Under Obamacare, Out-Of-Pocket Costs Dropped But Premiums Rose, Study Finds


Isabel Diaz Tinoco (left) and Jose Luis Tinoco speak with Otto Hernandez, an insurance agent from Sunshine Life and Health Advisors, as they shop for insurance under the Affordable Care Act at a store setup in the Mall of Americas on Nov. 1, 2017 in Miami, Fla. The open enrollment period to sign up for a health plan under the Affordable Care Act runs until Dec. 15. (Joe Raedle/Getty Images)

Passing the Affordable Care Act was always much more about extending coverage than cutting costs. Still, as the landmark law faces one challenge after another, new data are giving a better picture of how the law has played out. That includes a new study that looks at how Obamacare affected household medical spending.

The short answer: On average, Obamacare did not affect household medical spending very much — but it definitely did cut costs for poorer people more than it did for people with more money. Here’s our discussion on Radio Boston, edited:

Host Meghna Chakrabarti: So what did this study find?

Carey Goldberg: The study was looking for how Obamacare was affecting our medical spending. As with everything with Obamacare, it’s complicated. But here we go: In a nationally representative sample of over 80,000 adults, overall, in the first couple of years after Obamacare really kicked in — 2014 and ’15 — out-of-pocket payments dropped by an average of $74.

And by out-of-pocket payments, you mean co-pays and payments you have to make because you haven’t hit your deductible yet.

Right, or procedures that aren’t covered. And meanwhile, the insurance premiums that households paid rose by an average of $232. So it’s a funny little coincidental parallel — out-of-pocket payments dropped by 12 percent, but premium payments rose by 12 percent.

But I’d imagine the effects really varied depending on a household’s income level?

They did. The ACA was meant mainly to help households with lower incomes, and it did. The study found that 6.5 percent of the population became newly insured after the ACA kicked in, and overall, the ACA predominantly helped lower-income people.

Here’s Dr. Anna Goldman, from Cambridge Health Alliance and Harvard Medical School, the lead author on the study: ‘The big picture is that the ACA did make real progress by reducing out-of-pocket spending, especially for poor and low-income households. But even in light of this progress, many American households still continue to face burdensome medical costs.’

On those ‘burdensome costs,’ this study also looked at what’s called ‘high-burden spending,’ which is defined as paying more than 5 or 10 percent of your income on out-of-pocket medical expenses. Premiums can be considered ‘high burden,’ too — that cut-off is if you’re paying more than 9.5 percent of your income.

So if I’m earning 20,000 a year, and I’m hit with out of pocket medical expenses of over $,1,000, that would be considered ‘high-burden’ or a premium that runs me close to $ 2,000 a year.

Right. So on these ‘high burden medical expenses, the good news is that out-of-pocket, high-burden spending fell by 20 percent overall — and it especially dropped for poor people. The not-so-good news for better-off folks is that among middle-income households, there was a 28 percent increase in high-burden spending on premiums.

Because premiums have been getting steeper and steeper. Does this study suggest the ACA is to blame?

No. Dr. Goldman says a better way to look at it is that while the ACA did help with out-of-pocket costs, it didn’t stem from the rise in premiums that was already underway.

I have to admit this is a little underwhelming. We have devoted so much attention and so much political wrangling to Obamacare over the last years, and this study is telling us that at least in the first couple of years, and in terms of household costs, it’s been something of a wash.

I feel the same way. What Dr. Goldman, the lead researcher, commented about that is, look, the ACA was the biggest reform of the health care system since 1965, and to get passed it had to involve a lot of political compromise:

‘It was nowhere near as radical as it could have been,’ she said. ‘I think that a single-payer plan, for example, which many Democrats on the more progressive side of the party were advocating for, would have been much more effective in reducing medical spending by all American households, certainly for people in poor and low-income households — no co-payments, no deductibles, no premiums.”

This isn’t news either, but a single-payer system apparently in this country has not been in the realm of the politically possible.

I would think the ACA as it is right now isn’t even within the realm of political possibility at the moment. The individual mandate is already out.

It’s on its way out. Although not here in Massachusetts, we should note. But what this study also tells us is that as the individual mandate and other aspects of the ACA get phased out, it will be largely the poorer people who will mostly lose out.

In the study’s conclusions the authors write that without the individual mandate, the numbers of people without insurance will go back up again, as will out-of-pocket costs, and premiums will likely rise, too, because healthier people won’t be buying insurance.

The final sentence of the paper says that international experience shows that a universal, comprehensive national health insurance program would be the most effective way to reduce household spending on medical expenses and the gaps between rich and poor.


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