ACA seen curbing medical bankruptcy

Feb. 02--More than one in four Ohio families have experienced financial hardships stemming from unpaid medical bills, according to a recent government report

The Affordable Care Act was enacted, in part, to offer protection from unwieldy medical costs that could push consumers' finances over the edge.

But even with subsidized health coverage available to millions of uninsured Americans through the ACA, their financial security could still be in jeopardy, experts say.

"We see that rather commonly," said Paul "P.J." Minnillo, an attorney with the Cincinnati-based law firm Minnillo & Jenkins that specializes in debt relief through bankruptcy. "If you have a plan with a high deductible, and you have to come up with that upfront payment before your insurance kicks in, then you may have to sacrifice some other payment like a credit card or vehicle payment.

"That can cause a spiral of debt problems, forcing the hand of people who have that debt to seek relief under bankruptcy," he Minnillo said.

According to the American Journal of Medicine, more than 60 percent of bankruptcy filings are directly related to health care costs.

Explaining all the plans

But those costs aren't as transparent as they could be to many people enrolling in ACA coverage who are shopping for health insurance for the first time, said Dave Hickman, director of the Helping Hands Community Outreach Center's ComCare program, which was established to help local residents navigate Ohio's health marketplace and facilitate enrollment.

"We're dealing with a largely unsophisticated consumer group, most of whom have never had health insurance before," he said. "We try to explain to them the difference between saving on the front end or saving when the bill comes in, but a lot of people are just accustomed to shopping on price."

Hickman was referring to the monthly premiums for marketplace plans, which come in three levels of coverage: bronze, silver, gold and platinum. The bronze plans typically carry the lowest premiums but have higher deductibles and cover the least amount of enrollees' overall medical expenses, although costs vary by plan.

"People who have used insurance in the past almost always jump to the silver or even gold plans," Hickman said, referring to plans that cover 70 percent or more of medical expenses after the deductible is met. Bronze plans, by comparison, are only required to cover 60 percent of medical costs.

"A lot of people who have never had insurance are unaware of the trade-offs, and you'd be surprised at the number of people who come in who've never had insurance," Hickman said. "They have to have a clear example or scenario about how the plan works, and that's what we provide.

"Our navigator presentation is pretty simple: you can pay higher premiums now and don't have to worry about a big hospital bill down the road, or you can pay a lower premium and risk being hit with a big bill," he said.

But private insurance is only part of the equation for reducing medical bankruptcies through the ACA.

Medicaid -- the state and federally funded health insurance program for the poor -- has been expanded in 36 states, including Ohio, under the national health care law, which now extends benefits to anyone earning up to 138 percent of the federal poverty level, or just under $16,000 a year in 2013.

Enrollment continues

In Ohio, 39,955 Ohioans had signed up for a private marketplace plan as of Dec. 28 last year, according to the last state report from the U.S. Department of Health and Human Services. But an even greater number, 48,971, had been deemed eligible for adult or children's Medicaid.

Nationwide, about three million Americans have signed up for private health insurance through the ACA, while more than six million have qualified for Medicaid coverage, according to HHS.

"Most of the people we see sign up for Medicaid," said Stacia Dawson, outreach and enrollment coordinator for Community Health Centers of Greater Dayton. "Anyone who doesn't think that Medicaid coverage does much for low-income people have probably never not had insurance.

"We get so many people who come in and say I had a medical problem and wasn't insured and now I have this huge medical bill," Dawson said. "Without having insurance, it's easy to run up a tremendous amount of medical debt, which most people can't afford."

A handful of recent studies underscore the dilemma for those living in or near poverty.

At least 26 percent of people earning less than $16,000 a year have had problems paying their medical bills, according to the 2012 National Health Interview Survey from the Centers for Disease Control and Prevention. That compares to just 6 percent of Americans earning $45,000 a year or more, according to the survey.

The Oregon Experiment

The Oregon Health Insurance Experiment, which was published May in The New England Journal of Medicine, found that Medicaid decreased the probability of having an unpaid medical bill sent to a collection agency by 25 percent. The Oregon study compared thousands of low-income Oregonians who received access to Medicaid through a lottery in 2008 with an identical population that did not.

Even some critics of the national health care law agree that expanding health coverage through Medicaid or private health plans can go a long way toward ensuring the financial security of the uninsured, which includes nearly 1.5 million Ohioans, according to U.S. Census data.

"Nobody wants to see people go through a medical bankruptcy...and it's very likely that some of that will be ameliorated" as a result of the ACA, said Greg Lawson, a policy analyst at The Buckeye Institute for Public Policy Solutions. "The question is is that the best way to do it. There are a lot of ways to address this issue and we would like to find a way that is fiscally responsible and still accomplishes these goals."

Like most critics of Medicaid expansion, Lawson fears the cost to taxpayers may eventually exceed projections. And he doesn't consider the health marketplace a "true free-market" solution for covering the uninsured because the health care law mandates that people buy insurance or pay a tax penalty.

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