Many can’t afford cost-sharing in typical private health plans, a new Kaiser Family Foundation study has found.
In its latest brief, KFF analyzed data from the 2019 Survey of Consumer Finances. It found that large shares of non-elderly households don’t have enough liquid assets to meet typical plan cost-sharing amounts. In fact, most households’ savings are less than the maximum out-of-pocket limit allowed for most private plans.
Single-person households had median liquid assets of about $3,000, while their maximum out-of-pocket limit in private plans was nearly $8,000. A similar disparity was seen in multi-person households with assets of about $6,700 compared to the out-of-pocket maximum of nearly $16,000.
“Much of the discussion around affordability of private coverage has centered on premium costs,” the study said. “A broader notion of affordability would focus on the ability of families, particularly low- and middle-income families, to meet potentially high out-of-pocket expenses associated with a chronic or acute illness.”
Lower-income households have less savings than the typical deductibles in employer plans, according to the study. Assets vary greatly depended on household income, with the highest being among multi-person households with incomes of 400% of poverty or more.
While some low-income individuals may get reduced cost-sharing if they are covered through Medicaid or a marketplace plan, many are ineligible for these programs. Households with someone uninsured also have especially low assets. Though households where someone has private insurance generally have more assets, a notable share still do not have the means to meet typical cost-sharing expenses.
Many households did not have enough assets to pay the typical deductibles, and most can’t afford to meet high deductibles. More than 4 in 10 non-elderly adults would meet an emergency expense of $400 with savings or cash. Nearly half of single-person households did not have the means to afford a higher-end deductible, and more than 6 in 10 could not cover a very high single deductible.
More than 4 in 10 multi-person households did not have the means to cover the typical employer plan family deductible, and more than 6 in 10 did not have assets for a very high family deductible. And, to cover health expenses, more than a quarter of people with employer coverage put off vacations or major purchases, and the same amount cut spending on necessities.
Health plan cost-sharing has the potential to lower premiums by reducing the expense paid by the insurer, the study concluded. Requiring consumers to contribute also encourages them to carefully consider what services they will use. But evidence suggests cost-sharing may also discourage people from seeking care.