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Source: Department of Health and Human Services.

Reducing the number of people forgoing health insurance and lowering healthcare costs were two core goals of Obamacare, but while Obamacare has done a good job at driving down the uninsured rate, Americans remain hard-pressed to pay for medical treatment.

According to a study conducted by Gallup late last year, 31% of Americans report that they're putting off healthcare because of its high cost, and that percentage hasn't budged since Obamacare's implementation.

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First, a little background
Health insurance premiums are pricey and getting pricier, but subsidies to low- and moderate-income Americans significantly reduce its cost. As a result, millions of Americans have signed up for health insurance through the Obamacare exchanges.

According to the Department of Health and Human Services, 12.7 million Americans enrolled in health insurance plans through the federal and state health insurance exchanges this year, including 4 million people who enrolled for the first time. Roughly eight in 10 of these Americans qualified for an average subsidy of almost $300 monthly, representing about 72% of their health insurance premium.

Subsidies are a big reason millions of people have enrolled in health insurance plans, but they're not the only reason. Obamacare also includes penalties for going without health insurance, and more people are also enrolling because those penalties are increasing.

Last year, the penalty for being without health insurance was the higher of 1% of income or $95 per adult and $47.50 per child, up to a maximum of either the national average cost of a bronze level plan or $285 in 2015. As a result, 7.5 million Americans paid a combined $1.5 billion to the IRS in 2015 for failing to get health insurance in 2014. This year, penalties for going without health insurance in 2015 have jumped to the higher of 2% of income or $325 per adult and $162.50 per child, up to a maximum of either the average national cost of a bronze-level plan or $975.

Patients' burden
Subsidies and penalties are a big reason Obamacare has succeeded in reducing the uninsurance rate, but because Obamacare has few carrots or sticks that can be used to control the underlying cost of healthcare, such as hospital procedures and drug prices, many Americans with insurance are still putting off treatment.

Currently, healthcare prices are determined by negotiations between insurers, providers, and drugmakers, rather than patients, and because price transparency remains virtually non-existent, it's difficult to comparison shop for healthcare services. Ultimately, patients are captive to insurers' provider networks and pricing schemes.

That wouldn't necessarily be bad if health insurance plans covered the bulk of healthcare costs out of the gate, but they don't. Instead, insurers require patients to absorb the majority of costs incurred early on via sky-high deductibles and co-pays.

For example, the average bronze-level health insurance plan available through the federal exchange in 2016 had a combined prescription and services deductible of $5,765, up 8% from an average $5,328 in 2015, according to the Kaiser Family Foundation. That's a lot of money to pay before health insurance really kicks in, but patients are often on the hook for much more than that because Kaiser's analysis shows that 47% of bronze plans had combined deductibles north of $6,000. Given most Obamacare enrollees have low to moderate income, these nosebleed deductibles still serve as a major barrier to getting medical care.

Patients also delay care because of their plan's co-pay and coinsurance requirements. Increasingly, insurers employ drug formularies that include multiple drug tiers with varying co-pays and coinsurance. If an insurer favors a drug -- usually because of lower prices or a deal cut with the manufacturer -- then it appears in a low tier requiring lower patient cost sharing. Pricier drugs are placed in higher tiers requiring higher patient cost sharing.

These drug formularies can be a big problem for people with tough-to-treat diseases requiring costly medicine, such as HIV or cancer. In 2014, the Tampa-based AIDS Institute filed a complaint with the Department of Health and Human Services because HIV drugs were often placed in the most costly tier, and a similar finding for cancer drugs was made by the American Cancer Society's Cancer Action Network (ACSCAN) last year.

In its study, ACSCAN found that 17 of the 18 oral cancer drugs it looked at were covered by insurers in the highest cost-sharing drug tier more than 80% of the time. It also found that the majority of insurers surveyed relied on co-insurance, rather than co-pays, for drugs in that tier, significantly increasing the cost burden on patients. 

Looking forward
While Obamacare has made big strides in reducing the uninsurance rate, high deductibles and co-pays remain a barrier to care for many low- to moderate-income Americans, and that's unlikely to change without major changes that provide greater subsidies for out-of-pocket expenses or give Obamacare more tools in the toolbox to rein in costs for healthcare services and medicine. Until then, it's hard to imagine that the percentage of people delaying healthcare because of its high cost will drop. 

 

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