Millions of Americans are facing soaring health insurance premiums and rising out-of-pocket costs. Advocates warn that large numbers of people will be priced out of coverage as a result, straining the broader health care system.
More than 20 million people enrolled in Affordable Care Act marketplace plans are seeing monthly premiums double or more after enhanced federal subsidies expired at the start of the year. Early data show that about 1.4 million people have already dropped coverage or downgraded their plans. Analysts predict 3 million more could follow in March after a grace period for paying premiums ends.
“On average, it is over a doubling of their premiums. And in many cases, it’s a tripling or a quadrupling,” said Anthony Wright, executive director of Families USA, at a recent news briefing.
Many low-income consumers who previously paid little or nothing for coverage will pay hundreds of dollars a month. Older Americans in particular are facing massive sticker shock. Now, with the subsidies that curbed the cost of health insurance expiring and Congress unable to reach an agreement to renew the contract, families are going to have to make tough decisions.
“Some may have felt sticker shock and have already dropped coverage, while others dropped down to lower-tier coverage with sky-high deductibles, paying more and getting less,” Wright said. “We expect many will try to pay their premiums of hundreds or thousands of dollars more in the next few months and forego other necessities, but some may end up uninsured over the next several months.”
Health care costs are also consuming a growing share of the U.S. economy. Stanford University economist Neil Mahoney said health spending has risen from about 8 percent of gross domestic product several decades ago to about 18 percent today, more than any other peer country.
“The most important driver is that the prices are too high,” Mahoney said. “For everything from drugs to hospital care, we pay higher prices than almost everybody else in the world.”
Those prices show up in premiums, deductibles, and copays that increasingly strain families and employers. Mahoney said the average annual cost of family coverage is now about $27,000.
“For $27,000, you can get a decent car,” he said. “That is a huge amount of money.”
Pharmacists are being affected, as patients also face rising costs at the pharmacy counter. Merith Basey, executive director of Patients for Affordable Drugs, said one in three Americans cannot afford their prescription medications.
“Americans are paying between four and eight times what patients in other high-income countries are paying for the very same brand-name drugs,” Basey said. “The reason is that it’s pharmaceutical corporations who are setting those launch prices and controlling the market through their monopolies.”
Basie said drug companies routinely use patent strategies to block competition, keeping prices high.
