Trouble Paying Medical Bills: Uninsured Do Better Than Obamacare Insured

iStock_000007047153XSmall(A version of this Health Alert was published by Forbes.)

The Centers for Disease Control and Prevention’s National Center for Health Statistics conducts thorough research on health insurance coverage. Recently published early results of the latest National Health Interview Survey have been misrepresented in the media to show that Obamacare is reducing the number of uninsured Americans, and that the number of people having trouble paying for health care has dropped as a result.

Actually, this is not the case. The data show some factor other than Obamacare has caused the survey’s respondents to state that they are having less trouble paying medical bills than in previous years. We know this because those who remained uninsured improved their ability to pay medical bills more than those who got coverage through Obamacare.

Only 45 million Americans under 65 years old reported they were in families with problems paying medical bills in 2015. In 2011, the number was 57 million. That drop of 12 million corresponds with a significant increase in health insurance coverage. The number without insurance dropped by 18 million, from 46 million to 28 million, while the population increased by about three million.

So, it looks like two thirds of the 18 million people insured after Obamacare took hold have no more worries about medical bills. Hooray for Obamacare, right? Not at all. In fact, it is those who remained uninsured who account for the biggest share of the decrease in the number of Americans with troubles paying medical bills.

Looking back at 2011, the 57 million with trouble paying were spread out across all categories of insured status: 24 million had private insurance, 17 million had government coverage (usually Medicaid, the joint state-federal welfare program for low-income households), and only 16 million were uninsured.

By 2015, the proportion of uninsured with trouble paying medical bills dropped to 30 percent from 36 percent in 2011. That is the same percentage-point drop as took place among those dependent on government, for whom the share dropped from 28 percent to 22 percent. The share of those privately insured with trouble paying medical bills barely dropped, from 15 percent to 13 percent.

Of the 21 million who gained coverage from 2011 through 2015 (of which 18 million were uninsured, plus population growth of three million), five million were added to Medicaid and other government programs. Although the government and most analysts describe these people as “insured,” the description is inappropriate for the same reason that nobody describes people receiving cash welfare benefits as “employed.”

Although the government promises these low-income people health care for free or almost free, they actually have very difficult access to care because a significant number of doctors do not accept payment from Medicaid. So, Obamacare’s shifting uninsured patients to Medicaid dependency is unlikely to relieve their challenges with medical bills, relative to those who remain uninsured.

As for the 16 million who gained private coverage, this number combines people with employer-based benefits and those with individual policies purchased on Obamacare’s poorly performing health insurance exchanges. The latter experience very high deductibles, co-pays, and are entangled in confusing and restricted networks of providers. So, it is not surprising that they have not experienced much relief on the payment front either.

Because Obamacare shifted so many from uninsured to Medicaid, the actual number of those dependent on government for their health care, who have with troubles paying medical bills, did not drop very much. They account for only three million of the 12 million decrease. The privately insured account for only one million.

Fully eight million of the 12 million person improvement in the number of people in families with trouble paying medical bills between 2011 and 2015 took place among the pool of uninsured Americans. And that pool shrank by 18 million over the five years!

The survey does not explain how those left outside Obamacare have managed to get their health finances under control so well. To be sure, there may be some selection bias: Healthier uninsured patients were more likely to have remained uninsured than the sicker ones. However, the sickest ones would likely have fallen into Medicaid dependency, and those also had less trouble paying their bills in 2015 than 2011.

Perhaps these Americans have simply given up waiting for politicians to fix the health care system, and are taking control of their own health spending by discussing fees with doctors upfront, and negotiating payment plans. If so, that is a very good outcome from (or despite) Obamacare.

Comments (20)

Trackback URL | Comments RSS Feed

  1. Ron Greiner says:

    “As for the 16 million who gained private coverage, this number combines people with employer-based benefits and those with individual policies purchased on Obamacare’s poorly performing health insurance exchanges. The latter experience very high deductibles, co-pays”

    John, if you actually talked with consumers you would know that people with employer-based health insurance have seen their Out-Of-Pocket expenses explode too.

    Then you write, “Only 45 million Americans under 65 years old reported they were in families with problems paying medical bills in 2015.” Are we to believe these numbers? Didn’t they take a small sampling then guess about all of America?

    John, you should talk to your PHD friends and get someone to write an article how Americans can still purchase health insurance after 2/1/2016. Maybe one Republican Governor could tell his citizens that insurance is still being sold in his state. I bet the reason that nobody can know is that STM is so cheap that everyone would question the high price they are paying for employer-based insurance. Of course, that is the last thing we want to discourage is employer-based insurance because they have bought the politicians of both political parties, the media and all those who report on health care in America. These people have some big bucks.

    The large corporations want Obamacare and their self funded plans and nobody really cares about the voters because they are not the donor base for the non-profits and they don’t give money to the media.

    • Ummmm…. I am a consumer with employer-sponsored benefits!

      • Ron Greiner says:

        So, if you get sick and can’t work then you will lose your health insurance John. That’s not the good stuff. If you have a stroke like Jan Mickelson just had, you will need OBAMACARE! Do you remember talking with Jan a few months back at WHO radio in Des Moines? I listened to the show and Jan was saying how much he liked Medical Savings Accounts and you corrected him and told him they are called HSAs today.

        Usually people don’t get sick so you will probably be OK with insurance that TERMINATES sick people.

        Do you gamble with insurance that terminates the sick because of the tax write off or you just know that us in the Individual Market have been chosen to pay your bills if you need us?

        I’m glad you still have a little deductible John if that is your point. Why don’t you tell us how much your coverage costs to have that itty-bitty deductible. Maybe you don’t even know the cost like the rest of the uninformed employees on dangerous employer-based health insurance.

        Jan is in a nursing home and he is young. Now in Iowa all of these Presidential candidates running for President are never asked a healthcare question exactly like the Presidential Debates. I spent several hundred thousand dollars advertising the MSA on WHO that’s why Jan still calls them MSAs. John Goodman says we wouldn’t have the HSA today if it wasn’t for him but I submit we wouldn’t have the HSA today if I didn’t get my wife to spend all that money in a very important political state – IOWA!

        But you can say you did it John. I remember that when Jan brought up MSAs you changed the subject!!! How many times has an interviewer asked you 1st about the HSA? I couldn’t believe you acted like that wasn’t the subject you wanted to discuss. It is plain to see you have never spent any of your own money advertising the HSA.

  2. Bob Hertz says:

    As you note, John, any statistics about the uninsured are highly imperfect, and the very statement “having trouble paying bills” is pretty subjective in itself.

    However I do have one observation from working in the health insurance field.

    Insured people are more likely to visit a doctor or ER in the first place where they can accrue bills and then have trouble paying those bills.

    Uninsured people often avoid seeing the doctor, and I would not be surprised if in some cases an uninsured person might be turned away from some clinics.

    And when it comes to hospital bills, most hospitals have either formal or informal programs to forgive parts of the bills of uninsured persons. Once in a while an aggressive hospital goes full tilt after some poor uninsured debtor, but my impression is that this happens less and less. The bills may be reduced to something that the uninsured can in fact pay.

    But boy, if a patient has a middle class income and his/her insurance has big gaps, the hospitals will show no mercy in collections.

    • The important thing is the change over the period. Whatever people mean by “trouble paying medical bills” will not have changed over the period.

      • The big ham says:

        That’s exactly the problem we have been talking about. Tax payers paying almost 100% of the cost for most government employees family health insurance plans. Then When the employee looses eligibility for the plan it terminates.
        the insurance company gets rid of the sick and gets a new healthy employee to replace the sick one. Politicians think this is a great deal.
        Jonatan Gruber is correct the American people are stupid.

  3. The big ham says:

    Well it’s not surprising the American people are confused if the top policy people at the NCPA take employer based benifits. I’m curious have you ever read you own plan John.
    What economist would be ok with losing that much salary to rent benifits from an employer?

    • Ron Greiner says:

      big ham, notice how John never writes about how the free loaders on employer-based plans end up costing the self employed when they get sick and moved to Individual Health insurance.

      None of the PHDs write about what is really happening and how a very small percent of the population ends up paying all of the bills for the self funded plans and employer-based insurance in general.

      The media is so controlled in America that it’s exactly like NAZI Germany in 1938.

      Maybe John will write a story about how 1 million health insurance agents now have lost their renewals and commissions. I say tax the non-profits because it’s just propaganda anyway.

    • We just sat through a 90-minute briefing yesterday! If I could use pre-tax dollars to buy my own plan, I would do it.

      Do you know there are free-market think tank policy types in DC who do not take employer-based benefits because they get benefits through their spouses, who are federal public servants! If you want to pick on anyone, go dig them out!

  4. Jimbino says:

    Of course the uninsured will do better than the insured for the simple reason that insurance premiums drain the bank accounts of the privately insured. Social Security insurance manages to deplete your earnings to the tune of several millions of dollars in a lifetime of working, partly because of the bad return on insurance of any kind, but also because of diversion of your retirement funds to indolent spouses and children and to the SS disabled.

    Make no mistake: a “loss-ratio” of 80% implies that the insured 20% of each premium dollar goes to profit and expenses of insurance providers–funds that are wasted when it comes to the purpose of purchasing health care.

  5. James F. Burdick, MD says:

    Forbes and John Graham are wasting time, money and bandwidth on speculation that only confuses the fundamental issue: Americans must be able to see the doctor when necessary and not be penalized financially. See Single payer by taxation will allow clear substantive policy discussion of the country’s spending priorities.
    James F. Burdick, MD

    • Thank you. The junior doctors in England went on strike earlier this month to protest 30 percent pay cuts. How were they able to “see the doctor when necessary”? The doctors were picketing.

      • James F. Burdick, MD says:

        We are a rich country and PNHP and everyone agree doctors will be paid well. My GP friend says he is seeing 10% fewer patients and doing 10% more hours in the mess we have created in the U.S.
        The answers to costs and reimbursement are in my book coming out within weeks, “Talking About SINGLE PAYER.” for updates.
        James F. Burdick, MD, FACS

    • Jimbino says:

      Right, but if Walmart were public, instead of private, we wouldn’t be able to find bread or any other product we needed at a reasonable price. Thank Darwin, we have Uber and Lyft to provide us what the gummint-sponsored taxis can’t, and charter schools to provide us the education that public schools have failed to do for almost a century.

      If you must see a doctor, you are better off in a totally privatized system. Try calling the IRS for some gummint tax advice.

  6. Bob Hertz says:

    Let me go back to Devon’s post itself, and the issue of who is having trouble paying bills.
    The ACA does have a program called CSR (cost saving reductions) for enrollees up to about 200% of poverty.
    ($23,000 income a year for a single person, a higher income for families) These lucky souls can buy a Silver plan and the deductible will go down from $2500 (per the policy itself) down to about $200. The out of pocket limit goes way down as well.

    Like so many parts of the ACA, it is a real benefit but it is limited to a narrow slice of the population, and utterly unavailable to the middle class.

    Hillary Clinton is no favorite of most of the readers of this blog, but she does have two concrete proposals to reduce medical debt.

    One would limit the out of pocket drug costs for any insured person to $250 a year. Such a law has been proposed in California and Maine also.

    The second proposal would allocate up to $5000 for anyone who was insured, but who still got medical bills in excess of 5% of family income due to their deductible and coinsurance.

    I rather like the second proposal, because it deals with the fact that ACA policies have deductibles way out of line with the incomes of most enrollees.

    • Ron Greiner says:

      Bob, don’t be crazy. Have the government pay the deductibles is not the answer. This would work great for Blue Cross because they would have high deductibles and be out of paying claims. It is well established that everything that is done always benefits Blue Cross Inc.

      You just can’t put one problem on top of another and call that a solution. Hillary has a problem with these sky-high deductibles and the American people would never believe her that she will make it all better, get real!

      These Obamacare deductibles are going over $7,000 per person right before the Presidential Election. Poor Hillary I almost feel sorry for her. Not really.

  7. Over at Forbes, a commenter is not buying my argument at all, which is that an exogenous, unexplained factor is much more significant explaining this improvement than Obamacare’s expansion of coverage is. I calculated that if the proportion of uninsured, publicly insured, and privately insured having trouble paying medical bills had remained constant from 2011 to 2015, but the same number of people had become insured as actually happened, the reduction in number of people with trouble paying medical bills would have dropped 2.6 million, not 12.1 million. Calculations are at

  8. Bob Hertz says:

    Ron, I am the first to admit that it seems nuts to
    first subsidize the purchase of insurance, and then add another subsidy because the insurance is incomplete.

    But is there another alternative? We cannot force insurers to offer low deductible plans; we cannot force all middle class and working class people to save up an HRA to cover deductibles.

    These debts due to deductibles and coinsurance are real and damaging. Show me another way to relieve them bssides the Clinton way and I will sure listen.

  9. Barry Carol says:

    Bob – I don’t think Clinton’s proposal is workable within our insurance structure as I don’t believe we can completely insulate people from most of the cost of healthcare. Combined health insurance premiums and out-of-pocket healthcare costs are not even tax deductible until they exceed 10% of adjusted gross income (7.5% for seniors). That implies to me that policymakers view total costs in the range below tax deductibility as reasonable or at least not unreasonable. Moreover, most people don’t have high out-of-pocket costs every year. Even for me, this is my 17th year with heart disease but only three of those 17 years were expensive from a healthcare cost standpoint. The other 14 were in the couple of thousand dollars per year range, mostly for drugs.

    While I’m not a fan of taxpayer financing for health insurance, that approach does have a few things going for it. Most people factor the cost into their budget and lifestyle expectations because they know they have to pay the taxes whether they want to or not. Second, everyone gets the coverage including those who are unhealthy and already sick and they don’t lose the coverage if they get sick or can no longer work. If their income drops, so does their tax liability. The majority of these populations, including the Medicare population with standard FFS Medicare, also buys supplemental coverage to pay for what the primary policy doesn’t pay for, namely the deductibles and coinsurance amounts. Medicare Advantage members can’t do that though.

    The problems with Sanders’ Medicare for all approach, I think, are that it would lock in all the rigidities and inefficiencies of our current system, politics would be way too influential in determining what’s covered, what isn’t and how much is reimbursed, there would probably be much more fraud, and it would likely slow the pace of medical innovation. In short, it would create more problems than it solves. It would probably also winding up costing significantly more than the so-called experts think it would despite lower administrative costs. Even liberal ACA supporter and contributing architect, Ezekiel Emanuel, opposes it.

    My own preference would be something closer to the Swiss approach but with a much wider range of deductibles to choose from coupled with subsidies to help people afford the coverage. I note that in Switzerland, 45% of the population qualifies for a subsidy. My second choice would allow medical underwriting and full age rating (6 to 1 maximum probably) if there were well financed high risk pools that actually worked for the unhealthy and already sick and subsidies to help people buy insurance at an out-of-pocket premium capped at a maximum of 10% of adjusted gross income with no income limit on eligibility for a subsidy and sliding scale lower percentage of income caps below 300% of the FPL down to a nominal payment at 100% of the FPL or lower.