Meet Karla Castañeda. She’s 22, is a single mother, and recently went back to school. Her son is eligible for Medicaid, but she is not because she makes too much money, and her job doesn’t provide her with insurance. To get coverage, she turned to New Mexico’s insurance marketplace.
“So I looked on the exchange and I signed up and registered and everything and then I started looking to see what plan that I was going to get,” said Castañeda. “I was like ‘there’s no way I’m going to be able to pay this’.”
Castañeda is a community health worker in Albuquerque.
“If I was just a full-time student, of course, I’d probably be able to qualify for Medicaid,” said Castañeda. “But at the same time I wouldn’t be getting any income. So, I have to work, but I still work too much to qualify for Medicaid, so it’s hard.”
Castañeda falls into what’s being called ‘the affordability gap’ — the economic no-man's-land where you make too much to be eligible for Medicaid and too little to afford coverage on the exchange, even with a federal subsidy.
The Affordable Care Act was designed in part to give more people access to health insurance and could solve a number of problems for low-income people: better access to care, better health outcomes, and a reduction of medical debt. However, there are huge gaps in the plan. And those that fall through the cracks — like Karla Castañeda — run the risk of not having care or running up huge medical bills.
Sireesha Manne is an attorney with the New Mexico Center On Law and Poverty. She said for this population, choosing to pay the $95 tax penalty for not getting insurance next year may be a more affordable option. That’s because even the cheapest plan may not improve access.
“So on the exchange, you could choose something called a bronze plan, which is the cheapest plan in the sense of monthly payments,” Manne said. She added those payments could range from $15 a month to $150, depending on income.
“But with the bronze plan comes very high out-of-pocket costs, so these are the co-pays that you have to pay every time you go to see a doctor, what you have to pay for prescription drugs, your deductible," Manne said.
In other words, the upfront costs to see the doctor, even on the plan, makes it unaffordable. So, with something like a bronze plan, you can pay much less each month on your insurance premiums, but if you actually end up in the hospital, you could be dropping as much as $12,000 in out-of-pocket costs.
“For a low-income family that’s making $25,000 to $30,000 a year, that’s an extraordinary amount of money to pay out of pocket, which means that a lot of people are going to be susceptible to still having medical debt,” Manne said.
Which isn’t so different from the current situation.
According to the National Center for Health Statistics, currently one in six families in America have had problems paying their medical bills in the last 12 months, while one in 10 families have medical bills they couldn’t pay at all.
Data also show that families with incomes at or below 250 percent of the federal poverty level are more likely to experience burdens from medical debt — families most likely to take a gamble on their health in order to avoid paying for a plan or a procedure.
Mark Schiffman is with ACA International — an association of third-party collection agencies. He said the debt landscape is changing with the Affordable Care Act due to the types of policies available.
“Some of those might include that the consumer pays the co-pay, the consumer pays an increasing part of the deductible, or that there are less items covered under the elective procedures,” Schiffman said. “So there's certainly more of a burden falling to the consumer, the patient.”
Schiffman said there’s still a lot that is unknown as the law is still rolling out. But his association is concerned that some consumers may be adversely affected by the cost of their care.
“So it's an increasingly difficult proposition for both the healthcare system but also for consumers who haven't been used to this sort of practice in the past," Schiffman said.
With an estimated 60,000 people in New Mexico alone who could fall into the affordability gap, lawmakers may be tasked with creating local systems and providers that can serve these populations that will choose to pay a cheaper tax penalty rather than buy health insurance. Like Karla Castañeda in Albuquerque.
“I just can’t afford to get sick,” Castañeda said. “I can’t afford to have an emergency and that’s basically how I’m looking at it right now.”
The fine for not having insurance begins at $95 next year. By 2016, the fine will increase to almost $700 per adult.
“Just, don’t get into trouble,” Castañeda said. “Don’t get into an accident or something so that I won’t have to have medical debt.”