We hear it every day from supporters of the Affordable Care Act: The fact that more people have health insurance now than before the law was signed is proof that it’s working. But this is hardly the best measure of the law’s success — after all, what good is health-insurance coverage for middle- and low-income families if they can’t afford to use it?
That’s the plight millions of Americans find themselves in today. And as a new analysis by my organization shows, it only got worse this year.
The latest problem with health plans obtained through the law’s exchanges is one that’s largely flown under the radar: the enormous deductibles that come with them. While monthly premiums can aptly be described as how much it costs to have insurance, deductibles are how much it costs to use it. On average, that cost now runs well into the thousands of dollars annually, severely limiting access to insurance patients can afford to use.
My organization, Freedom Partners Chamber of Commerce, recently released a deductible tracker showing just how much deductibles are increasing across the country. Using data from the Robert Wood Johnson Foundation and state-by-state enrollment figures provided by the federal Centers for Medicare and Medicaid Services, we calculated a weighted-average — which accounts for market share — of deductibles for Affordable Care Act plans in all 50 states.
Here’s the short version: Average deductibles across bronze, silver, and gold plans obtained through the Affordable Care Act’s exchanges increased by $265, or 8.4 percent, in 2016.
These increases were deep and widespread. In total, 41 states saw average deductibles increase, with 17 states — representing 45 percent of total exchange enrollment — seeing double-digit spikes. The largest increases were in Mississippi (39 percent), Washington (31 percent), South Carolina (26 percent), Louisiana (24 percent), Florida (23 percent), Michigan and Vermont (22 percent), Arizona (21 percent), and North Carolina and Rhode Island (20 percent). By comparison, only two states (New Mexico and Oklahoma) had double-digit declines.
The percentage increases are sobering, representing hundreds of dollars more that families will have to pay to access their health insurance this year. And those increases come on top of deductibles that were already too high for many to afford.
Average deductibles for silver plans — which accounted for nearly 70 percent of the exchanges’ 9.3 million enrollees last year — now average $2,994. The second most popular Bronze plans have average deductibles of $5,629. Of the three most popular categories, gold plans were the only category to see deductibles decline (by 0.6 percent to $1,105), but carry premiums too expensive for most Americans to afford.
Paying $3,000 or $5,600 before their insurance kicks in simply isn’t an option for most families in times of emergency. A December 2015 survey by Bankrate.com found that 63 percent of Americans don’t have enough savings to cover an unexpected emergency-room visit costing $1,000. A recent report from the New York Times put it bluntly: Rising out-of-pocket costs have rendered many exchange plans “all but useless” for those already struggling to make ends meet.
It’s important to note that higher deductibles are not bad in and of themselves. Some consumers may prefer high-deductible plans as a way to have lower monthly premiums or have more flexibility in their health-care spending decisions. What’s concerning is these increases are happening at the same time premiums are skyrocketing. A similar analysis by my organization found premiums for individual health plans increased by an average of 14.9 percent this year. Consumers with Affordable Care Act plans thus have no escape from skyrocketing costs.
So, who’s to blame for these continued rising costs? While it’s natural to want to blame insurers, many of them are hemorrhaging cash on the exchanges, too. The largest U.S. health-insurance provider, UnitedHealth, recently announced losses of nearly $1 billion in 2015 and 2016 on plans sold via exchanges. Other insurers have also lost significant sums. They and other large insurers are even considering leaving the exchanges altogether in 2017, which could cancel hundreds of thousands of plans.
The real culprit is the Affordable Care Act itself. By mandating that all health-insurance policies cover all manner of treatments — regardless of whether a consumer actually wants or needs them — the law is driving up everyone’s costs across the board. Many new enrollees are also sicker than anticipated. And as costs rise, fewer people want the law’s plans, which drives prices higher for everyone else. It’s a vicious cycle with no end in sight.
Despite its name, the Affordable Care Act limits access to health care that people can actually afford to use — and it’s only getting worse with each passing year.
— Nathan Nascimento is a senior policy advisor at Freedom Partners Chamber of Commerce.