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Analysis: ACA deductibles may mean unaffordable medical debt

When the Affordable Care Act was passed, one of its major goals to protect people from the ruinous medical debt that many people have been forced to incur after a single, catastrophic accident or if they suffer from a chronic illness that prevented them from getting insurance. Relief from medical debt has become the No. 1 reason Americans seek bankruptcy protection, and the ACA was meant to help.

A recent report on medical debt by the Kaiser Family Foundation, however, indicates that the Affordable Care Act may still leave medical care unaffordable for some people, even those who receive premium subsidies. After reviewing study data from the Centers for Disease Control and Prevention and performing its own case studies of people with medical debt, the KFF concluded that the cost-sharing mechanisms of the ACA may be a major barrier for many people.

Cost-sharing refers to the proportion of out-of-pocket costs individuals and families have to pay for medical care and prescriptions, such as deductibles, co-pays and limitation on payments for care at out-of-network providers. Deductibles are an amount patients are responsible for paying before insurance even kicks in. Co-pays are a flat amount or a percentage the patient must pay on each visit.

Some economists believe that requiring cost-sharing by patients forces them to choose less-expensive healthcare alternatives, saving money for everyone. The KFF, however, found that people whose health insurance had a high deductible were much more likely to have trouble paying their medical bills. A CDC study found that 34 percent of those in high-deductible plans were having trouble, while only 24 percent in lower-deductible plans were.

By law, the maximum amount in cost sharing patients can be required to pay under the ACA is $6,350 per individual and $12,700 per family. Among plans on the federal insurance exchange, the average deductible for an individual was $3,000. Among the less-expensive plans, however, the average deductible was $5,082, according to USA TODAY, and that doesn’t even count separate deductibles for prescriptions. Unfortunately, the KFF study concluded that most American’s have $3,000 available to pay those deductibles.

Unfortunately, illness and injury can’t be conveniently scheduled. For many people, the KFF concludes, a single accident or a chronic condition will still be a major financial threat, even under the ACA. In those cases, bankruptcy may still be the only realistic way to get relief from medical debt.

Source: USA TODAY, "Medical debt will persist despite health law," Jayne O'Donnell, and Paul Overberg, Jan. 15, 2014 

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