Medical insurance bill and the invoice.

Reviews | Our Biggest Health Insurance Concern Isn’t What You Think

Only 8.3% of Americans were uninsured in 2021, down more than 37% from 2013 (13.4%) – the year before the market began and the Medicaid expansion created by the Affordable Care Act. So why are nearly half of working-age adults (46%) still skipping treatment or medication? Being uninsured is no longer our biggest problem, to be underinsured it’s — when you have insurance, but the payouts are still so high that you can’t afford to use it.

What has been done to resolve this issue?

President Biden and his administration have made significant progress in improving the affordability of health insurance and health care for millions of Americans in his first 2 years. The American Rescue Plan Act of 2021 increased premium subsidies for purchasing health insurance through and state markets through the end of 2022, which the Inflation Reduction Act (IRA) passed earlier this year extended to the end of 2025. The IRA also included a cap on insulin costs of $35 a month for those on Medicare from next year, a $2,000 annual cap paid on all prescriptions starting in 2025, and introduced a framework for the Drug Price Negotiation Program – opposed by the pharmaceutical industry, but popular among Americans.

An amendment proposed by Sen. Raphael Warnock (D-Ga.) to cap insulin costs in all commercial health insurance plans, including employer-sponsored health insurance and market plans, has been removed from the bill, but reflects how far the conversation has come. During the last presidential election cycle, current Transportation Secretary Pete Buttigieg lobbied for monthly caps on seniors’ prescription costs.

These proposals reflect the larger realities that health care is increasingly unaffordable, even for those with “good” insurance – a majority of households below 400% of the federal poverty level cannot afford their franchises.

What are the potential solutions?

While Health Savings Accounts (HSAs) are often touted as an option to improve healthcare affordability, the reality is that they are not – they primarily serve as a tax shelter for already well-off Americans. . Although their use has increased over the years, we have found considerable disparities by race, ethnicity and income in participation in HSAs – which reflect those who are uninsured and have difficulty provide care – so they are not a systemic solution to this problem.

Two years ago, my colleagues and I started thinking about the pros and cons of an alternative solution to underinsurance: monthly caps. Monthly caps on reimbursable healthcare costs could potentially simplify our current more complex cost-sharing approach, which typically starts with a deductible, then a co-insurance period before reaching a reimbursable maximum based on a calendar year. . Instead, monthly caps would give patients a smaller monthly deductible, after which every cost would be fully covered. We could still leave cost-sharing exemptions in place, such as for preventive care, and co-pay for doctor visits, changing only the frequency and amount people are required to pay up front. before getting help from their scheme. About a third of American families can’t afford an unexpected $400 expense, so the trend of ever-higher deductibles is simply outstripping what they can cover.

Monthly caps would mitigate expenses for people with chronic conditions, leaving out-of-pocket expenses each month, but avoiding a huge upfront cost each year. And for young and healthy people, this alternative design would still come in handy whenever they go for treatment, in case they need a few tests or an MRI that can run thousands. Plus, if deductibles were to reset every month, people wouldn’t have to worry about losing their progress if they changed jobs mid-year.

We went further by recently publishing a study in Open JAMA Network, applying the idea to real-world data from health insurance claims. We found that a hypothetical $500 monthly cap on out-of-pocket expenses for in-network care lowered costs for almost a quarter (24.1%) of commercially insured people in the United States, lowering median expenses for this group. by nearly half (-45.5%) over a calendar year. The benefits were even greater with a $250 monthly cap on in-network care, where 36.8% of enrollees benefit and median annual fees fell by more than half (-50.8%) among those who did. benefit. Cost reductions were even greater for people enrolled in high-deductible health plans.

Of course, the money has to come from somewhere. With the shifting of costs to the plans, we projected premiums to increase by 5.6% for the $500 monthly cap and 7.9% for the $250 monthly cap. It’s not nothing, but it’s helped by the fact that most Americans don’t pay the full cost of their insurance on their own – usually an employer pays for most of the tab or people get help finance in the market. A key point is that our study assumes that people won’t start using a lot more heals just because of the monthly cap, which seems reasonable because there’s only a limited amount of heals you can use in one months before the cap is reset.

What are the monthly cap limits?

Any policies, including monthly caps on insulin or out-of-pocket costs, that only address how much patients pay will not solve the more systemic problem of rising health care costs. In the oft-quoted words of the late economist Uwe Reinhardt, “It’s the prices, stupid.” Nor will it solve the problem of non-insurance, with millions of people still without coverage – and which is expected to increase dramatically with the imminent end of the COVID-19 public health emergency, now pushed back to the start of next year.

Of course, we also don’t know exactly what the monthly caps on reimbursable expenses look like in practice. No one has actually tried them on a large scale before. The insulin cap in Medicare won’t begin until next year, but we’ll learn how patients respond to it and how diabetic complication rates change as a result. On a larger scale, getting commercial insurers to move away from an annual cost-sharing model, essentially used since the beginning of health insurance in the United States, would not be a trivial effort.

We hope that an employer or insurer would be willing to pilot this model, see how patients respond to it, and then consider making it an option in their plan offerings. Who knows, maybe they’ll even end up becoming the insurer to make sure patients can seek care when they need it.

Paul Shafer, PhD, is an assistant professor in the Department of Health Law, Policy, and Management at Boston University.


Research for this coin was supported by Arnold Ventures. Shafer has received research funding over the past 12 months from the Robert Wood Johnson Foundation, The Commonwealth Fund, Arnold Ventures and Renova Health. He is also a researcher at the VA Boston Healthcare System under contract with the Boston University School of Public Health.

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