Back to THE COMMONWEALTH FUND

Barbara Doucet of Newnan, Georgia, has been waiting for affordable health insurance for years. A restaurant server, she has been uninsured almost continuously for 15 years and, until she visited an urgent care clinic a couple of months ago, hadn’t seen a doctor in 14 years. At 63, Doucet is, in her words, “stoked” about the Affordable Care Act. 

 

Doucet signed up for a health plan through HealthCare.gov on Dec. 3, and is paying just a penny a month for that coverage because she qualifies for a tax credit covering all of her $660 premium. Her “silver” plan (plans range from bronze to platinum) has a $500 deductible and a $750 annual maximum on out-of-pocket expenses. Doucet is paying so much less than she expected that she also picked up a $30-a-month dental plan so she can get some much-needed work done on her teeth.

“I’ll be able to really sleep at night because I won’t be terrified: ‘Oh my God, what happens to me if I slip and fall in the bathtub?,’” said Doucet a few weeks before her coverage kicked in on January 1. “And I won’t have to worry about going through bankruptcy again.”

84 Million People

Lying in bed worrying about how to pay for health care had become a routine part of life in the U.S. for many working people. According to a 2012 Commonwealth Fund survey, 84 million people, or nearly half of working-age Americans, were uninsured or underinsured in 2012, which means their out-of-pocket health care expenses consumed 10 percent or more of their income. The report also found that 43 percent of adults skipped needed treatment or did not fill a prescription because it cost too much. And 41 percent of adults reported problems with medical bills or medical debt.

Not surprisingly, the problems are starkest among those with low to moderate incomes. More than half of adults making less than $57,625 a year in 2012 said they had cost-related issues getting health care. And many people earning between $30,657 and $57,625 took major financial hits because of steep medical bills: 53 percent received a lower credit rating, 32 percent were unable to pay for basic necessities such as rent, food, or heat, and 24 percent were forced to delay their career or education plans.

“I’ll be able to really sleep at night because I won’t be terrified: ‘Oh my God, what happens to me if I slip and fall in the bathtub?,’” said Doucet a few weeks before her coverage kicked in on January 1. “And I won’t have to worry about going through bankruptcy again.”

The New Coverage Options

The Affordable Care Act was designed, in part, to help prevent people like Doucet from skipping care or going bankrupt if they are unlucky enough to get sick or injured. Under the law, as of October 2013, each state has a health insurance marketplace, operated by the state or the federal government, through which people without affordable employer-sponsored or public coverage can buy a private health plan. Individuals earning up to $46,000 a year, and families of four earning up to $94,000, are eligible for federal subsidies, or tax credits, to help cover premiums costs. In addition, small businesses with fewer than 50 employees can shop for coverage for their workers on the Small Business Health Options Program (SHOP) Marketplace.

The Affordable Care Act also called for expanding Medicaid in every state to people earning up to 138 percent of the poverty level, the equivalent of about $16,000 a year for an individual. But after the U.S. Supreme Court determined in 2012 that state participation in the Medicaid expansion was optional only 26 states are expanding Medicaid.

The ACA also requires all health plans—whether sold in or out of the marketplaces—to offer an essential benefit package, including outpatient and emergency care, maternity care, and other services. Within the marketplaces, there are four tiers of plans—bronze, silver, gold, and platinum—that each offer a different level of cost-sharing for consumers. So a bronze plan covers between 60 percent and 69 percent of a person’s estimated medical expenses for the year, while a platinum plan covers more than 90 percent of estimated bills.

For comparison, in 2010 about two-thirds of people with employer-sponsored coverage had the equivalent of a gold or platinum plan, while about half of those who bought coverage for themselves had plans with benefits that were less comprehensive than a bronze plan. Many of these skimpy plans were canceled by insurers at the end of 2013 because they did not meet ACA standards.

David Weidman, 51, of Los Angeles, had such a plan prior to January 2014. A realtor, Weidman was buying his own coverage as well as coverage for his 10-year-old daughter, Lulu, on the individual market. Prior to this year, there were few consumer protections in individual health insurance market in most states: women were charged more than men, people with preexisting conditions were denied coverage, and premiums and deductibles were often prohibitively high. In fact, a 2011 Commonwealth Fund survey found nearly half of people who sought a plan on the individual market didn’t end up buying one.

Weidman’s plan, which was canceled at the end of 2013, cost about $600 a month, with a $5,000 deductible. His new coverage, purchased over the phone through Covered California on October 3, costs him $192 a month, thanks to a tax credit based on his estimated 2014 income. (Weidman will pay back the Internal Revenue Service [IRS] some of his monthly subsidy of $360 at the end of the year if his income is higher than anticipated. If his income is lower than his estimate, the IRS will credit him.) He also has a more manageable $500 deductible and broader coverage with the silver plan he selected. His daughter is now covered through MediCal, which has no premium.

This winter, Weidman plans to have nasal polyp surgery, something he had been postponing while on his old coverage because of its $10,000 price tag. This sinus surgery is covered under his new marketplace plan.

David's previous coverage costs:

David's new 

Michael A., 49, and his wife, Catherine, of Montclair, New Jersey, were also buying their own coverage for themselves and their two children before the ACA marketplace opened. Both are self-employed: Michael is a composer for film and TV and his wife is a psychotherapist in private practice. They paid $1,300 a month for their former coverage.

“We opted to get a fairly minimal plan and just pay for things as they came up,” Michael says. “It was a compromise between having and not having insurance—hospitalizations would be covered. But it turns out that our son has a condition that requires electrocardiograms (EKGs) and we have a $500 limit per year on outpatient testing and that covers nothing. Anytime any of us needs an EKG or blood work, we’re paying in full out of pocket.”

In the New Jersey marketplace, Michael and his wife chose a gold plan that will cover 80 percent of the costs of their son’s routine medical tests, with a full premium of $1,893, a deductible of $2,000, and an out-of-pocket max of $5,000. With the subsidy they qualify for under their 2014 estimated income, he and his wife are paying considerably less than they were before, for better coverage. They have some concerns about the accuracy of their 2014 estimated income, however, since they are right on the subsidy line. If Michael and his wife make more than they did in 2013, their plan would become unaffordable.

Yet, overall, Michael is comforted by the fact that he and his wife will be able to change plans during the next enrollment period if necessary, and that their coverage is so much more comprehensive.

“When we hear on the news about these non-ACA compliant plans and how three out of four people who go bankrupt because of a health event had insurance…I definitely feel like we were in line to join them. If something major had happened, it’s very possible that it would have been more than we could have handled financially. And having some familiarity with the ACA and knowing what it mandates in terms of minimum coverage I feel a lot safer and more secure, and like that I’m going to actually have insurance in the literal sense of the word.”

“When we hear about how three out of four people who go bankrupt because of a health event had insurance…I definitely feel like we were in line to join them. Having some familiarity with the ACA, 

Ensuring Marketplace Success. Enrollment in the marketplaces, which began in October, was not made easy by the technical problems that plagued HealthCare.gov and many of the state websites. In fact, Michael and his wife hit online snags that delayed their enrollment and required repeated customer support calls. Fortunately, enrollment has grown at a fast pace since December, reaching 4 million by mid-February. People have until March 31 to sign up for coverage in 2014 and not face a penalty for being uninsured.

The Commonwealth Fund’s latest Affordable Care Act tracking survey finds that awareness of the new coverage options stands at 63 percent among the potentially eligible, indicating there’s more to be done to bring people into the marketplaces. Yet, among eligible people who are aware, there is still definite interest. According to the survey, 59 percent of adults who either had not yet gone to their marketplace, or had visited it but not yet applied for or enrolled in a plan, said they were likely to visit by the end of March 31 to enroll or find out if they are eligible for financial help.

One factor considered key to the success of the marketplaces is the participation of healthy people and young adults, who have high rates of uninsurance, in order to spread out insurers’ risk and keep premiums low. While the makeup of the enrollees is still not clear, the Commonwealth Fund marketplace survey data suggest that by December, 41 percent of marketplace visitors were ages 19 to 34, and more than three-fourths of all visitors reported that they were in good health. A recent Commonwealth Fund study found that the health status of enrollees of all ages was more important to the success of the marketplaces than young adult participation.

 

Alison Megliola, 30, of Los Angeles, signed up for a bronze plan through Covered California in October. Megliola recently completed a master’s degree in nutrition and is doing a required internship without benefits at the Veterans Administration Greater Los Angeles Healthcare System. With her basic plan, she says, there’s a high deductible of $5,000 but her monthly premium is just $25, with her subsidy of $188. “I got insurance for peace of mind,” she says. “I run a lot and am concerned about injuries or getting hit by a car. On the other hand, I am a healthy person and rarely go to the doctor.”

Megliola adds that her plan covers her first three doctors' visits entirely, so she can get a yearly exam and two other visits “before I start chipping away at my deductible.”

While the Affordable Care Act’s coverage expansion won’t wipe out people’s worries about their health and health care, it will, for many, provide a stronger sense of financial security. And someone like Barbara Doucet will no longer have to “self-medicate” at the local Walgreen’s or Publix because she can’t afford to go to the doctor. “It was getting tougher every day.”