One of the hosts of the popular podcast Call Your Girlfriend, Aminatou Sow, recently found herself in the health policy spotlight. Sow was diagnosed with endometrial cancer, and has been vocal about her experiences. Recently, she published a thread on Twitter about a surgery she needed. The hospital asked her to pay her deductible in full before she could have the surgery. This, she said, was fine for her but she worried for those who don’t have the cash on hand to pay a high deductible.

Her concern is valid. In the past month, new research highlights the regressive effects of high health plan cost sharing. In our first post for CHIRblog’s new What We’re Reading series, I dive into some recent health insurance and financial equity research.

The American Journal of Public Health’s The Effects of Household Medical Expenditures on Income Inequality in the United States (Jan 18, 2018). This study attempts to assess the effect of families’ medical spending on income inequality, and whether there have been changes since enactment of the Affordable Care Act (ACA).

What it Finds

• Spending on medical care lowered the poorest median incomes by 49 percent and near-poor incomes by close to 11 percent, while the highest incomes were decreased only by 2.5 percent.
• This issue improved minimally after enactment of the ACA (47 percent and 2.7 percent).

Why it Matters

Families with lower incomes are spending a higher percentage of their household incomes on health care. Increasingly high deductibles in both the individual and employer group markets are a factor. For example, the study notes that enrollment in employer-sponsored coverage with deductibles of at least $2,000 has increased by six times since 2006. While these plans lower costs for employers, they exacerbate income inequality because high out-of-pocket spending affects lower-income families more. Unfortunately, while the ACA improved the overall adequacy of coverage for many, its effect on the trend towards higher consumer cost-sharing has been minimal.

Kaiser Family Foundation’s Health Coverage by Race and Ethnicity: Changes Under the ACA

(Jan 2018). This brief looks into the demographics of who is covered and who is left out in the ACA’s historic coverage gains.

What it Finds

• People of color saw a larger gain in coverage than whites due to the ACA, helping to alleviate racial and ethnic health disparities.
• Despite these notable gains, significant disparities still exist, especially for those of Hispanic or Latino descent.
• Although opportunities remain to further alleviate these disparities, efforts to repeal parts of the ACA by the current Administration and Congress, such as repealing the individual mandate and sharply decreasing enrollment assistance funding, impede current and future efforts.

Why it Matters

Before the ACA, the uninsured rates for black and Latino Americans were 17 percent and 26 percent respectively. The law cut these rates significantly: 12 percent for black Americans and 17 percent for Latino Americans. The uninsured rate for white Americans fell from 12 percent to 8 percent. Even so, a greater share of black Americans than white Americans fall into the Medicaid gap due to a larger portion of the population being in Southern states that have refused Medicaid expansion. For the Latino community, a greater proportion face steep barriers to subsidies and Medicaid coverage due to citizenship status. Falling into the Medicaid gap, or losing the ability to receive subsidies offered under the law leave middle- to low-income black and Latino Americans to face higher premiums and cost sharing as compared to their white counterparts.

Health Affairs’ Medicaid Versus Marketplace Coverage for Near-Poor Adults: Effects on Out-of-Pocket Spending and Coverage (Jan. 24, 2018). This study compares family health care spending for those who would be eligible for Medicaid in states that have and have not expanded the program.

What it Finds

• For those living in a state that expanded Medicaid, adults with family incomes between 100-138 percent of poverty experienced a $344 decline in out-of-pocket spending relative to their counterparts in non-expansion states.
• Expansion-state residents between 100-138 percent of poverty experienced a 7.7-point decline in the probability in having any out-of-pocket spending as compared to their non-expansion state counterparts.
• In states choosing not to expand Medicaid, average total out-of-pocket spending for the near-poor increased from $1,086 to $1,412.
• When compared to subsidized Marketplace coverage, Medicaid expansion was associated with lower out-of-pocket premium spending, lower probability of premium spending over 10% of a person’s income, and a lower probability of out-of-pocket premium spending generally.

Why it Matters

This Health Affairs study highlights the regressive effect of having low-income populations enrolled in marketplace coverage instead of Medicaid, resulting in increased health and income disparities in non-expansion states. This study of Medicaid versus Marketplace coverage could have implications for national policy proposals, such as Senator Ben Schatz’s proposal for a Medicaid Buy-In option, as well as state-level efforts to adopt Medicaid expansion.

Urban Institute’s Why Does Medicare Advantage Work Better Than Marketplaces? (Jan. 2018). Experts compare the operation of the Medicare Advantage (MA) program with the operation of the ACA’s Marketplaces.

What it Finds

• Enrollees in Medicare Advantage are more highly subsidized than those in the Marketplaces, leading consumers to be less price-sensitive when choosing coverage and insurers to focus on plan design rather than aggressively priced premiums.
• The benchmark for subsidies for MA plans are based on different criteria than marketplace plans, making premium prices lower and more stable.
• Risk adjustment does not have to be budget neutral in the MA program, which helps make insurers less wary about their risk pool.
• Provider payments, especially in consolidated markets, are much higher for commercial marketplace plans than MA plans due to Medicare’s ability to limit payments for out-of-network providers. This, in turn, makes costs rise for commercial marketplace plans faster than for MA plans.

Why it Matters

The ACA’s health insurance marketplaces have undergone significant instability in their early years. In 2016, CHIR experts mapped out several policy recommendations to improve the individual market, using lessons learned from Medicare Advantage, Medicare Part D, and the ACA marketplaces. To the extent policymakers wish to maintain insurer participation and moderate premium increases in this market, the Urban Institute’s study underlines the extent to which Medicare Advantage can offer some helpful lessons.