4 Ways Obamacare Will Save Patients From Bankruptcy

When congress passed and Obama signed into law the Patient Protection and Affordable Care Act (ACA), many people were rightfully confused by what this new law meant for millions of people and in particular for them. There have been many statements made by those who resist change to give the ACA a very big black eye. Have they read the 1,200 page document? Probably not and neither have I.

However, there are a few facts I HAVE read that are clear and that everyone should be aware of:

1. Young adults 26 and younger can stay on their parent’s health insurance.

This part of the ACA makes it possible for college age young adults who are not yet earning a sustaining income to be covered.

It’s hard to find a job right after college these days. Many post college young adults are living at home because they can’t afford an apartment without a job. Given hefty student loans for many as well as no job, how could they afford their own health insurance?

Real-world Example:

Consider Paul’s situation. After college he got the entrepreneurial bug and wanted to start his own online retail store selling digital equipment. He was so convinced his start-up would thrive, he took his only savings and put it into his business. He moved out of his parent’s house on his savings because he needed office space and more independence and less pressure from his close knit family.

A crisis occurred when he fell and whacked his head on a cement floor, saw stars and briefly passed out. As a result of what was diagnosed as a moderate concussion, Paul’s doctor told him that he needed to rest his brain and do nothing but stay in a dimly lit room and only do things that took minimal mental effort. Several months later Paul was only marginally better and still not sleeping well.

His business was put on hold and he was forced to move back into his parent’s house. Now 14 months later he is just beginning to be able to sustain mental effort for an hour or so at a time without triggering a long and painful headache and nausea.

The fact that he was on his father’s health insurance meant he was not responsible for monthly premiums and that he had access to doctors. Had he not been covered through his dad, his medical bills would have crushed his already depleted savings and demoralized him into a significant and protracted depression.
2. You cannot be denied health care for pre-existing conditions. If you have not had health care and have diabetes you cannot be denied health care anymore.
If you have no health care and get sick you are set up for financial as well as physical stress. If you don’t feel good, have to pay out of pocket for expensive medications and doctor visits, it doesn’t take a genius to realize this is a recipe for disaster. Many people in this situation are forced to put medical expenses on their already ailing credit cards.

Then they have a hard time paying their monthly balance and end up with a high balance on a high interest (15% or higher) credit card. Financial worry when you are weakened by physical illness leads to feeling helpless and self blaming, overwhelmed and even humiliated, not to mention having to deal with the physical condition itself.

Is it any wonder that 60% of all bankruptcies over the last number of years are due to cascading medical expenses?

3. Mental health now has parity with physical health.

The ACA includes mental health care and substance abuse treatment among its 10 “essential” benefits, which means that plans sold on the public health care exchanges must include coverage. In addition, the rules to fully carry out an older law, Mental Health Parity and Addiction Equity Act of 2008 were issued in November, 2013 after a long delay, according to the New York Times article, “Understanding New Rules That Widen Mental Health Coverage,” by Ann Carrns, January 9th, 2014.

The parity law says that when health insurance plans provide coverage for mental ailments, it must be comparable to coverage for physical ailments. For instance, plans cannot set higher deductibles or charge higher co-payments for mental health visits than for medical visits, and cannot set more restrictive limits on the number of visits allowed. Health insurance companies are not mandated to offer mental health coverage, but if they do, as most do, they have to follow the new parity rules.

If you have a mental issue like, depression, anxiety, autism or ADHD/ADD, the insurance company now has a responsibility to provide an equal benefit for a mental condition as they give for a physical condition.

Real-world Example:

This was not the case when Mary lost her job 5 years ago. She fell into a sense of uselessness and self doubt as her period of unemployment turned from weeks into months. Because she had majored in history as an undergraduate and continued to be fascinated by it, she managed to find a couple of adjunct teaching positions at two local community colleges that offered her $3,000 a semester for each course with no health insurance. Her COBRA benefit (offered from her last job), extended her health care for 18 months, but the premiums were so high she had to drop it.

When she couldn’t get out of bed because she felt so hopeless and self-loathing, she reached out to get help from a psychologist. Her insurance coverage for mental health was so minimal she knew the psychologist would not accept it. She suffered alone and collapsed into a deepening sense of depletion and self blame. If her insurance had allowed as relatively much for mental health as for surgery, she could have gotten the therapeutic help she needed to recover her sense of empowerment despite her challenging situation.

4. The Medical Loss Ratio (MLR) means that Insurance companies are now required to spend at least 80% of premium dollars (85% in large group markets) on medical care and quality improvement activities.

Insurance companies that are not meeting this standard will be required to provide rebates to their consumers. The Medical Loss Ratio is a critical change within the heart of the health care industry most people don’t know about.

During the early 1990s I was Media Chair for the National Association of Mental Health Professionals and Consumers. In that role I learned that managed care companies spent an average of 30-50% of each of your health care premium dollars on marketing and advertising costs. For every dollar you may have paid in health care premiums, often half went to marketing the health care company. Compare this to Medicare at the time that spent only 4% on administrative and non-medical expenses!

And, of course, the only way the insurance company could maintain a “healthy” profit is by denying care. They would maintain that treatment was either not “medically necessary” or by significantly delaying reimbursement. However, now the insurance companies are mandated by law to use your hard earned premium dollars for health care (except for 15% of your dollar, down from 30-50%), YOUR health care and not for their company’s already “plump” bottom line.

I mentioned earlier that 60% of all present bankruptcies are due to overwhelming medical costs that have sunk an individual or family so far into the red they can’t survive. With some strong patient protection measures now law the hope is that Americans will be able to get the health care they need when they need it so they can take better care of themselves and not go broke in the process.

 

Maggie Baker, Ph. D.
Psychologist – Financial Therapist
Author of Crazy About Money: “How Emotions Confuse Our Money Choices And What To Do About It”.