It’s hard to see the Harvard University faculty’s fury over their health insurance as anything but comic. The school began the new year by requiring its employees to pick up a great percentage of their health care bill—a change the school partially attributed to the very Affordable Care Act many of its professors once argued for. Now those academics are pushing back, but for those of us living in the real world, the amount in dispute sounds ridiculous. From no deductible to $250 per person? This is worthy of a protest movement? When the New York Times reported on the dispute earlier this week, the Internet laughed. I did. You probably did too.
We were wrong. L’affaire Harvard is a perfect demonstration of why continuing unhappiness with the Affordable Care Act almost certainly resides not just in Republican stonewalling and endless yammering about fictional death panels, but in our pocketbooks, too.
Let me explain.
Many left-leaning pundits remain convinced that Americans will come around on the Affordable Care Act. After all, we no longer have to fear getting tossed off a plan for an undisclosed pre-existing condition, or being forced to remain employed at a job we don’t love simply because there is no other way to receive insurance. The number of people lacking any sort of medical insurance, mostly but not only due to the Medicaid expansion, has fallen dramatically. And most triumphantly: After years of medical inflation, the growth rate of overall health care spending in the United States is at record lows, with a 3.6 percent increase in 2013.*
So what’s the problem? Think of it this way: National medical bills might be under control, but a closer look reveals it was accomplished not by reining in medical expenditures but by shifting costs onto our increasingly financially beleaguered middle class.
According to a report by management consultancy Aon Hewitt’s Health Value Initiative Database, which analyzes data from several hundred large companies, those with employer-sponsored health insurance will pay 52 percent more in out-of-pocket expenses in 2015 than they did in 2010. You don’t need me to tell you did not receive a commensurate salary increase during the same period.
Almost everyone who has health insurance now has a deductible. And those deductibles are soaring. USA Today recently reported that the average individual has seen the amount of money he or she needs to pay out of pocket—before insurance kicks in—increase by more than 100 percent in less than 10 years, and is now at $1,217.
According to the Mercer Foundation, almost one in four employees covered by employer-provided health insurance is now using a high-deductible offering. These plans are the fabled “skin in the game,” the thing that everyone from free-market true believers to insurance company executives claim to believe will turn sick people seeking immediate help into conscientious consumers comparing prices of services in advance. The practical result? A family of four can pay hundreds of dollars a month in insurance premiums and still find itself on the hook for several thousand dollars’ worth of medical bills annually. Perhaps as a result, a full one-third of people surveyed by Gallup claimed they or a family member delayed seeing a doctor or receiving other medical treatment last year due to cost.
Moreover, price comparison is all but a joke in the opaque medical industry. A few years ago, a group of researchers attempted to price a hip replacement for a 62-year-old woman. Less than 20 percent of the hospitals they called could or would give them a quote, and when they did, the amounts charged varied by tens of thousands of dollars for no reason anyone could explain. True, this was pre-ACA, but no one is arguing that medical pricing has become more transparent in the past year. It’s almost certainly easier to get a quote on a dog’s hip replacement than on a human’s. Trust me. I put it to the test.
Many plans offer no coverage for out-of-network services, and then limit the network to a small group of doctors and hospitals. (In New York, the state insurance exchange offers no out-of-network options.) The rub? Maximum out-of-pocket costs only apply for in-network services. See a doctor outside the network, or take a pill not on the approved formulary, and if you are in a nonemergency situation, you are on your own.
This contributes to a charming practice called balance billing. That’s the difference between what the insurer will pay for a service, and what an out-of-network doctor or laboratory bills you. Just because a hospital performing a surgery is in network, does not mean, say, that the anesthesiologist assigned to your case is as well.
Financial horror stories, not surprisingly, abound. Last fall, the New York Times reported on a woman named Patricia Kaufman, who found herself charged $250,000 by plastic surgeons for closing a surgical incision. After her insurer paid $10,000, the unrepentant doctors billed Kaufman for the balance. Most stories aren’t quite as dramatic, but are still financially painful. The Tampa Bay Times recently told the tale of a man injured at a softball game. Taken to a local in-network emergency room, he only later discovered the doctor who fixed him up was not part of the package deal. The bill? $2,255.
It might be one thing if ACA defenders began to acknowledge that these issues are almost certainly behind a decent proportion of people’s unhappiness with Obamacare, and began demanding meaningful change. But that, for the most part, is not happening. Many point to the Medicaid and Children’s Health Insurance Program (CHIP), which have expanded to cover an additional 6.1 million people, or the fact that the rate of uninsured adults has fallen from 18 percent to 13.4 percent, as if these positive accomplishments should somehow make up for the increased middle-class bills. Others champion facts that sound good but leave out the less than savory aspects. Paul Krugman, for example, recently pointed out that insurance premiums are going up at “very modest” amounts, but did not mention individual medical inflation.
Yet another group is quick to say that this sort of stuff long predated the Affordable Care Act. They’ve got a point. Many employers are blaming Obamacare for cost-shifting changes, when the truth is much more complicated. Employees were picking up an increasing percentage of their tab even before health care reform. The Affordable Care Act, after all, didn’t legislate narrow networks or mandate high deductible plans. It didn’t tell doctors and hospitals and drug companies to raise their rates. But it didn’t do much of anything to discourage any of this either. And that, it turns out, is the problem.
Health care reform solved one issue—the uninsured and the uninsurable—but left the bigger one outstanding: Costs continue to climb. Harvard’s protesting professors might be overprivileged and clueless, but their mistake wasn’t in getting angry. Their mistake was in not linking their health insurance woes to what the rest of us are already going through.
That “we” is us. Each and every one of us.
*Correction, Jan. 13, 2015: This article originally misstated that overall health care spending is up by 3.6 percent. The growth rate of overall health care spending is up that amount. (Return.)