Who Has The Cheapest Health Insurance – “The legislation would direct about $20 billion more to insurers by making higher premium subsidies for consumers who buy qualified plans. . . . Expanding coverage is the path of least resistance . . . the result is that you’re adding an incredibly expensive system . . .”
As Democrats pushed a two-year extension of the Affordable Care Act into the Covid relief bill this month, many people celebrated the part that would make health insurance more affordable for more Americans.
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But health researchers see the move as a short-term solution to a long-term crisis that avoids facing an inconvenient truth: The only clear way to expand health insurance is through more government subsidies for the most expensive for-profit health plans. form of covering.
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Relying on private plans — a tough trade-off in the 2010 health care law designed to win the industry — already costs taxpayers tens of billions of dollars each year as the federal government takes away part of insurance premiums for about 9 million Americans. .
The price of the ACA will now rise even higher because of the recently passed $1.9 trillion COVID-19 relief bill. The legislation would direct about $20 billion more to insurance companies by making higher premium subsidies available to consumers who buy qualified plans.
And if Democrats want to extend the bailout beyond 2022, when additional aid under the Emergency Relief Act expires, the tab will surely crumble further.
“Expanding coverage is the path of least resistance,” said Paul Starr, a Princeton University sociologist and leading expert on the history of American health care, who called the dynamic “a health policy trap.”
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“Insurance companies have nothing to lose. Hospitals have little to lose. Pharmaceutical companies have little to lose,” Starr said. “But you end up adding an incredibly expensive system.”
Next year, taxpayers will shell out more than $8,500 for every American who receives subsidized health care through the insurance marketplaces created by the ACA, often called Obamacare. That’s about 40% more than the cost of market-based grants in 2020 due to increased aid, data from the nonpartisan Congressional Budget Office show.
Supporters of the relief package, known as Bailout USA, say the federal government needs to act quickly to help people affected by the pandemic.
“That’s why we pay tax. We want the federal government to be there when we need it most,” said Mila Coffman, who manages the D.C. insurance market. Cofman said the middle of a pandemic is not the time to “wait for the perfect solution.”
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But the government’s big new commitment underscores the gap between the high cost of private health insurance and cheaper public plans like Medicare and Medicaid.
Keenly aware of this discrepancy, the ACA’s creators created another way to offer health insurance to uninsured Americans alongside the marketplaces: Medicaid.
The half-century-old public health insurance system provides coverage for about 13 million low-income working-age adults who gained access to the program through the health care law and earn too little to qualify for subsidized commercial insurance.
But that’s about 18% less than what the government will pay to cover people through commercial health plans.
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“We knew it would be cheaper to switch to private plans than to subsidize people,” said former Congressman Henry Waxman, D-Calif., who, as chairman of the House Energy and Commerce Committee, helped write the Affordable Care Act and has been a long-time Medicaid advocate.
For patients, Medicaid offered another benefit. Unlike most commercial health insurance plans, which require enrollees to pay high deductibles before their coverage kicks in, Medicaid sharply limits the amount people must pay for doctor visits or hospital trips.
For example, let’s take a 50-year-old woman who lives outside of Phoenix and works part-time and pays $1,000 a month. With such a low income, the woman was able to enroll in Arizona’s Medicaid program.
If one day she slipped on the stairs and broke her arm, her medical bills would most likely be covered in full and she would be left with no expenses.
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If the same woman found a full-time job that paid $4,000 a month but didn’t have health benefits, she could still get coverage, this time through a commercial health plan in the Arizona Insurance Marketplace.
Taxpayers will still pick up part of the cost of her health plan, in this case about $300 a month, or half the $606 monthly premium for a basic silver plan from Oscar Insurance, according to KFF’s subsidy calculator. non-profit. The woman had to pay the rest of the monthly premium.
That means the same broken arm from her fall would likely leave her with more than $4,700 in medical bills, according to healthcare.gov’s federal cost estimate.
The main reason that commercial health plans cost more and patients have higher medical bills is that they typically pay hospitals, doctors and other health care providers more than government programs like Medicaid.
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For example, health insurance companies in the Atlanta area pay primary care physicians an average of $93 for a basic patient visit, according to a 2017 analysis of commercial insurance data by the nonprofit research organization Health Care Cost Institute.
By contrast, Georgia’s Medicaid program would pay the same doctor to see a patient covered by the state’s health care program just $41 under the state’s rate plan.
“It’s much cheaper to provide health insurance to people through government programs like Medicaid than it is to provide private insurance because the prices paid to doctors, hospitals and drug companies are much lower,” said Larry Levitt, executive vice president for policy of health care KFF.
The price difference also explains why the health care industry, including insurers and providers, has for years fought proposals to create a new government plan, or “public option,” that could pay less.
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Industry officials often argue that hospitals and doctors will not be able to operate unless they charge higher rates from commercial insurance companies to offset the low rates paid by government programs.
The Biden administration and Democrats in Congress have so far fought the issue by simply increasing subsidies to private health insurance companies.
Kaiser Health News (KHN) is a national health policy news service. This is an editorial-independent program of the Henry J. Kaiser Family Foundation, which is not affiliated with Kaiser Permanente.
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