Obamacare Facts: "We Have Insurance, but We Can't Afford to Use It"

Obamacare facts: While the Affordable Care Act (ACA) has helped millions of low-income Americans get medical care, middle-class citizens who have signed up for Obamacare plans are getting crushed financially.

Many middle-class people who enrolled in an Obamacare plan have not only seen premium rates rise, but are getting stuck with steep deductibles. Despite having health insurance, these folks often find they can't afford treatment.

obamacare facts"The deductible, $3,000 a year, makes it impossible to actually go to the doctor," David R. Reines, a 60-year-old former hardware salesman from New Jersey, told The New York Times. "We have insurance, but can't afford to use it."

According to healthcare consumer group Families USA, close to 30% of people with high-deductible Obamacare plans said they went without needed medical care in 2014 because of the high cost.

High-deductible health insurance plans are nothing new. Before Obamacare, mostly healthy people bought them to protect themselves from the impact of a catastrophic illness. And the premiums were low.

Obamacare Facts: High Deductibles Now Typical

But Obamacare has made high deductibles common on the majority of insurance plans offered through the exchanges. And they keep going up.

According to a Kaiser Family Foundation study, health insurance deductibles have grown six times faster than wages since 2010.

A high-deductible plan is one with a deductible of at least $1,300 per year for an individual or at least $2,600 a year for a family, according to the Internal Revenue Service (IRS).

But many Obamacare plans have much higher deductibles. In Chicago, the median deductible is $3,400, according to Healthcare.gov. In Phoenix, it's $4,000. In Miami, it's $5,000. Some family plans have deductibles as high as $12,000 to $13,000 a year.

That's a ton of money for the average cash-strapped American. One in four have no emergency savings, according to Bankrate.com. And a survey by the U.S. Federal Reserve in 2014 found that 47% of Americans, when faced with a $400 expense that needed to be paid immediately, would need to sell something or borrow the money.

It's no wonder that so many people are putting off needed medical care.

But wait. Wasn't the ACA supposed to make health insurance more affordable for more people?

That was the intent. But here's what happened...

The Obamacare Facts That Gave Us Unaffordably High Deductibles

Unfortunately, Obamacare's architects misjudged how the health insurance market would react to all the changes the law made.

They expected more healthy people to willingly sign up for Obamacare plans, allowing the insurers to spread the cost of covering those with serious illnesses who previously were denied coverage. Many haven't, opting instead to pay the annual tax penalty.

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But the very sick and the very poor have signed up in large numbers. Those with incomes below 250% of the federal poverty line get subsidies to help pay for both their premiums and out-of-pocket costs.

While the federal government covers the subsidies, the insurers have to pay when medical services are rendered. The increase in the number of the sick and the poor using healthcare has some insurers losing money on Obamacare.

In fact, yesterday (Thursday) UnitedHealth Group Inc. (NYSE: UNH) said it would probably pull out of the Obamacare exchanges altogether in 2017 because the plans were becoming such a drag on profitability.

Obamacare mandates that many preventive services be covered, which has also raised the cost of the plans.

So the insurers had three choices: offer the insurance at a loss, drastically raise premiums, or jack up the deductibles. Premiums have gone up somewhat, but for the most part, insurers have opted to raise deductibles.

Even employer-sponsored health insurance has felt part of the impact of these changes.

Obamacare Facts: Employer-Sponsored Plans Affected, Too

Remember, all health insurance plans must comply with Obamacare's mandates, so employer-sponsored health insurance is growing more costly as well. And insurers also may be trying to recoup some of the losses from the Obamacare plans.

So more employer-sponsored plans are including deductibles, and those that already had deductibles are seeing increases. As of 2014, 41% of U.S. workers with employer-sponsored health insurance had high-deductible plans.

Like their middle-class counterparts with Obamacare plans, such workers have started to forego needed medical treatment because they can't afford it - about 30%, according to the Commonwealth Fund.

Kentucky physician Praveen Arla told USA Today that 45% of his patients had commercial insurance, while 25% were on Medicaid. Now it's the other way around.

"It's flip-flopped," Arla said, recounting that patients with employer-sponsored insurance tell him, "'My deductible is so high. I'm trying to come to the doctor as little as possible. ... What is the minimum I can get done?' They're really worried about cost."

Six years after the ACA passed and two years after it launched, the law has improved the lives of some - the poor and the very ill - but at the price of saddling the wavering American middle class with a financial burden it cannot bear.

The Bottom Line: While Obamacare has made health insurance coverage available to many who did not have it before, it has pushed many middle-class Americans into high-deductible plans. That has made healthcare unaffordable for many middle-class Americans, about a third of whom are putting off needed medical care because they can't pay for it.

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About the Author

David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.

Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.

Dave has a BA in English and Mass Communications from Loyola University Maryland.

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