Study: Growing Healthcare Coverage Causes Decline in ‘Substantial’ Costs for Consumers

  • By Rebecca O'Rork
  • 10 Feb, 2017

Researchers for The Commonwealth Fund find out-of-pocket expenses decline overall for consumers who do not qualify for Medicaid.

A majority of consumers “spend very little” on healthcare in any given year since the Affordable Care Act health insurance marketplaces opened in 2014, according to an issue brief from researchers for The Commonwealth Fund .

“Since 2014, when the Affordable Care Act's health insurance marketplaces opened and states were able to expand Medicaid eligibility under the law, the rate of growth in out-of-pocket spending has slowed and the share of Americans reporting medical bill programs and cost-related delays has declined,” according to the brief's authors Sherry A. Glien, dean at the Robert F. Wagner School of Public Service, New York University; Claudia Solís-Román, research scientist at New York University; and Shivani Parikh, M.P.A. student at the New York University Robert F. Wagner Graduate School of Public Service.

The researchers evaluated the change in out-of-pocket cost-sharing expenses and out-of-pocket spending on premiums between 2013 and 2014, when Affordable Care Act coverage expansions occurred, for consumers who do not qualify for Medicaid based on their income.

“The probability of incurring high out-of-pocket costs and premium expenses declined as marketplace enrollment increased,” according to the report.

The researchers' data analysis focuses on consumers living between 133 and 249 percent of the federal poverty level (FPL) who qualify for cost-sharing reductions and premium subsidies; consumers between 250 and 399 percent of the FPL who qualify for the subsidies but not cost-sharing reductions; and consumers at 400 percent of the FPL or higher who do not qualify for cost-sharing reductions or subsidies, according to the report.

In 2013, before the Affordable Care Act marketplaces opened, approximately 31 percent of consumers with incomes at more than 133 of the FPL spent at least $500 on out-of-pocket cost sharing, according to the report. “Relatively few people—less than 3 percent—in any income group—incurred out-of-pocket cost-sharing expenses as high as $5,000.”

Between 2013 and 2014 the number of consumers in that group spending more than $500 on cost sharing expenses declined by about 2.3 percent, according to the report. “The share who spent more than $2,000 declined by 0.3 points, with this decline concentrated among those with lower incomes; and the share who spent more than $5,000 decreased by 0.2 percentage points.”

Overall, in 2013, about 50 percent of consumers with incomes outside of the Medicaid-eligibility range spent more than $500 on premiums and out-of-pocket costs, according to the report. Approximately 10 percent spent more than $5,000 on those expenses.

“We found the likelihood that people with incomes above 133 percent [of the] FPL spent above the out-of-pocket cost-sharing thresholds general decreased as the marketplace enrollment increased,” according to the report.

Enrollment in marketplace plans, among consumers younger than age 65, increased from 0 percent in 2013 to 2.6 percent by mid-year 2014.

“This rise in enrollment … was associated with about a two-percentage-point decline in the share of Americans spending more than $500 on out-of-pocket expenses, a one-point decline in the share of spending more than $2,000, and a 0.4-point decline in the share spending more than $5,000. These reductions are large relative to the baseline rates: they are equal to 7 percent, 9 percent, and 17 percent, respectively, of the share of individuals who had out-of-pocket costs exceeding these thresholds in 2013,” according to the report.

The net effect of increased healthcare coverage for consumers is in turn a reduction in the number “facing substantial costs,” the researchers conclude. “Despite this good news, it is important to note that many Americans continue to find that premiums and cost-sharing impose a large burden that makes it difficult to access care.”

The researchers also note that a majority of consumers have health insurance through their employers and “for them, increases in healthcare costs lead to rising spending, particularly on premiums. Containing overall healthcare costs is therefore critical to maintaining both access to care and protection against high out-of-pocket spending.”

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