A Las Vegas couple in their early 60s making $65,800 a year can receive nearly $1,200 in monthly subsidies from the federal government to buy health insurance.
But if their income increased by just $100 a year, the subsidy would vanish and health insurance would cost them about one-third of their annual income.
The fact that health insurance can be unaffordable for a swath of middle-class Americans is not new. But an analysis released this week by the Kaiser Family Foundation paints a more detailed portrait of those who either struggle to make their premium payments or simply go without.
“Even though it’s less than 5 percent of the population, it’s gotten 95 percent of the media coverage,” Cynthia Cox, an author of the report, said of the plight of middle-class customers who must pay full price for their policies or do without. “I think from both the left and the right, this is seen as a problem.”
By the KFF’s estimates, roughly 1.6 million people nationwide bought unsubsidized coverage through their state marketplace (such as Nevada Health Link in the Silver State). Another 4 million found health insurance outside the state exchange.
About 1.9 million others didn’t buy coverage at all and had incomes above 400 percent of the federal poverty level — the cutoff to qualify for a subsidy.
‘Priced out of the market’
“Those are people who you might say are priced out of the market,” Cox said, adding that most of those people are likely older Americans.
Per federal Affordable Care Act regulations, health insurers can’t discriminate against patients based on their health conditions. They can, however, charge people who are older or live in rural areas more, and they do.
The report showed Nevadans who are 60, single and earning $50,000 a year would pay between 15 percent and 27 percent of their income just for health insurance premiums, depending on whether they live in urban Clark County or rural areas of the state.
That cost wouldn’t include the person’s coinsurance or copays or any costs from their deductible.
That may mean some local couples in their 60s simply can’t afford health insurance, said Jeremy Shugarman, a Las Vegas broker and past president of the Clark County Association of Health Underwriters. He said he had to help one senior couple disenroll from health insurance in the last month when they realized their income was just slightly higher than they’d estimated.
“I have a lot more people that are not getting help from the government than I do that are getting help,” he said. “(Health insurance) is affordable for people that are in the income bracket that allows them to get large subsidies on better plans.”
It’s nearly impossible for someone making just above 400 percent of the poverty level to pay for health insurance, said Cox, the coauthor of the Kaiser foundation report. Because the price of health insurance rises as you age, it would take a $500,000 annual income to be able to afford coverage for some customers. And not many Nevadans earn that much, especially those living in a rural areas.
Nationally some states are looking into reinsurance programs, which could decrease or keep steady health insurance premiums by offering reimbursements for insurers when patients rack up high bills. The approach, Cox said, has been largely bipartisan.
And some on the left in Congress have proposed expanding subsidies to a higher income bracket or enacting single-payer health insurance. Rep. Pramila Jayapal, D-Wash., for instance, introduced a “Medicare-for-all” proposal last month that effectively eliminates private health insurance.
Bill would add Medicaid option
In Nevada, association health plans have been made available through chambers of commerce in the north and south, offering comprehensive plans to small businesses and sole proprietors. And Assemblyman Mike Sprinkle, D-Sparks, is rolling out a bill to offer consumers a Medicaid buy-in option. Sprinkle has said such coverage would likely cost about the same as plans available on the marketplace today.
The real problem, according to Cox, are the high prices that Americans pay for medical care.
“We really don’t use more health care than other countries do … but we spend much more on the services we get,” she said. “This really is an issue of underlying prices of health care being so high in the U.S. compared to other countries.”
In the meantime, Cox said, Nevadans and middle-class residents of other states may have only one option: short-term, limited-duration plans. Such plans are often referred to as “junk” insurance because unlike ACA-compliant plans they are not required to cover 10 essential health benefits, including mental health care and prescriptions.
Nevada Health Link Executive Director Heather Korbulic said she’d never recommend them because of the unimpressive benefits.
Looking at the Kaiser data, Korbulic said she was surprised by the high insurance premiums in rural Nevada compared with the rest of the nation and indicated those numbers are worth further examination.
Still, she’s not optimistic the state’s budget could support solutions like a reinsurance program. Instead, those will require federal action, she said.
“If you think about it in the bigger picture for the state of Nevada, our public health and our economy are improved when people have access to health insurance,” Korbulic said.