Obtaining an insurance plan on the Obamacare exchange may leave consumers with some healthcare coverage, but not in optimal amounts.
While the U.S. uninsured rate is at a historic low, the number of underinsured Americans is still drastically high.
Some 31 million people, or 23 percent of all 19-to-64 year old adults, have such high out-of-pocket costs relative to their incomes that they are classified as underinsured, according to a survey by the Commonwealth Fund. That figure is nearly double the number of underinsured Americans reported in 2003.
The principal stated aim of Obamacare was to make healthcare “more secure, reliable, and more affordable for families, small business owners, and employees.” Despite such benevolent intentions, some 44 percent of the 31 million underinsured adults report are forgoing medically necessary treatment because of burdensome costs.
Under Obamacare, health insurance plans are differentiated by their actuarial value. For example, if a plan has an actuarial value of 55 percent, the insured party would be responsible for 45 percent all remaining costs. Insurance consumers could be on the hook for a higher or lower percentage than the one listed on their plan, depending on the actual healthcare needs of the individual and the terms of their policy.
The higher the actuarial value, the greater the cost of the plan. On the Obamacare exchanges, bronze plans fetch a 60 percent actuarial value. Silver plans get 70 percent, and gold plans come with an 80 percent value.
Consumers first healthcare expense is often a monthly premium, the amount of money that an individual or business must pay for an insurance policy. The cost of the premium is calculated based on a few factors, including: the probability of a claim being made by the insured party, the area where the policy-holder lives or operates a business, and the amount of competition the insurer faces in the marketplace.
In addition to premiums, policy holders are also subject to the cost of their deductible — the up-front cost of healthcare the consumer must pay before insurance — and co-pay fees.
Insurance policies have deductibles for ethical and financial reasons. Deductibles work to lower risky behavior by the insured party, as they are financially responsible for a substantial portion of the costs stemming from injuries or catastrophic events. They also help to keep the insurance market solvent, by ensuring that insurance providers aren’t paying out in full for every claim made by a policy holder.
“The steady growth in the proliferation and size of deductibles threatens to increase underinsurance in the years ahead,” Commonwealth Fund reports.
Once consumers have covered premium and deductible costs, they must cough up co-pay fees. These fees can range from $20 to as much as $100 for an emergency room visit, the Times reports.
All plans on the Obamacare exchange have out-of-pocket maximum clauses. This means that after a policy holder spends up to the required amount on their plan (deductible, co-pay, co-insurance, etc.), that their policy then pays 100 percent of the costs of covered benefits. Even with these maximums, a $20,000 surgery could cost consumers upwards of $4,400, the Times reports.
Essentially, millions of Americans are burdened by exorbitant out-of-pocket healthcare costs that are getting them less coverage than they anticipated under their health plans.
President-elect Donald Trump promises to “repeal and replace,” Obamacare in his first term, but conversely has no specific plans for reducing out-of-pocket costs. Some propose changing the structure of the insurance industry to slow the growth of deductibles, and incentivize people to seek healthcare sooner rather than later. Others call for policy-makers to address the loopholes in the system that burden families with unexpected costs.
Obamacare is in the midst of a death spiral: 17 co-ops have failed, the Tennessee Health Commissioner says the healthcare exchanges in the state are “very near collapse,” insurance companies in North Carolina have become a “financial sinkhole,” and few health experts have positive things to say about the future of the legislation. (RELATED: Obamacare ‘Very Near Collapse,’ In Tennesee, Says Insurance Regulator)
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