24 Million With 'Good' Insurance Struggle With Medical Bills Each Year, Study Finds

Employer health plans are popular, but their coverage is becoming less and less adequate.

One of the biggest obstacles to “Medicare for All” and other ambitious health reform proposals is that a majority of Americans already have private health insurance through employers.

These job-based plans have been around a long time and they are relatively popular, judging by the polls. Anytime the national conversation turns toward regulating or eliminating them ― or taking other sweeping action that might affect employer plans indirectly ― voters get skittish.

That goodwill makes it easy to assume the plans provide comprehensive, reliable coverage. They frequently don’t, as a new study from the nonpartisan Commonwealth Fund makes clear.

Roughly 24 million Americans with employer plans are struggling with “high medical costs” annually, the researchers concluded after examining two years of U.S. Census data. And that number is bound to increase in the future, at least as long as the price of medical care keeps going up.

“High medical costs” is an inherently subjective term and the definition that the researchers used is complex. For the majority of Americans, the study considered a “high” cost as anytime somebody with an employer plan had to spend more than 10% of their household income on either out-of-pocket expenses or the employee share of premiums.

For Americans living at or below twice the federal poverty line, out-of-pocket expenses of just 5% of household income counted as high medical costs ― on the theory that, at such low incomes, even relatively small copayments or deductibles were enough to cause financial hardship.

The study’s authors chose those benchmarks because, based on past research, the numbers seemed likely to correspond roughly with the point at which people would begin rationing their own health care, by delaying or skipping treatments, because they could not afford it.

“It’s not precise, but it’s a measure of affordability where people start to make different decisions about getting health care,” co-author Sara Collins, the Commonwealth Fund’s vice president for health care coverage and access, told HuffPost. “They have higher rates of reporting not getting needed health care because of cost, not filling prescriptions, delaying going to the doctor or getting a follow-up visit.”

Some 24 million Americans might not sound that many, given that they represent only one-sixth of the total population with job-based coverage. But only a fraction of people have serious medical expenses in a given year, which means that, among those who actually need their insurance, a much higher proportion find employer coverage inadequate.

“Cost protections have eroded for those who have employer-sponsored health coverage, putting the burden of health care costs on workers and their families.”

- David Blumenthal, president of the Commonwealth Fund

Whatever the proportions, 24 million is still quite a lot of people. For context, it’s larger than the number of people who have obtained insurance through the Affordable Care Act. And the number is only going to increase.

The real driving force behind this trend is the fact that the price of medical care is rising faster than wages. Inevitably, employees will be left paying more and more for their care through higher premiums, higher out-of-pocket costs or both.

“There is growing evidence that cost protections have eroded for those who have employer-sponsored health coverage, putting the burden of health care costs on workers and their families,” David Blumenthal, the Commonwealth Fund’s president, said in a press release accompanying the report. “In addition to policy fixes, we need systemwide efforts to slow the rate of growth in health care costs and ensure better outcomes.”

The new study shouldn’t come as a great shock, because lately there’s been a steady flow of stories and studies documenting the increasing inadequacy of employer coverage.

Just a few weeks ago, in a joint survey on employer coverage by the Henry J. Kaiser Family Foundation and the Los Angeles Times, about half of the respondents said that “someone in their household skipped or postponed some type of medical care or prescription drugs in the past year because of the cost.”

The summary of the Commonwealth Fund report includes some discussion of policy remedies, with a focus on narrow but relatively easy-to-enact initiatives such as offering new, direct subsidies to people with employer coverage in order to offset their costs. Democratic lawmakers have been proposing and trying to pass these sorts of measures over the past few months. Republicans have not supported them and, in general, have opposed any legislation that would require spending more government money, as these reforms inevitably would.

The Commonwealth Fund report also mentions that “more attention needs to be paid to what we pay hospitals and physicians.” That’s an oblique way of suggesting that the only long-term solution to rising health care costs may be to have the government set overall budgets or directly regulate prices, as the national health systems of other countries do.

That kind of price regulation is a key piece of Medicare for All, which is getting so much attention from progressive Democrats in Congress and in the 2020 presidential campaign. Price regulation is also a feature of some less ambitious reforms, including the “Medicare for America” plan that would create a large new public program but allow employer coverage to remain in place.

Proposals for even modest price regulation face stiff opposition, not just from Republicans but also from the health care industry. The same goes for plans like Medicare for All that would wipe away employer coverage altogether.

But without some kind of dramatic change, the financial burden of medical care is likely to crush more and more people, including a whole bunch who have “good” insurance.

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