Undermined ACA and the Pandemic Ravaged Economy Threaten Health Care Access for Millions of Low-Income US Workers

The Pandemic of the century has made a mockery of American health care system, and laid bare the structural distortions and perverse incentives for the world to witness.

How does one even begin to reconcile the disastrous outcomes when the US health care sector has such a dominant presence in the economy accounting for 18% of the GDP? Is the American exceptionalism preventing us from appreciating the obvious association between collective wellbeing of a society and individual enterprise? Do we still subscribe to the view that creating a health safety net for every single person in this country regardless of their zip code, race, skin color, education, and employer runs counter to our national character?

As a country, we spend an awful lot on health care; and that number has been steadily climbing since 1998. As it turns out, higher spend isn’t translating to better overall care for everyone; quite the contrary. As per the recent survey by Peterson-KFF, as rates of all-cause mortality, maternal mortality, and disease burden, hospital admissions, treatment outcome, years of life lost have stagnated or increased over time, the gap has widened between the US health system and those of its similarly wealthy OECD peers. On average, on a per capita basis, adjusted for PPP, US outspends those countries by a margin of 99%.

I’d argue that, our poor overall showing vis-à-vis our wealthy peers, is a result of a fundamental structural inequality that discourages, and in certain cases, restricts access to basic health care for large cross-sections of low-income, non-elderly working individuals and families, a cohort with higher than average representation of women, young adults and groups of color. This distortion, I’m afraid, is expected to accelerate as the economic impact of Covid-19 sweeps through our nation, at a time, when, we’re systematically undermining ACA.

Employer-based coverage is by far the largest source of health insurance for the non-elderly, but its degree of financial protection varies considerably across the income scale. People in lower-income families below 200% of Federal Poverty Level (FPL) incur out-of-pocket costs close to 14% of their income on average as compared to 8% for people in families with income between 200% and 400% of FPL, and 5% for people with income 400% of FPL or more.

Here’s an example prepared with the help of the Household Health Spending Calculator to demonstrate this: A family of four with annual income of $50,000 with average health status covered through an Individual Market Exchange is estimated to spend $9,550 (19% of their income) on health care cost per annum whereas, it’d cost a similar family with the same level of income and health status covered through an Employer plan about $7,450 (15% of their income) — a staggering 28% higher cost burden for those who are forced into Individual Private Markets.

The coverage options and quality of coverage are steadily and significantly deteriorating. The share of people with employer-sponsored insurance has declined over the past 20 years: from 66.7% in 1998 to 58.3% in 2018. For all income groups earning below 400% of FPL the decline has been steeper. To complicate matters further, there is a gradual deterioration in the rate at which the workers take up offer of coverage; the largest decreases in take up were among lower income households, with fewer workers in households below poverty or between 100% and 250% of FPL accepting an offer of coverage. In a survey conducted by KFF and the LA Times in 2019, 40 percent of non-elderly adults with employer-based coverage said that they or a family member had difficulty affording health insurance or health care or had problems paying medical bills.

Given our depressed economy, a more competitive job market may lead certain employers to drop coverage or reduce the generosity of their offerings. Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), individuals losing employer coverage can remain enrolled on their employer plan for 18 months but are required to bear the full premium and an administrative fee. Given the high cost of employer coverage, relatively few former workers tend to enroll in COBRA.

This Forgotten Middle, today, includes 8 million with family incomes of less than 200% of FPL, and almost 29 million with incomes between 200% and 400% of FPL out of a total of 101 million non-elderly people who have job-based coverage.

We need to act now, act decisively, and with empathy. The clock is ticking.