Many Americans worry about how they will afford health care if they get really sick. Policymakers have responded with a whole range of complicated proposals. Are you confused about what these reforms would mean for you and your family?
If so, you’re not alone. On this episode of The Dose, host Shanoor Seervai sits down with the Commonwealth Fund’s Sara Collins to break down what she learned in the Fund’s latest survey of Americans’ views on health care.
They discuss how Medicare for All and other Democratic proposals would change the health system; the latest on marketplace open enrollment; and an ongoing court case’s implications for the Affordable Care Act.
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SARA COLLINS: In the Commonwealth Fund’s most recent survey about health insurance coverage, we asked adults about their views of a Medicare for All-type approach to expanding health insurance coverage, specifically whether they’d favor or oppose eliminating all private insurance and making public insurance like Medicare the only option for people to enroll in. About 27 percent of people were in favor of it. Democrats were the most in favor. Republicans were among the most strongly opposed.
SHANOOR SEERVAI: Hi, everyone. Welcome to The Dose. You just heard from Sara Collins, vice president of Health Care Coverage, Access, and Tracking at the Commonwealth Fund. I asked Sara to join me on the show today because everyone is talking about health care. Many Americans are worried about how they will afford care if they get really sick, and the Democratic presidential candidates are responding to this concern with a whole range of policies. But these policies are complicated, so I asked Sara to help me clear some things up, based on what some of her most recent research shows.
Sara, welcome to the show.
SARA COLLINS: Thank you.
SHANOOR SEERVAI: It’s interesting to know that many people would support a public plan, as you said. But I was more intrigued by another finding in that same survey, which is that 40 percent of people said they just don’t have enough information to decide whether or not they would opt for a public program instead of a private insurance system. So what does this tell us about the information gap when it comes to health policy, about the reality of people on the ground, and then what political leaders are talking about?
SARA COLLINS: I think it reflects just how complex the health care system is, people often not even understanding the basic dimensions of their own health plan. People don’t really interact with the health care system that much on a regular basis. So I think that that’s what it reflects. People don’t know what a Medicare for All approach might mean for them, might mean for their neighbors and for the health system in general, and I think that that’s what this reflects.
SHANOOR SEERVAI: We’re in this situation where people are really worried about health care and what’s going to happen to the health system. In multiple polls, we see it again and again. It’s coming out as the number one issue that Americans are concerned about, but there’s just not enough information around it.
SARA COLLINS: Right. When we look at some of our survey data, we ask people whether or not they’re satisfied with their current health insurance plan — so people who have insurance. And people express pretty high satisfaction levels with their current plan. People on Medicaid are particularly happy with their coverage, people on employer-based coverage.
When we start asking about the future, though, that’s when we see a drop-off in satisfaction or just confidence that they’ll be able to afford health care in the future if they were to become very sick.
And I think a lot of that is driven by the fact that people see their deductibles going up every year. We know that that’s the big trend in private insurance coverage.
SHANOOR SEERVAI: So specifically now, if you see your deductible going up, what that means is that if you get really sick, you will have to pay more to get good care. Is that right?
SARA COLLINS: That’s right. And so if you have a $5,000 deductible, there will be some services that are excluded. Under the Affordable Care Act, you get preventive care with no cost-sharing, for example. But if you were to sustain an accident or get injured riding your bicycle or something, or a child get injured riding their bike — and you had to go to the emergency room — then you might be subject to a pretty high out-of-pocket cost if you have a high deductible. In fact, on an earlier survey, when we asked people in employer-based plans if they had an unexpected $1,000 bill — so if they made a trip to the emergency room or got really sick — only a third of people on employer-based plans said they’d have the money to pay that bill off in one month. People just don’t have the assets. They don’t have the reserves. They’re walking around with health plans that can be a time bomb in terms of what they might potentially be exposed to in terms of health care costs.
SHANOOR SEERVAI: And so if you’re sitting on a time bomb, you’re going to be really anxious, right? And let’s talk about this anxiety. We’re recording this episode right before the open enrollment period begins for 2020. So starting November 1st, people can buy insurance on the marketplace, but how does this anxiety, this constant fear about cost play out as people are trying to figure out what kind of coverage they should get?
SARA COLLINS: Right, so open enrollment begins in just a couple of weeks, on November 1st. It extends to December 15th in most states, but some states have actually extended that. So it’s really important if you’re uninsured right now or think you might not have insurance next year, or if your employer plan is not that affordable, you might want to consider checking your options out. Most people who buy coverage in the individual market get a premium tax credit through the Affordable Care Act that will help them afford their premiums — people who are just over the threshold that makes them eligible for premiums, so people earning about $48,000 or $49,000 a year are exposed to the full premium. And that can be a big hit for people. Even for bronze-level plans, looking at just the premiums that people might pay, it could well exceed 10 percent of your income, and higher for gold-level plans.
SHANOOR SEERVAI: Can you explain what you mean when you say “gold level” or “bronze level?”
SARA COLLINS: So plans offered in the individual market and the marketplaces have to be offered at four different levels of cost-sharing. So bronze-level plans have the greatest amount of cost-sharing. They tend to be the cheapest plans, have the lowest premiums. Silver plans, then gold plans, and then platinum plans — each of those have gradually less and less cost-sharing, less and less, lower and lower deductibles. And the premiums go up accordingly.
What we also see in some of our survey data is that a lot of people who are uninsured and are considering going to the marketplaces or know that they might be eligible for plans are hesitant to go because they’re worried about how much it’s going to cost them. So affordability is a major reason given by people about why they don’t go to the marketplaces, why they didn’t choose a plan once they did go to the marketplaces, and why they dropped a plan once they enrolled. It is also driven by the fact that we don’t have a lot of outreach and advertising happening anymore from the federal government. So the Trump administration has dialed back significantly how much money they’re spending on letting people know about the open enrollment period, that there are subsidies for people to help them buy their coverage.
So the affordability issue is partly a real issue for people, particularly as you go up the income scale, and your premium tax credits get smaller, your out-of-pocket costs can go up.
SHANOOR SEERVAI: Right. So those aren’t the lowest-income people, but they are people who are sort of on this cusp, where they’re not really making enough money to be able to afford to pay the full premium, but they’re making too much money to get a tax credit.
SARA COLLINS: That’s right.
SHANOOR SEERVAI: And so for those people in particular, but also for everyone, this is the first year that there’s no mandate that people have to have health insurance coverage. Do you think that that’s going to impact people’s decision, that they no longer have to pay a penalty if they don’t have health insurance?
SARA COLLINS: What we found in our survey, and when we asked people without coverage why they didn’t enroll, if they didn’t enroll in a plan because of the mandate — it’s actually a relatively small percentage of people — about 11 percent of the overall population of people who don’t have health insurance coverage.
So the mandate is important, but the affordability issue is much more important.
SHANOOR SEERVAI: And so does this affordability issue — is it impacting the marketplaces in terms of impacting insurers? Are insurers raising premiums because, say, healthy people are choosing not to buy coverage, and sick people are buying coverage?
SARA COLLINS: Well, what we’ve seen in the last couple of years is a stabilizing marketplace in individual market. We see more insurers actually offering plans this year, so more insurers coming into the market than actually leaving. Premiums in the marketplaces are expected to rise at the slowest rate that they’ve risen since the marketplaces were launched in 2014.
So there is a general sense of a very stable market. Over time, the Congressional Budget Office is projecting that premiums will rise at the rate of health care costs, just like they do in employer-based plans. So it’s a market whose affordability issues will reflect the other affordability trends in the group or the big employer market where 150 million people get their health insurance coverage.
SHANOOR SEERVAI: That’s interesting. So what you’re saying is that regardless of whether you’re buying insurance on the marketplace, or whether you’re getting it from your employer, everyone is subject to this same concern about health care costs rising.
SARA COLLINS: Right, so there are a couple of caveats to that. The Commonwealth Fund has developed a measure of underinsurance, which we define as people who are insured all year but have high out-of-pocket costs and deductibles relative to their income.
So currently about 44 million people are underinsured, and the biggest growth that we’ve seen in recent years is happening in employer-based plans, and it’s driven by this steady increase in the deductibles that people are exposed to.
In the individual market, people’s deductibles or out-of-pocket costs tend to be higher on average than people on employer-based coverage, but it differs by income.
SHANOOR SEERVAI: And this problem of underinsurance — and we can talk about some of the other problems that we have with the health care system, including the fact that there are still millions of people who don’t have insurance — that’s what the Democratic presidential candidates are trying to fix, right? — whether it’s with Medicare for All or something else. so how are these proposals going to fix some of these problems?
SARA COLLINS: So between 27 and 30 million people currently lack health insurance coverage. That’s a big improvement since the Affordable Care Act went into effect in 2010, but there are reasons for this. Congress has not made any adjustments to the Affordable Care Act since it was passed in 2010. That’s very unusual for a piece of federal legislation. There are ways of addressing the out-of-pocket costs and the high premiums that a lot of people are paying in the individual market.
The other major driver of growth in the uninsured is coming from the 17 states that haven’t expanded eligibility for Medicaid yet.
SHANOOR SEERVAI: And just to clarify those are really poor people who, if they lived in any other state, they would be eligible for public coverage through Medicaid.
SARA COLLINS: That’s right. And so the law was designed to help the poorest people in the country gain health insurance coverage, because that’s really where the biggest problems were. People with lower incomes tend not to have an offer of coverage through an employer. It is amazing that so many of the very poorest people in the country are now without an affordable coverage option because of the fact that these states haven’t expanded.
SHANOOR SEERVAI: So those are a large number of people who are uninsured, and then who are the other people who are uninsured?
SARA COLLINS: So a lot of people are not getting coverage because of the affordability issues that we talked about. And about 11 million people are undocumented — which means that they are not eligible for the subsidies that are offered through the marketplaces or Medicaid.
SHANOOR SEERVAI: And since we’re recording this the day after the October 15th Democratic candidates’ debate, even though we’re in the midst of an impeachment inquiry right now, health care was still a big issue in the debate, and we have candidates pressing each other. We had the moderators asking questions about health care. So what were candidates saying?
SARA COLLINS: You know, all the candidates are in favor of getting the United States to universal coverage — so getting everybody insured. That’s pretty clear. Where they differ is in the path to getting there.
The proposals that are on the table range from plans that build on the Affordable Care Act, so that plans that build on the subsidies, that do something for the people who are living in these 17 states that haven’t expanded Medicaid. Adding some kind of feature like the individual mandate penalty — bringing that back — or some kind of autoenrollment mechanism, to make sure that everybody gets into health insurance.
And then there are proposals that would use a very different approach, which is Medicare for All, which is essentially a single-payer approach where everybody is enrolled in a public plan that looks like Medicare. And those plans also can get to universal coverage.
So candidates like Vice President Biden, Mayor Buttigieg are proposing plans that build on the Affordable Care Act. And Senator Sanders and Senator Warren are looking at plans or supporting plans that would use a Medicare for All approach.
Each of those approaches can move the country to universal coverage. We have new estimates out from a Commonwealth Fund/Urban Institute report that demonstrate that both building on the Affordable Care Act and Medicare for All can move the country to universal coverage — or near-universal coverage — the difference being, in some of the proposals, whether all undocumented immigrants are covered. But both approaches do have the potential to move the country to universal coverage, improve affordability — so get those premiums down, both in plans that build on the Affordable Care Act, obviously down to zero in Medicare for All-type approaches — and really reducing the amount of money that people have to pay out of pocket when they go to the doctor.
SHANOOR SEERVAI: Uh-huh. So where do these approaches differ, then?
SARA COLLINS: They really differ in terms of how the system would look and how the system would be financed. Right now, health care is financed through a mix of spending by households. We all pay premiums, out-of-pocket costs. Employers pay premiums for people on employer-based plans, and the federal government spends a lot of money both in the employer-group market, obviously the private market through the premium tax credits, the Medicaid program. States contribute a lot of money to the Medicaid program. So we have a mix of private and public financing.
The plans that build on the Affordable Care Act would largely retain that kind of financing mix, so everybody would be responsible for contributing. In the case of a single-payer program or a Medicare for All-type approach, most of the financing that’s provided by employers, by households, by state governments — would shift to the federal government. So that’s the major difference.
SHANOOR SEERVAI: And this has been on my mind for a little while, so I’m going to ask you to help me break it down. Now it’s true that if there is a public plan, a Medicare for All, or some other public plan that covers everyone, the federal government would be spending more money on health care. But at the moment, it’s not that the money isn’t being spent — it is — but it’s in the form of tax breaks to employers. So as I understand it, employers pay for their employees to have health care, but neither the employers nor the employees are paying tax on the premiums for health care and for buying into this whole insurance system. So if things change, and it wasn’t this mix with private and public money, the federal government would no longer be giving tax breaks to employers. And so they could shift some of that money over to help pay for the public plan. Is that correct?
SARA COLLINS: That’s right. There are a lot of different ways to finance the government’s responsibility for health care in the instance of Medicare for All, or even in some of the proposals that build on the Affordable Care Act. You could raise taxes. You could move money around, like you’re suggesting. There are savings to be had, and you see this in the Urban Institute’s estimates of the Medicare for All approaches. There are fewer costs associated with providing health insurance through the Medicare program than there are through commercial insurers.
The other major cost savings in the Medicare for All approach and in the public option-type approaches and the plans that build on the Affordable Care Act — the major driver of health care costs in the United States right now are the prices that we pay to providers in commercial insurance. When we talk about the cost issue, that is where a lot of people’s costs are coming from in the system. The Medicare for All would take that up to a very broad scale, so all providers that are in the system would be paying closer to Medicare rates.
Another potential place for savings is how much we pay for drugs.
So there are both ways of financing this through cost-savers, like I just mentioned, moving funding around like you just mentioned — in the case of the employer tax break — and then also, at some point, there will need to be a tax increase. If you’re not paying through premiums anymore, then some people, depending on how the taxes are distributed, may pay more in taxes than they’re paying in premiums right now. But some people, particularly people with lower incomes, may actually see a net savings, so they’ll pay a lot less in taxes than they do in premiums right now.
SHANOOR SEERVAI: So just like we’ve been talking about this whole time, health care is really complicated, and it’s not enough to just say, “Oh, Medicare for All — it’s going to make things more expensive.” There will be a very complex way that — either a public plan approach or a different approach to get to universal coverage — would change the way that health care is financed and the way things function.
SARA COLLINS: That’s right. There are a lot of trade-offs to be considered, both in the way that we do this and how it would be financed.
SHANOOR SEERVAI: So as we’re wrapping up, Sara, and since we’re going into open enrollment, what’s the biggest concern on your mind?
SARA COLLINS: Well, I hope that everybody who knows that they’re eligible for marketplace subsidies and Medicaid do enroll, that people aren’t afraid to go to the marketplaces and check out their options. People might really find out that they’re eligible for coverage.
The other risk that is looming on the horizon is a current court case that was brought by plaintiffs in the state of Texas who claimed that as a result of the mandate penalty being zeroed out in the Congressional Tax Bill in 2017 — as you mentioned earlier, it no longer applies anymore. And so some people are not getting coverage because of it. But the plaintiffs claim that the mandate is still in the Affordable Care Act and is unconstitutional due to an earlier ruling by the Supreme Court.
The plaintiffs’ case was upheld by a district court in December of last year.
That decision was appealed by several state attorneys general, and the oral arguments were in July. We’ll be hearing about that decision any day now. If the Appeals Court upholds the lower court’s decision, then the Affordable Care Act would be deemed unconstitutional. And it is very likely that the state attorneys general that are supporting the Affordable Care Act in the case and the House of Representatives will appeal that decision to the Supreme Court.
So we could get a decision on this case sometime next year, right in the middle of the election season. But it is very concerning, because declaring the law unconstitutional would reach nearly every corner of the health system right now. The Affordable Care Act has been in place since 2010, so it’s heading into its ten-year anniversary. Every single aspect of the health care system would be affected by a decision that deemed it unconstitutional. Obviously millions of people would lose their health insurance coverage. About 20 million people have gained coverage since the passage of the law. More than 50 million people have preexisting health conditions. If they were to lose their employer-based coverage, they would not be able to get coverage on the individual market again — just like the days before the Affordable Care Act.
SHANOOR SEERVAI: So this chaos that you’ve described — if, ultimately, the Supreme Court decides that the Affordable Care Act is unconstitutional, that’s not going to happen in the short run because regardless of what the appeals court decides, it is likely that the case will then go further to the Supreme Court, right?
SARA COLLINS: Right. If the lower court decision was upheld, it is very likely that it would be immediately appealed. There would be many reasons that the decision would be stayed. It would just be enormously disruptive if the decision were to take effect immediately. But the decision could come next year.
SHANOOR SEERVAI: If and when the decision comes in 2020, what would this mean for the Democratic presidential candidates?
SARA COLLINS: It would change the discussion significantly, if you think about the plans that build on the Affordable Care Act. Obviously that would change the base for those plans. It might change the discussion around Medicare for All. The Trump administration has decided that they are in support of the plaintiffs.
SHANOOR SEERVAI: The Trump administration is siding with the plaintiffs, so the Trump administration is essentially supporting the case that says the Affordable Care Act is unconstitutional. But they are not offering an alternative.
SARA COLLINS: That’s right. And we have also not heard an alternative from Republicans in Congress.
SHANOOR SEERVAI: Okay, so we’ve talked a lot, Sara, about the chaos that we’ll see if the appeals court upholds the decision of the lower court, but what will happen if the appeals court reverses the lower court’s decision?
SARA COLLINS: In that case, the Affordable Care Act would stand, so it would continue as usual. So the question is what the Trump administration would do. So would the plaintiffs appeal the decision to the Supreme Court, which means we’d be on a similar trajectory, with the decision coming potentially in the middle of next year? Or might they appeal it to the return to the appeals court for a full discussion by everybody on the Fifth Circuit Court of Appeals? So they call this an “en banc” decision.
The idea of the decision coming in the middle of an election year might make the administration pause over their strategy to appeal it directly to the Supreme Court.
SHANOOR SEERVAI: All right, well, this is something we should be watching for carefully. This has been very helpful, Sara. Thanks so much for joining me.
SARA COLLINS: Thank you for having me.
Illustration by Rose Wong