Abstract
One-quarter of privately insured working-age adults have high health care cost burdens relative to their incomes in 2015, according to the Commonwealth Fund Health Care Affordability Index, a comprehensive measure of consumer health care costs. This figure, which is based on a nationally representative sample of people with private insurance who are mainly covered by employer plans, is statistically unchanged from 2014. When looking specifically at adults with low incomes, more than half have high cost burdens. In addition, when privately insured adults were asked how they rated their affordability, greater shares reported their premiums and deductible costs were difficult or impossible to afford than the Index would suggest. Health plan deductibles and copayments had negative effects on many people’s willingness to get needed health care or fill prescriptions. In addition, many consumers are confused about which services are free to them and which count toward their deductible.
BACKGROUND
More Americans than ever before have private health insurance, in large part because of the coverage expansions of the Affordable Care Act (ACA), now in their third year.1 At the same time, as more people than ever are gaining coverage, many of those enrolled in private plans, including employer-based and ACA marketplace plans, have high deductibles and other forms of cost-sharing. These elements can place a great financial burden on individuals and families, especially those with low or moderate incomes.2
This issue brief draws from the second installment of the Commonwealth Fund Health Care Affordability Tracking Survey to measure the extent to which U.S. adults have high health care cost burdens.3 We created what we call the Commonwealth Fund Health Care Affordability Index, a composite measure that assesses the share of U.S. adults who have high premium costs, high deductibles, and/or high out-of-pocket health care costs relative to their incomes (see graphic below). In addition, we asked adults about how they perceive the affordability of their premiums, deductibles, and copayments or coinsurance. Adults also told us how their deductibles and copayments affected their health care decisions in the past year.
The data reflect the health insurance and health care expenditures reported by adults who were insured continuously all year with private insurance through an employer, the Affordable Care Act’s marketplaces, or the individual market.4 The majority of the survey sample has employer coverage (90%), but the sample also includes people in marketplace plans (6%) and with individual coverage (5%). In the survey, 61 percent of U.S. adults had been insured continuously with private coverage for the prior 12 months, up from 56 percent one year earlier (data not shown).
FINDINGS
How Many Privately Insured Adults Have Unaffordable Health Care Costs?
In the 12-month period ending in July–August 2015, 25 percent of privately insured adults had unaffordable health care costs as measured by the Affordability Index. (Exhibit 1, Table 1). In other words, these adults either had premiums, deductibles, or out-of-pocket costs that were unaffordable as measured by the threshold levels in the Index: 13 percent of adults had premiums that were unaffordable, 10 percent had unaffordable deductibles, and 11 percent had unaffordable out-of-pocket costs.5 The percentage of adults with unaffordable costs is lower than it was in 2014, but it is statistically unchanged from that year.
Insurance and health care costs had by far the greatest impact on the budgets of low- and moderate-income families (Exhibit 2, Table 2). More than half (53%) of privately insured adults with incomes under 200 percent of poverty ($23,340 for an individual or $47,700 for a family of four) had unaffordable health care costs.6 Three of 10 (30%) adults with moderate incomes (up to $46,680 for an individual or $95,400 for a family of four) had unaffordable costs, which was double the rate of higher-income adults.
How Do Consumers Rate the Affordability of Their Premiums, Deductibles, and Copayments?
We asked adults for their thoughts on how affordable their health insurance costs and cost-sharing responsibilities are. Our measures of affordability for premiums and deductibles diverged from consumers’ views. According to our Affordability Index, 13 percent of privately insured adults had unaffordable premiums (Exhibit 1). However, one-quarter of privately insured adults said their premiums were difficult or impossible to afford (Exhibit 3). Adults with low and moderate incomes were more likely to report that their premiums were difficult to afford than higher-income adults.
People reported even greater difficulty affording their health plan deductibles. According to our Affordability Index, 10 percent of privately insured adults had unaffordable deductibles. (Exhibit 1). However, when we asked privately insured adults about their views of how easy or difficult it was to afford their deductible, 43 percent said their deductible was difficult or impossible to afford (Exhibit 4). Half of low- and moderate-income adults expressed difficulty affording their deductibles. In addition, a large share (32%) of adults with higher incomes reported it was difficult to afford their deductibles.
People had fewer problems affording copayments and coinsurance when they visited a doctor or filled a prescription (Exhibit 5). However, the lowest-income adults reported struggling with these costs. One-third (34%) of adults with incomes under 200 percent of poverty said it had been difficult or impossible to afford their copayments or coinsurance when they had gone to the doctor or filled a prescription in the past year.
How Do Deductibles and Copayments Affect People’s Health Care Decisions?
Employers and insurers have made the argument that deductibles and copayments in health plans create disincentives for consumers to overuse health care or use services that might be of limited value. The survey finds evidence that cost-sharing also creates disincentives for people to get necessary care, like going to the doctor when they are sick or filling prescriptions for their medications. These findings are consistent with past research conducted by The Commonwealth Fund.7
Effects of Deductibles on Health Care Decisions
We asked adults whether their deductibles had affected their decisions to get needed health care over the past year. Adults whose deductibles were high relative to their income were significantly more likely to report delaying or avoiding needed health care than those with lower deductibles. Two of five (40%) adults with deductibles that amounted to 5 percent or more of income reported that because of their deductible: they had not gone to the doctor when sick, did not get a preventive care test, skipped a recommended follow-up test, or did not get needed specialist care (Exhibit 6). Adults with lower deductibles relative to their income were less likely to avoid needed care, but one of five (21%) said they did not get needed care because of their deductible.
Many people with deductibles appeared to be confused about which services count toward that amount—that is, how much they need to pay in full before their insurance kicks in—and which services are paid outright by their insurance and therefore, free to them. Under the Affordable Care Act, all health plans, including employer plans, must provide free preventive care services, such as cancer and cholesterol screenings, regardless of whether an individual has met his or her deductible (see box below). But despite this protection, 18 percent of adults with high deductibles relative to their income and 10 percent of those with lower deductibles relative to their income said they did not get a preventive care test because of their deductible.
|
Preventive Care and Other Exclusions from Deductibles For plan years beginning on or after September 23, 2010, all nongrandfathered group health plans (including self-insured plans), individual market, and marketplace plans are required by law to cover recommended preventive services without charging copayments, coinsurance, or deductibles.8 Covered services include those that the United States Preventive Services Task Force rate as either “A” (high certainty that the net benefit is substantial) or “B” (high certainty that the net benefit is moderate); immunizations recommended by the Advisory Committee on Immunization Practices; and evidence-informed preventive care and screening for infants, children, adolescents, and women, supported by the Health Resources and Services Administration. While these standards apply nationwide, there is variation across states in other services that are excluded from consumers’ deductibles. California’s marketplace Covered California, for example, excludes physician visits and outpatient services from the deductible for all silver level and higher plans.9 A CMS analysis of silver level plans in 2015 found that 80 percent of consumers selected plans that had one of seven service exclusions including primary and specialty care visits, generic and brand name drugs, mental health and substance use disorders services.10 |
To further probe people’s understanding of their deductibles, we asked adults who had a deductible whether their health plan covered the full cost of preventive care services. Nearly two of five (37%) adults either said their health plan did not fully cover preventive services or that they didn’t know if it did (Exhibit 7). Adults with lower incomes were more likely to be unaware that their health plans covered these services, compared to adults with higher incomes (49% vs 32%).
Effects of Copayments and Coinsurance on Health Care Decisions
Copayments and coinsurance also created disincentives for many people—especially those with low incomes—to get needed health care services. Two of five (39%) adults with incomes under 200 percent of poverty ($23,340 for an individual or $47,700 for a family of four) said that because of their copayments or coinsurance, they had either not filled a prescription, not gone to the doctor when they were sick, skipped a medical test or follow-up visit recommended by a doctor, or not seen a specialist when they or their doctor thought they needed one (Exhibit 8). One of five (19%) adults with relatively higher incomes also reported that their copayments were barriers to filling prescriptions or getting needed medical care.
Many Adults Report Receiving Surprise Provider Bills
The reality of a high deductible or copayment for a prescription drug can be a bracing experience for families when someone falls ill. But while the deductible is a known potential cost at the time of enrollment, there have been widespread anecdotal reports about people who have received surprise bills from providers that were assumed to be in network. For example, a patient may have surgery in an in-network hospital by an in-network surgeon, but receive a bill from an anesthesiologist who is outside the network. Providers outside a plan’s network may charge patients the difference between their allowed amount and what they charge. This is commonly known as “balance billing.”
We asked adults whether there had been a time over the past year when a provider charged anyone in their family more than the insurance would pay and then billed them for the difference. Three of 10 (29%) respondents reported they had experienced this (Exhibit 9). We then asked these adults why they believed this had happened: 36 percent said it was because they had not yet met their deductible and 26 percent said it was because the provider was not within their network.
CONCLUSION AND POLICY IMPLICATIONS
The Commonwealth Fund Health Care Affordability Index indicates that one-quarter of Americans with private health insurance had premiums, deductibles, and/or out-of-pocket costs that were unaffordable in 2014 and 2015. But a larger portion of adults viewed key components of the Index—premiums and deductibles—as more difficult to afford than the Index would suggest.
Ultimately, consumers’ perceptions of cost and their understanding of their health plans are what matter most. If people believe that their deductibles or copayments are unaffordable, it will affect the way they make health care decisions. Two of five adults who had high deductibles according to our Index reported not getting needed care because of their deductible, including not going to the doctor when they were sick or delaying or not getting a follow-up test recommended by a physician. But one of five adults with deductibles that were considered “affordable” according to the Index also said they delayed needed care because of their deductible. In addition, some people seemed to be unclear about which services were free to them and which were subject to meeting a deductible limit.
Our measure of premium affordability is based roughly on the definitions of premium affordability for marketplace and employer plans under the ACA. But it is a conservative measure. For example, the Index would not identify someone with a low income as having an unaffordable premium if he or she was spending less than 7 percent of income on an employer premium, but more than they would spend if they were enrolled in a subsidized marketplace plan or Medicaid.
Perceptions of premium affordability also affect consumer behavior. A recent Commonwealth Fund survey found that 47 percent of adults in marketplace plans viewed their premiums as difficult to afford.11 In addition, 57 percent of people who visited the marketplaces in the last open enrollment period but failed to sign up said they could not find an affordable health plan.12 Among those who didn’t get coverage elsewhere, more than half had incomes that made them eligible for premium subsidies. Some people may not realize that they are eligible for subsidies or understand the actual costs of marketplace plans once subsidies are factored in. Others may simply view their premiums as unaffordable to them, despite what the law considers “affordable” in theory.
In the current open enrollment period, the federal and state governments are aiming to simplify the marketplace shopping experience to help consumers better understand their choices. In addition, if more states choose to expand their Medicaid programs, there will be more affordable choices for many low-income people, including those who currently have employer coverage. But ultimately, to reach the goal of allowing all Americans to have access to affordable health insurance and health care, policymakers must listen carefully to what consumers are telling them about their costs.
Notes
1 According to the federal National Health Interview Survey, from January to June of 2015 the share of working age adults with private health insurance climbed to 70.6 percent, up from 64.2 percent in 2013, just prior to the major coverage expansions. The share of nonelderly adults with coverage through either Medicaid or Medicare rose from 16.7 percent to 18.2 percent. M. E. Martinez and R. A. Cohen, Health Insurance Coverage: Early Release of Estimates from the National Health Interview Survey, January–June 2015 (Washington, D.C.: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Health Statistics, Nov. 2015).
2 S. R. Collins, M. Gunja, P. W. Rasmussen, M. M. Doty, and S. Beutel, Are Marketplace Plans Affordable? Consumer Perspectives from the Commonwealth Fund Affordable Care Act Tracking Survey, March–May 2015 (New York: The Commonwealth Fund, Sept. 2015); G. Claxton, M. Rae, N. Panchal et al., “Health Benefits in 2015: Stable Trends in the Employer Market,” Health Affairs, Sept. 2015 34(10):1779–88; S. R. Collins, P. W. Rasmussen, S. Beutel, and M. M. Doty, The Problem of Underinsurance and How Rising Deductibles Will Make It Worse—Findings from the Commonwealth Fund Biennial Health Insurance Survey (New York: The Commonwealth Fund, May 2015); and C. Schoen, D. C. Radley, and S. R. Collins, State Trends in the Cost of Employer Health Insurance Coverage, 2003–2013 (New York: The Commonwealth Fund, Jan. 2015).
3 S. R. Collins, P. W. Rasmussen, M. M. Doty, and S. Beutel, Too High a Price: Out-of-Pocket Health Care Costs in the United States— Findings from the Commonwealth Fund Health Care Affordability Tracking Survey, September–October 2014 (New York: The Commonwealth Fund, Nov. 2014).
4 Unlike the Commonwealth Fund Affordable Care Act Tracking Surveys, we did not oversample for people enrolled in marketplaces plans, so we group people who have coverage through these three sources of private coverage. See, for example, Collins, Gunja, Rasmussen et al., Are Marketplace Plans Affordable? 2015.
5 The majority of adults in the sample reported per-person deductibles; 2 percent reported a family deductible amount.
6 The Health Care Affordability Index for this income group declined from 62 percent in 2014 to 53 percent in 2015, but the change was not statistically significant.
7 Collins, Rasmussen, Beutel et al., The Problem of Underinsurance, 2015; and Collins, Rasmussen, Doty et al., Too High a Price, 2014.
8 U.S. Department of Health and Human Services, “Preventive Services Covered Under the Affordable Care Act” (Washington, D.C.: DHHS, Sept. 22, 2015); and Centers for Medicare and Medicaid Services, “Affordable Care Act Implementation FAQs—Set 12” (Washington, D.C.: CMS).
9 J. C. Robinson, P. Lee, and Z. Goldman, “Whither Health Insurance Exchanges Under the Affordable Care Act? Active Purchasing Versus Passive Marketplaces,” Health Affairs Blog, Oct. 2, 2015.
10 K. Counihan, “Five Facts About Deductibles,” The CMS Blog, Centers for Medicare and Medicaid Services, Nov. 17, 2015.
12 S. R. Collins, M. Gunja, M. M. Doty, and S. Beutel, To Enroll or Not to Enroll? Why Many Americans Have Gained Insurance Under the Affordable Care Act While Others Have Not (New York: The Commonwealth Fund, Sept. 2015).
|
HOW THIS SURVEY WAS CONDUCTED
The Commonwealth Fund Health Care Affordability Tracking Survey, July–August 2015, was conducted by SSRS from July 15 to August 9, 2015, as a part of SSRS’s weekly, nationally representative omnibus survey. The survey consisted of a 15-minute telephone interviews in English or Spanish and was conducted among a random nationally representative sample of 2,762 adults ages 19 to 64 living in the continental United States. Overall 1,060 interviews were conducted with respondents on landline telephones and 1,702 interviews were conducted on cellular phones, including 1,116 with respondents who live in households with no landline telephone access. This is the second wave of the Affordability Tracking Survey. The first wave was conducted from September 10 to October 5, 2014. The analysis in this issue brief focuses on 1,687 adults who were insured continuously for the prior 12 months with private coverage, either through an employer, the Affordable Care Act’s marketplaces, or the individual market. The majority of the sample comprises people in employer-based plans.
The data are weighted to adjust for the fact that not all survey respondents were selected with the same probabilities, the overlapping landline and cellular phone samples, and disproportionate nonresponse that might bias results. Data are weighted to the U.S. 19-to-64 adult population by age, race, gender, region, marital status, education, and population density, based on the U.S. Census Bureau’s 2014 March Supplement to the Current Population Survey and household telephone use using the CDC’s National Health Interview Survey. The resulting weighted sample is representative of the approximately 190.7 million U.S. adults ages 19 to 64.
The survey has an overall margin of sampling error of +/– 2.1 percentage points at the 95 percent confidence level. The landline portion of the survey achieved a 10 percent response rate and the cellular phone sample achieved a 5.5 percent response rate. The overall response rate was 6.9 percent. |
|
ABOUT THE COMMONWEALTH FUND HEALTH CARE AFFORDABILITY INDEX The Commonwealth Fund Health Care Affordability Index is a composite measure that assesses the percent of adults ages 19–64 who were insured all year with either employer, individual, or marketplace coverage and had high premium costs, high deductible costs, or high out-of-pocket costs relative to income. Below is our rationale for our threshold measures of affordability. Premiums Under the Affordable Care Act, workers covered by employer health plans who have premium contributions greater than 9.5 percent of their income for single coverage are potentially eligible for subsidies to purchase health plans in the health insurance marketplaces. People who buy coverage through the marketplaces are eligible for subsidies that effectively cap their premium contributions as a share of income. People with incomes of 100 percent of the federal poverty level pay no more than 2.01 percent of their income for a benchmark plan. Premium contributions rise with income: at 200 percent of poverty people pay no more than 6.34 percent of income and at 300 percent to 400 percent of poverty no more than 9.56 percent.a Therefore, we define someone as having a high premium cost burden if their:
Deductibles For deductibles and out-of-pocket costs on medical care, we use threshold levels relative to income, as developed previously for The Commonwealth Fund’s measure of underinsurance.b The measure takes into account an insured adult’s reported out-of-pocket costs over the course of a year, not including premiums, and his or her health plan deductible. This combination of actual expenditures and the potential risk of expenditures, as represented by the deductible, are then compared with household income. People who are insured all year are defined as having deductibles that leave them at risk of high out-of-pocket costs if:
Out-of-Pocket Health Care Costs We asked survey respondents how much they spent out-of-pocket for medical treatments and services for themselves or their family that were not covered by their health insurance over the prior 12 months. They were asked to think of all their expenditures, including copayments, when they went to the doctor or hospital, as well as their costs for prescriptions and vision and dental care. We consider a person who is insured all year to have high out-of-pocket costs if:
Notesa The full premium tax credit caps for 2015 are:100%–<133% of the federal poverty level (FPL): 2.01% 133%–149% of FPL: 3.02–4.02% 150%–199% of FPL: 4.02–6.34% 200%–249% of FPL: 6.34%–8.1% 250%–299% of FPL: 8.1%–9.56% 300%–399% of FPL: 9.56% http://www.commonwealthfund.org/interactives-and-data/health-reform-resource-center b S. R. Collins, P. W. Rasmussen, S. Beutel, and M. M. Doty, The Problem of Underinsurance and How Rising Deductibles Will Make It Worse—Findings from the Commonwealth Fund Biennial Health Insurance Survey (New York: The Commonwealth Fund, May 2015). |
Table 1. Health Care Affordability Index Indicators, 2014 and 2015
|
|
2014 |
2015 |
|
Health Care Affordability Index indicators among adults insured all year |
|
|
|
Base: Adults ages 19–64 insured all year with private health insurance** |
|
|
|
Cumulative percent, using two premium indicators below |
14 |
13 |
|
Premium equals 10% or more of income |
12 |
10 |
|
Premium equals 7% or more of income if low income*** |
7 |
5 |
|
Deductible equals 5% or more of income |
10 |
10 |
|
Cumulative percent, using two out-of-pocket medical expenses indicators below |
13 |
11 |
|
Out-of-pocket medical expenses equal 10% or more of family annual income |
11 |
8 |
|
Out-of-pocket medical expenses equal 5% or more of income if low income*** |
7 |
6 |
|
Cumulative percent, using all five indicators |
27 |
25 |
* Health Care Affordability Index includes adults who were insured all year with private insurance and experienced one of the following: premium costs equaled 10% or more of income; premium costs equaled 7% or more of income if low income (below 200% of the federal poverty level, or FPL); deductible equaled 5% or more of income; out-of-pocket expenses equaled 10% or more of income; or out-of-pocket expenses equaled 5% or more of income if low income (below 200% FPL). ** Private insurance includes adults with either employer, individual, or marketplace coverage. *** Less than 200% FPL. Source: The Commonwealth Fund Health Care Affordability Tracking Survey, September–October 2014 and July–August 2015.
Table 2. Demographics of Privately Insured Adults Who Were Insured All Year, 2014 and 2015
|
Privately insured all year,
ages 19–64, 2014
|
Privately insured all year,
ages 19–64, 2015
|
||||
|
Total privately
insured adults,*
ages 19–64,
insured all year,
2015
|
Percent with
costs that DO
NOT exceed
the Health Care
Affordability
Index**
|
Percent with
costs that
exceed the
Health Care
Affordability
Index***
|
Percent with
costs that DO
NOT exceed
the Health Care
Affordability
Index**
|
Percent with
costs that
exceed the
Health Care
Affordability
Index***
|
|
|
Percent distribution |
100 |
73 |
27 |
75 |
25 |
|
Unweighted n |
1,687 |
- |
- |
- |
- |
|
Race/Ethnicity |
|
|
|
|
|
|
Non-Hispanic White |
69 |
74 |
26 |
73 |
27 |
|
Black |
10 |
73 |
27 |
82 |
18 |
|
Latino |
12 |
69 |
31 |
77 |
23 |
|
Age |
|
|
|
|
|
|
19–34 |
30 |
74 |
26 |
77 |
23 |
|
35–49 |
33 |
71 |
29 |
77 |
23 |
|
50–64 |
36 |
74 |
26 |
70 |
30 |
|
Poverty status |
|
|
|
|
|
|
Below 200% poverty |
19 |
38 |
62 |
47 |
53 |
|
200%–399% poverty |
27 |
72 |
28 |
70 |
30 |
|
400% poverty or more |
40 |
87 |
13 |
86 |
14 |
|
Education |
|
|
|
|
|
|
High school or less |
30 |
70 |
30 |
69 |
31 |
|
Some college/Technical school |
29 |
70 |
30 |
71 |
29 |
|
College graduate or higher |
41 |
78 |
22 |
82 |
18 |
|
Health status |
|
|
|
|
|
|
Fair/Poor health status, or any |
53 |
69 |
31 |
71 |
29 |
|
No health problem |
47 |
77 |
23 |
79 |
21 |
|
Region |
|
|
|
|
|
|
Northeast |
20 |
76 |
24 |
79 |
21 |
|
North Central |
22 |
73 |
27 |
71 |
29 |
|
South |
34 |
72 |
28 |
72 |
28 |
|
West |
24 |
73 |
27 |
79 |
21 |
|
Employee size |
|
|
|
|
|
|
Less than 50 employees |
30 |
66 |
34 |
69 |
31 |
|
50 employees or more |
69 |
77 |
23 |
81 |
19 |
* Private insurance includes adults with either employer, individual, or marketplace coverage. ** Includes privately insured adults who have low health care costs relative to their incomes and adults who are unware of their premium, deductible, or out-of-pocket costs. *** Health Care Affordability Index includes adults who were insured all year with private insurance and experienced one of the following: premium costs equaled 10% or more of income; premium costs equaled 7% or more of income if low income (below 200% of the federal poverty level, or FPL); deductible equaled 5% or more of income; out-of-pocket expenses equaled 10% or more of income; or out-of-pocket expenses equaled 5% or more of income if low income (below 200% FPL). **** At least one of the following chronic conditions: hypertension or high blood pressure; heart disease; diabetes; asthma, emphysema, or lung disease; or high cholesterol. Note: None of the year-to-year changes are statistically significant. Source: The Commonwealth Fund Health Care Affordability Tracking Survey, September–October 2014 and July–August 2015.