Will Obamacare increase personal medical bankruptcies?

Despite its rocky rollout it’s clear now that Obamacare is succeeding in bringing medical insurance to many of America’s uninsured. According to a recent Gallup poll, the uninsured rate fell to 13.4 percent in the second quarter of 2014. It peaked at 18 percent in the 3^rd quarter of 2013. This is the lowest quarterly figure since Gallup started tracking medical insurance enrollments in 2008. The Commonwealth Fund reports that as of May 1, 2014, 20 million people now have coverage under the Affordable Care Act. The largest number of enrollees, 8 million, purchased insurance directly through government run health insurance marketplaces, 6 million through Medicaid or CHIPS, 5 million from an insurer, and the remaining 1 million young adults under 26 enrolled in their parents’ plans. This is a remarkable success, especially given that 20 states are still firmly set against extending Obamacare to their Medicaid recipients.

At this point we can expect to see the uncharted shoals of Obamacare begin to emerge. For example, common wisdom is that the often comparably low monthly premium covers all, after the usual clearly stated deductibles, exclusions and coinsurance. This isn’t true, of course: the ACA isn’t National Health. It’s a pastiche woven from compromise.

Many of those freshly enrolled in Obamacare are newcomers to the medical insurance arena and are unaware of coverage pitfalls. Nowhere is this more dramatically clear than when balance billing issues arise. In balance billing, providers charge patients the full market rate for services. This often occurs because the patient, unbeknown to him or her, has been treated by a practitioner outside of the patient’s insurance network, be it PPO, HMO, or, increasingly an EPO. The New York Times last year chronicled the financial catastrophe that can befall patients and their families when balance billing comes into play. “It’s not uncommon for patients who visit an in-network hospital to learn later that they’ve been treated by out-of-network providers, resulting in thousands of dollars in charges,” notes the article, “Out of Network, Not by Choice, and Facing Huge Health Bills.”

Under Obamacare, as with traditional plans, patients referred by their in-network practitioners to a specialist who’s not in their network can end up with huge unforeseen bills. Likewise, in-hospital services are often provided by physicians unknown to patients or even unseen by them, such as anesthesiologists, radiologists, pathologists. Overwhelming bills can come from them, to.

The ACA does make some provision for balance billing in emergency services, but otherwise not, notes The Times. “It is conceivable that the problem gets worse for some people if the Affordable Care Act encourages narrower networks, which some people think it might do,” said health care law expert Professor Timothy S. Jost.

Evidence is emerging that Prof. Jost is correct. Obamacare seems to be sparking the growth of EPO’s—Exclusive Provider Organizations—into which insurance carriers are moving Obamacare enrollees. EPOs typically have fewer participating providers and offer less coverage. California’s Anthem Blue Cross is facing a potential class action suit over what The Los Angeles Times tagged as “more litigation over narrow networks in Obamacare coverage.” Anthem’s Obamacare subscribers allege they were surreptitiously moved from Blue Cross PPO’s into EPOs, and so inappropriately subjected to balance billing. Some of the Obamacare enrollees had prior PPO coverage, and believed they still did.

One out of three Americans have trouble pay their medical bills. Medical bankruptcies constitute 62% of personal bankruptcies in the US, according to the Kaiser Family Foundation. Most who filed for “were well educated, owned homes, and had middle class occupations. Three quarters had health insurance,” noted the Foundation.

We’re seeing millions of new, unsophisticated medical services’ consumers coming into the marketplace through Obamacare enrollment. Most are largely unaware of medical billing nuances, such as balance billing. It’s possible over the next few years that because of this we’ll see an increase in medical bankruptcies. Studies of Obamacare’s forerunner, Massachusetts’s Romneycare, showed that medical bankruptcies in that state were largely unaffected by Romneycare. In 2007-09, medical bills “contributed to 52.9% of all bankruptcies in the state. Absolute numbers of medical bankruptcies were up by a third,” reported The American Journal of Medicine.

One out of three Americans have trouble paying their medical bills. Medical bankruptcies constitute 62% of personal bankruptcies in the US. Most medical bankrupts “were well educated, owned homes, and had middle class occupations. Three quarters had health insurance,” according to the Kaiser Family Foundation.

Unless and until the Obamacare legislation is modified to account for all aspects of balance billing, medical bankruptcies will rise if not soar.

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