistributing wealth," but the reality is that Obamacare actually does very little redistribution. Think about it this way: in England or Italy or France, the poor and struggling -- or those stuck with chronic diseases like diabetes -- pay absolutely zero for health care -- kind of like Medicaid -- and have the most financial protection. In the US, however, those just above the cut-off for Medicaid and stuck with Obamacare junk insurance instead of Medicaid (and, don't believe the horror stories, Medicaid is actually more popular than Obamacare private insurance
), face tremendous financial uncertainty. The executives of Goldman Sachs -- with their gold-plated insurance plans subsidized by the "average Joe" American taxpayer -- enjoy more financial protection from medical costs under their plans even though they have the capacity to pay just about any medical bill sent their way. A universal health care "system" that operates in this way is hardly facilitating redistribution.
So, just what happens when those plagued by junk insurance face crippling medical costs that their "Blue Cross HSA 4,000" plan fails to adequately cover? Well, even the most prosperous families quickly spiral downwards into the ranks of the truly poor.
In their 30 years of marriage, the Overvolds had each taken on traditional household duties — Lee worked and managed the finances, while she cared for their two sons at home. At the time of his diagnosis, Lee earned $120,000 a year working in sales for an energy company in their hometown, Fontana, Calif. The rigor of his treatment regimen forced him to leave his job on disability, which cut the family’s income by 40%. Very quickly, his hospital bills consumed their emergency savings and the couple began drawing on his retirement benefits much earlier than expected.
“At least five of his cancer specialists weren’t covered by our insurance,” Deanne says. “And one day the hospital would charge $300 for one drug and the next day it would cost $750. It’s like it just keeps coming and you can’t stop it.”
Lee died in August, less than six months after his diagnosis. Deanne was left with more than $100,000 in hospital and physicians’ bills, she estimates -- an amount far too inadequate for her savings to cover. Six years away from reaching full retirement age herself, she’s begun looking for full-time work for the first time in more than two decades. On the recommendation of a friend, she enlisted the help of a financial advisor who specializes in helping widows and widowers.
“We had planned to retire at 67 and we had everything planned out,” Deanne says. “Now, there is no plan.”
And, let's not forget, that while Obamacare regulates deductibles, it also allows deductibles to rise over time. Obamacare plans will offer less, not more, protection from financial destruction as the years progress. This wouldn't be a problem if wages were increasing for the average worker, but they're not -- people are earning less as insurance offers less protection and already appalling health care prices
-- by international standards -- continue to increase.
A report by financial education website Nerdwallet.com released today shines new light on medical debt’s crippling effect on American households. Between 2010 and 2013, American households lost $2,300 in median income, but their healthcare expenses rose by $1,814, according to Nerdwallet. Out-of-pocket healthcare costs are expected to accelerate to a 5.5% annual growth rate by 2023 – more than twice as fast as the national economy, which grew by 1.9% last year.
“We found that one in three dollars that are currently in debt collections are actually medical, which we found quite shocking,” says Christina LaMontagne, general manager of NerdWallet Health and author of the report.
happens, over and over and
Kathy Penton, 58, was the breadwinner in her family when she was diagnosed with Fibromyalgia, a syndrome that causes chronic nerve and joint pain, in 2002. She was in her early 40s, a time when both men and women should be reaching their peak earning years. Instead, the constant pain drove her to leave her management position at the telecommunications company she had worked at for more than 10 years.
Kathy and her husband, Lonnie, 63, who live in Savannah, Ga. went from a dual-income household to relying solely on Lonny’s $50,000-a-year job at an auto repair shop. It took more than two years for Penton to successfully qualify for disability benefits, and by that time the couple had been regularly dipping into her 401(k) account and using credit to make ends meet.
“I know I could have planned better but before I even had a chance think about it, it was gone,” she says.
After paying taxes on early 401(k) withdrawals and sustaining a painful 25% loss during the 2008 financial crisis, Penton says her $100,000 nest egg is practically nonexistent today. When their bank threatened to foreclose on their home after two missed mortgage payments in 2008, it was a major tipping point. More than $20,000 in credit debt, the couple decided to file for bankruptcy.
Progressives may hopefully describe Obamacare as a "starter home" and dream of a natural evolution to single-payer over decades, but such thinking is most certainly unrealistic given the dysfunctional nature of American politics. Even if progressive states like Vermont
succeed at implementing single-payer, hundreds of millions of Americans in more conservative states will remain vulnerable to tremendous financial distress as they attempt to access health care.
We are collectively, as a nation, still in a state of health care crisis that would be absolutely unacceptable in any other rich nation.
Americans should probably start hurling cafe tables sooner rather than later.