Six Years After the ACA, More Reform Is Needed
In our previous post, we shared President Obama's recent comments regarding some of the cost and access problems in our current health care system, along with possible fixes.
New Mexico is not immune to these challenges. In this four-part series, we will be addressing three major problems that continue to make headlines in our state:
- Increasing health insurance premiums and rising health care costs paid by patients
- Increasing restrictions on patients' choice of health care provider
- Decreasing competition and increasing volatility in the health insurance market
In this post, we focus on affordability, which is being affected by increasing insurance premiums and the rising share of health care costs paid by the patient. Affordability is a very critical issue because it impacts individuals' ability to access quality health care.
Affordability Remains a Problem: Insurance Premiums and Health Care Costs
Most individuals who have purchased policies through New Mexico's health insurance exchange are being confronted with growing out-of-pocket costs, including large deductibles of thousands of dollars. (Federal subsidies for policies purchased on the exchange only help pay for the insurance premiums.)
Blue Cross and Blue Shield, which is planning to reenter the exchange for the 2017 calendar year, is seeking preliminary approval for an 83% increase in premiums. Other carriers, both on and off the exchange, are also requesting double-digit increases.
"I feel terrible we're going to have to raise rates," the Santa Fe New Mexican quoted Martin Hickey, CEO of New Mexico Health Connections, as saying. "At least we're still staying in the market," he added.
"New Mexico is a poor state and we cannot afford higher premiums," observed Superintendent of Insurance John Franchini in the same article. It is nevertheless likely that the Office of Superintendent of Insurance will approve some premium increases.
Rising out-of-pocket costs for consumers are a problem not just in New Mexico but across the nation. And, as mentioned above, premiums are only part of the affordability equation. Deductibles, copays, and coinsurance also have to be considered—and the precipitous increase in deductibles has been making news.
According to the Kaiser Family Foundation, deductibles are rising much faster than premiums, wages, and inflation:
Since 2010, both the share of workers with deductibles and the size of those deductibles have increased sharply. These two trends together result in a 67 percent increase in deductibles since 2010, much faster than the rise in single premiums (24%) and about seven times the rise in workers' wages (10%) and general inflation (9%).
The result is not pretty. The rise in deductibles makes it increasingly hard for people to pay for health care.
"You can't sugarcoat this," said Paul B. Ginsburg, a professor of the practice of health policy and management at the University of Southern California's Sol Price School of Public Policy. "This is a more challenging situation for consumers and it's a reflection of how difficult it is to afford health care."
To counter the rise in premiums, President Obama suggested increasing the subsidies for those who purchase insurance through the health insurance exchanges. But as we discussed above, premiums are only one piece of the problem.
The New Mexico Health Security Act goes further to address the affordability issue. This Health Security proposal is based on the assumption that rising costs are due to a systemic problem: the private insurance system. Under Health Security, premiums would be based on income, with caps, and there would be no deductibles. There would also be no copays for preventive care. Balance billing (surprise bills where a health care provider charges a patient for the amount of the bill not covered by insurance) would also be prohibited in New Mexico.
The next post in this series focuses on the increasingly limited health care provider networks available to patients.