Finding affordable healthcare: a closer look

obamacare

In this extended healthcare conversation on my blog I intend to focus both on the bigger questions (i.e. What are the ideal aims of a healthcare system? What are the standards by which we assess the merits of the different options available to us?) as well as the more concrete face of healthcare in America today.  Yesterday I focused on some big questions.  Today I’m going to focus more narrowly on one segment of the current healthcare system: the post-Affordable Care Act (ACA) market through which millions of Americans purchase their health insurance. Healthcare is expensive. In my biomedical ethics class at ACU I spend several class sessions exploring the topic of justice and healthcare. During this time we jump onto the healthcare.gov website to scope out the range of options that are available for consumers.  Most of my college students know very little about the pragmatics of health insurance and the cost of healthcare.  I want students to see in a more concrete way what the ACA does for consumers. I also want them to see some real numbers that cut through the bullshit that politicians throw around to muck up the conversation.

So that’s what I’m going to do on my blog today. Critics of Obamacare argue that healthcare reform has been a disaster. My question: with Obamacare in place, what healthcare options are available right now for a family that does not receive health coverage through an employer?  What are the costs of health coverage for families in this situation? In 2010, 48.6 million Americans were uninsured according the Centers for Disease Control. In 2015 the CDC estimates that this number stands at 28.6 million, and the latest data suggests that 2016 numbers will be even lower. That’s a notable achievement.

So to the question: what options are available for families in the market for health coverage? Earlier this morning I jumped onto the healthcare.gov website and created an imaginary family that is going to serve as the basis for comparing healthcare options. I want to do as much as possible to make this a typical American family. My imaginary family consists of 4 persons: a husband (age 43), a wife (age 47), and 2 children (male and female ages 17 and 13). Nobody in the home smokes, and nobody is pregnant. I patterned these details after my own family, save for the fact that I have three children, not two.  I set the yearly family income at $58,000/year, slightly higher than the $56,000/year that was the 2015 median income for US families according to the U.S. Census Bureau. I estimated the yearly healthcare needs for both spouses at the medium level, and both kids at the low level:

sample-family

median-income

Because each state has its own insurance market, I needed to decide the location for this family. I ran my scenario in two geographic locations, my current one in Texas (zip code: 79601) and my former location of residence in western PA where I was born and raised (zip code: 15825). I’m about to present some screen shots from healthcare.gov that illustrate some of the healthcare options available for my imaginary family in both places.  I’m also going to summarize some of these details and my own observations.

Let’s start with the family in western PA.  At $58,000/year, my family qualifies for a subsidy that will help to cover the cost of our health insurance.  The subsidy is estimated at $290/month:

estimated-savings-15825

What this means is that when I purchase health insurance for my family the state will provide an estimated tax credit that will cover $290 of the monthly cost of the plan.  With this estimate in mind, I then have the option to select from a range of plans that are available on the PA state market, broken into four tiers: Bronze, Silver, Gold and Platinum. These tiers reflect different levels of coverage.  Platinum plans provides more benefit than Gold, Gold more than Silver, and Silver more than Bronze. However, higher levels of coverage also entail higher monthly premiums for my family.  Within these four tiers I need to find a plan that (1) fits my family budget, and (2) provides a level of coverage that I deem acceptable for my family.  Running the numbers for my imaginary family of four, there are 10 plan options spread across the four tiers, with monthly premiums and total yearly costs as follows:

overview-of-plans-15825You will notice that health insurance is not cheap.  In Western PA I have only one Bronze plan to choose from, and it will cost my family $306/month once we factor in the tax credit (i.e. the plan is going to cost me $596/month without the credit). What does my $300 get me?:

bronze-plan-15825 This is a high deductible plan. My family will be responsible for the first $13,900 of healthcare expenses during the calendar year.  Primary care visits, however, will only cost my family $35, and I have a $30 copay for generic drugs. Visit to the emergency room? I’m responsible for the first $13,900 of expenses.  For the entire year I’m guaranteed to pay no more than $14,300 as a family.

What about silver plans?  Here I have a range of options.  Here is one:

silver-plan-15825

Notice that for $65 more per month I’m able to reduce my family deductible to $6000, and yearly out-of-pocket maximum to $11,400. This plan also offers a more robust range of copays ($300 for emergency room care after the deductible, $10 for generic drugs, $30 copay for primary care doctor, and $65 copay for the specialist doctor). I’ll present another silver tier plan option to illustrate some of the flexibility in this tier:

silver-plan-2-15825 For $390/month the family deductible is reduced to $3500 with a maximum out-of-pocket cost of $10,800, and copays reflected in the fourth column. What about gold plans?  At this higher tier I’m able to purchase a plan with a much lower deductible, but at the cost of a much higher monthly premium:

gold-plan-15825

For $554/month my family can purchase a plan that has a $1500 deductible and a maximum out-of-pocket cost of $7000, with copays that cover primary and specialist visits and generic drug purchases.

Finally, the platinum plan:

platinum-plan-15825

$1142/month is as much as a mortgage payment for many American families, so this extremely expensive plan will be a real stretch for my imaginary family of 4.  Notice that the deductible is only $500, however, and the yearly out-of-pocket-maximum is just $3,000.  There are low cost copays on generic drugs and primary care. To say it again, healthcare is expensive. Health insurance is expensive too.  However notice that in every one of these plans, my family would be paying $290 more for the plan without the tax credit that subsidizes the cost of care.  

Okay, so now let’s locate this family in west Texas.  First of all, notice that that the estimated premium tax credit is substantially greater for my family in TX than for the same family in PA. This is one feature of this exercise that requires some explanation for someone who knows more about how ACA tax credits are calculated. My question:  Why is it that my family is eligible for a $290/month tax credit in PA but a $1075/month credit in TX?:

estimated-savings-79601With this credit in hand, here is a summary of the Bronze, Silver, and Gold tier options for my family in TX:

overview-of-plans-79601

Unlike PA, here I have only three tiers of plans, with 18 options across the tiers.  The average cost for silver tier plans is slightly more in TX (about $36/month more), while the Bronze tier is substantially less (nearly $200/month less, likely because PA offers only one bronze tier option). The Gold tier plans in TX cost on average about $70/month more than in PA.

So what do these plans look like?  Consider the craziness of this plan:

bronze-plan-79601

With the insurance subsidy, my imaginary family can purchase a high deductible insurance plan-$13,100 deductible and out-of-pocket maximum–for, get this, just $6.19/month.  The plan is essentially a catastrophic coverage plan that offers no benefits until the deductible has been reached. That’s cheap.  Without the subsidy, the plan would cost this same family $1081.53/month.

What about Silver plans?  An example of what’s available for this family in TX:

silver-plan-79601

This is clearly much more expensive than the Bronze tier plan, above.  The advantage here is that I have a lower deductible–$8700 for my family–and primary care and specialist visits are covered with copays.  Generic drugs? No charge.

Finally, a gold tier option for the family in TX:

gold-plan-79601

For $736.25 my family is able to reduce its deductible to just $1500 for the year, with copays that cover primary and specialist visits and no charge for generic drugs. Once again, healthcare and health insurance are expensive. But without the tax credit all of these plans are $1075/month more expensive for my imaginary family.

This post has a lot of numbers, so let me close out by generalizing some observations:

(1) If access to healthcare is a fundamental goal for healthcare systems (as I argued above), then access to health insurance is critical to families that are unable to pay these expenses out-of-pocket, at least as long as we live in a healthcare system where insurance providers are the primary means that consumers use to pay for these costs.

(2) With all of the talk today about repealing Obamacare, it would be helpful for advocates of repeal to lay out for us what healthcare and insurance access looks like for a family like the one I describe above in as much concrete detail as I’m able to offer here.  I want to know: if a family of 4 is able to receive the benefits outlined in the plans above at the prices described, what benefits and prices are advocates of repeal willing to make to this family?  Is the promise that families will be able to receive better benefits at lower prices?  Show it.  I’m open to being persuaded.

(3) No doubt there is more here that needs to be considered. The subsidies that this family depends on for access to care are funded by taxpayers, and the cost of subsidies scales with the escalating cost of healthcare, so there is a level of burden that raises questions of sustainability. I don’t have an easy answer here, so this may be worth returning to in a later post.

The current administration has promised to “broaden healthcare access, make healthcare more affordable, and improve the quality of care available to all Americans.” I’m ready to hear how critics of Obamacare intend to achieve these desirable ends.

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