When her 14-year-old son, Jaxon, hurt himself playing football, Sa’tori Ananda of Dallas checked out the injury and had to make a tough judgment call: Take him to the doctor and potentially incur massive debt, or ice it and hope for the best. She did the latter. Several days later, they were in the emergency room, where Jaxon was treated for a fracture.
The Affordable Care Act has reduced the number of uninsured Americans significantly, but many insured Americans are making difficult decisions — avoiding or postponing health care because of cost concerns. High deductibles certainly play a role, but so do static incomes that can’t keep up with the rising cost of health care.
According to an October 2014 Associated Press survey of over 1,000 U.S. adults, 1 in 8 privately insured adults under age 65 face “major financial hardship” due to medical bills. That’s more than 16 million people who may think twice about seeing the doctor when they don’t feel well or getting a costly procedure when their health is on the line.
For Ananda, an engineer consultant for a major telecommunications company, avoiding medical care or prioritizing by cost and necessity is the new normal.
“We used to have more comprehensive coverage through my work’s insurance, but now my deductible is $2,500,” says the mother of three. “Before, we would almost overuse health care, going to the doctor for any ache or illness, but now it’s a different story.”
When Costs Are High, Some Avoid Care
Nineteen percent of privately insured adults don’t go to the doctor when they’re sick, according to the AP survey, and higher cost-sharing responsibilities are largely to blame. This is true whether you get your health insurance through a broker, the ACA marketplace or state exchanges, or through your employer.
Deductibles are both more common and higher than ever before. In 2003, only about half of employers offered health care plans with deductibles, and those deductibles averaged around $518. Ten years later, 81 percent of employer-based plans came with a deductible, and the average cost had risen 146 percent to $1,273, according to a trends analysis from The Commonwealth Fund, a foundation that supports health care research. Similar rises were seen in nonemployer-based private health plans, and it’s these deductibles that are often to blame for patient financial hardship.
“What we found was that people who were privately insured who had deductibles that were 5 percent or more of their income delayed or avoided getting needed health care at much higher rates than people whose deductibles were less than 5 percent of their income,” says Sara Collins, vice president of health care coverage and access at The Commonwealth Fund.
The Commonwealth Fund analysis found that nearly one-third of privately insured adults whose deductibles were more than 5 percent of their income skipped a doctor-recommended medical test, treatment or follow-up because of cost.
These people are at the middle to low end of income distribution, Collins says. Some of them may be eligible for Medicaid but are receiving coverage through their employer instead. Many consider themselves within the “middle class,” as Ananda does.
For Jaxon, who plays six sports and is about to enter high school, a recommended foot surgery to correct a “mild deformity” has been placed on the back burner.
“I want to get it done before he enters high school, as it causes him pain and could ultimately affect his sports and potential college scholarships,” Ananda says. “But budgeting for the deductible plus a 20 percent coinsurance isn’t easy.”
Growth of Health Care Costs Down, But Incomes Aren’t Keeping Up
Deductibles and premiums continue to rise, but their growth — and growth in health care costs overall — has slowed since the passage of the ACA. Premiums for employer-based coverage grew 4.1 percent per year from 2010 to 2013, compared with an average of 5.1 percent from 2003 to 2010, according to The Commonwealth Fund.
“The thing that has been so challenging for families in this middle range of income distribution is that wages haven’t grown much at all over the last few years,” she says. “So despite a big slowdown in deductibles and premium growth, it’s still a larger share of people’s incomes within that sector just because their incomes haven’t grown.”
From 2003 to 2013, the growth in health insurance premiums outpaced income growth in all states. So despite the health care law extending coverage to millions of Americans, and despite the caps it placed on out-of-pocket expenses, many just can’t keep up.
Managing High Out-of-Pocket Costs
Navigating a system that makes health care costs out of reach can be difficult, but it doesn’t have to be impossible. There are steps people can take to reduce out-of-pocket costs.
1. Take advantage of free preventive care. The AP found that 18 percent of insured adults skip recommended and preventive care due to cost concerns, suggesting that patients may be unaware of the many free preventive screenings and treatments under the ACA. Taking advantage of these free services could save you higher costs down the road.
2. Get educated about your options. Understanding everything there is to know about your plan now and during the open enrollment process (the next enrollment period is Nov. 1, 2015 to Jan. 31, 2016) will also help you make healthy decisions regarding your care.
“Consumers need to better understand their plan design before making a choice,” says Katherine Hempstead, director of the Robert Wood Johnson Foundation. “And there increasingly are tools that allow consumers to simulate the out-of-pocket costs of a year’s use of health services and compare plans on that basis.”
3. Set aside pretax dollars in an FSA or HSA. For employer-based heath insurance, there often aren’t many options to choose from, if you get a choice at all. If you’re in this situation, consider putting pretax dollars into a flexible spending account or a health savings account if you have a high-deductible plan. These accounts take pretax dollars from your paycheck and set them aside for your out-of-pocket health costs.
4. Compare prices. Just as you do when shopping for a car or other high-dollar item, you can comparison shop for medical treatments. Call around and get estimated costs, but be certain the providers are within your plan’s network, and call your insurance company to confirm.
5. Know when to ask for help. If you’re delaying treatment or avoiding it altogether because of costs, there may be programs that can help. Hempstead says hospitals are having to “rethink what charity care should mean in a post-ACA environment,” as many consumers are applying and receiving help through hospital programs. Doctors’ offices may also be willing to negotiate your medical bills or even provide discounts if you’re able to pay cash up front.
More Americans have health insurance, and the growth of health care costs has slowed, but it’s not all good news. When you’re forced to make decisions that could put your health at risk, it’s important you understand how to best navigate the system.
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