Avalere examined the potential financial benefits for consumers with a range of ages, incomes, and family size who have diabetes, a broken leg, breast cancer, and stroke. The findings indicate that even after paying premiums, deductibles, and cost-sharing, these consumers could reduce their spending significantly by purchasing insurance compared to remaining uninsured (Figure 1).

“New diagnoses or unexpected health conditions can occur anytime and may cause tremendous financial and emotional strain on people without insurance,” said Caroline Pearson, senior vice president at Avalere. “While healthier people may not think insurance is a good value for them, the financial protection and peace of mind it affords should not be underestimated.”

The ACA makes coverage available for all Americans through a range of policies, including establishing subsidized coverage options sold on insurance exchanges. However, approximately 32 million individuals remain uninsured, including, as estimated by the Kaiser Family Foundation, nearly 14 million of who are eligible to purchase coverage through insurance exchanges, according to the Kaiser Family Foundation.

Avalere’s research also examined premiums, out-of-pocket spending, and total insurance cost by condition. Avalere worked with clinicians to develop a treatment schedule for each case study, which were designed to be realistic of treatment for uninsured individuals who experienced high cost variations of the selected conditions. The schedules incorporate all elements of treatment commonly covered by insurance, including physician visits, inpatient stays, inpatient and outpatient surgeries, outpatient treatment, rehabilitation and physical therapy, and prescription drugs. Each schedule is for one calendar year (Figure 2). The full report includes detailed cost estimates for each of the conditions examined.

“Foregoing insurance in the short term to save money on premiums can lead to long-term consequences,” said Chris Sloan, senior manager at Avalere. “In addition to protecting the individual from unexpected costs, people with health insurance receive better and more timely care, which can lead to improved outcomes and lower overall costs.”

Funding for this analysis was provided by the Federation of American Hospitals. Avalere retained full editorial control.

Methodology

Using the Medical Expenditure Panel Survey (MEPS), Avalere picked four conditions that are high cost but also likely to apply across age groups and socio-economic statuses. Avalere worked with clinicians to develop a treatment schedule for each case study. The treatment schedules were designed to be realistic schedules of treatment for uninsured individuals experiencing high cost variations of the selected conditions. The schedules incorporate all aspects of the treatment commonly covered by insurance including: physician visits, inpatient stays, inpatient and outpatient surgeries, outpatient treatment, rehabilitation and physical therapy, and prescription drugs. Each schedule is for one calendar year in which the hypothetical acute event occurred.

Avalere used MEPS to determine the average cost that uninsured patients with the specified condition are billed for those services, including any normal discounts or negotiations providers implement for uninsured patients. To compare the total OOP costs for an uninsured patient to those of patients who have insurance, Avalere selected a low cost, popular 2016 silver exchange plan in four states: FL, TN, MO, and TX. Then, for six different patient scenarios (varied by income, family size, and age), Avalere calculated the expected OOP costs, running the patient treatment profiles through the plans’ benefit designs, and premiums, including expected premium tax credit and cost sharing reduction subsidies, for those individuals.