Squared Away Blog

August 31, 2021

Several million retirees have spent so much on their prescriptions in recent years that they crossed over into the “catastrophic” phase of their Medicare drug plans.

Once catastrophic coverage kicks in, Part D drug plans require retirees to pay only 5 percent of their medication costs out of their own pockets. But there’s a catch: there is no cap on total annual spending, which can quickly rise to thousands of dollars if they need chemotherapy or a brand-name designer drug for a rare medical condition.

Juliette Cubanski, deputy director of the Kaiser Family Foundation’s Medicare policy program, said that could change, because proposals to place a cap on total out-of-pocket spending in Part D plans have a bipartisan tailwind behind them. Democrats in the House recently reintroduced a bill that would limit spending to $2,000. Last year, the Republican-controlled Senate Finance Committee approved a $3,100 cap, which is currently part of a Republican prescription drug bill.

Now, President Biden says he wants to limit retirees’ spending in their Part D plans. However, the bills circulating on Capitol Hill could also become tangled up in a more complex debate about a related issue: the best way to control drug prices.

A flat dollar cap – if it passes – would be simpler than the current system for determining out-of-pocket drug costs, though it would mainly help people with extraordinarily high spending. Cubanski said most people on Medicare spend less than $2,000 out-of-pocket annually.

But in a given year, she said, “that could be anybody.” And as baby boomers stampede into retirement, more people will be pushed into catastrophic coverage at a time of continually rising drug prices. …Learn More

August 19, 2021

In the madcap 1960 movie, “Where the Boys Are,” a college student named Tuggle (played by Paula Prentiss) is forthright about why she’s going to Ft. Lauderdale for spring break: to find a husband.

Women have come a long way, and two out of three married women today choose to work, rather than go Tuggle’s presumed route and become a full-time housewife. Yet there’s a 21^st century corollary to Tuggle’s experience. College is important in determining who people marry.

We tend to marry others who are like us, and education has become central to this. College graduates gravitate to other college graduates. People who complete their formal education at high school graduation tend to marry other high school grads. Further, this trend of marrying someone with a similar education is growing over time.

“People are increasingly marrying other individuals with the same level of education,” says Boston College economist Geoffrey Sanzenbacher. Sanzenbacher and other economists say the growing trend of college graduates pairing off with other graduates has increased income inequality.

The importance of college goes much deeper. Among graduates, the specific college one attends is more important in determining who one marries than one’s field of interest or personal attributes like SAT scores or a parent’s income.

For example, graduates of a specific college are very likely to marry someone who went to that same institution – even if they are in different fields, according to a new research study that connected the data in Norway’s centralized college admissions system with marriage data. Or consider two graduates of the same law school. They have a good chance of getting married – not because they are both lawyers but because they attended the same school. …Learn More

August 12, 2021

At $140 billion, the nation’s unpaid medical bills are the single largest form of past due debt. One thing driving this is no doubt rising deductibles for health insurance.

A third of insured Americans said in a survey that it is difficult to pay the deductibles in their employer health insurance plans and in the policies sold on the Affordable Care Act (ACA) marketplaces.

Among employer-sponsored insurance plans, policies with high deductibles are becoming more pervasive, even in large corporations. Employers are choosing high-deductible plans in part to keep their workers’ monthly premiums at a reasonable level – a tradeoff that is inherent in health insurance.

But the sky-high cost of medical care can quickly run-up out-of-pocket spending in years when someone in the family becomes very ill or needs surgery. Average deductibles exceed $3,000 for a single worker’s policy in half of the U.S. companies with less than 200 workers. The family plan deductibles exceed $6,000 in more than 40 percent of small companies.

ACA plan deductibles are rising in almost every state and have surpassed $4,000 per year, on average, in 11 states from Arizona and Michigan to Oregon. A variety of plans are available on the exchanges, including plans with lower deductibles for people willing to pay higher premiums. But ACA premiums have also been rising, though the federal government has temporarily increased the premium subsidies as part of COVID-19 relief.

New research appearing in the July issue of the Journal of the American Medical Association (JAMA) estimates that medical bills made up more than half of all the consumer debt in collections last year. And the data are through June 2020 and don’t even reflect the full cost of caring for COVID patients. …Learn More

July 29, 2021

The Affordable Care Act gives a carrot to states that expand Medicaid from a health insurance program mainly for poor people to one that also includes low-income workers.

Under the 2010 law, the federal government initially paid the full cost of adding more people to the Medicaid rolls, and a large majority of states have signed up. The federal funding for new expansions dropped a bit in 2020 to 90 percent and will remain there.

Yet 11 states are holdouts and haven’t expanded their programs, leaving nearly 2.2 million workers and family caregivers in what the Center for Budget and Policy Priorities calls the Medicaid coverage gap.

The workers falling in the gap, who would qualify for coverage if their states expanded Medicaid, do not have health insurance at their places of employment and can’t afford to buy subsidized insurance through the Affordable Care Act.

The bulk of the uncovered workers are in the South, with half in Texas and Florida. Missouri had been a holdout. But last week, the Missouri Supreme Court ordered the legislature to comply with a voter ballot initiative and fund expansion of the state’s Medicaid. Expansion was also controversial in Oklahoma, but it went into effect on July 1 after voters there approved the measure.

An analysis by the Center sketched a picture of who is in the gap, based on 2019 Medicaid data, the most recent available. People of color comprised about 40 percent of the working-age population but made up 60 percent of the people in the gap in the non-expansion states, the Center estimates.

Nationwide, one in four who lack access to Medicaid are lower-paid essential workers on the front lines during the pandemic. …Learn More

July 8, 2021

The U.S. Supreme Court’s decision in June to reject another challenge to the Affordable Care Act was widely seen as the final word: the law is here to stay.

But it was COVID-19 that underscored how important it is.

The federal government said nearly 10 million people signed up for Medicaid health coverage during the pandemic year that ended in January 2021. A decade after passage of the Affordable Care Act (ACA), which expanded Medicaid to include more low-income Americans by increasing the income limit for eligibility, the new sign-ups pushed total Medicaid enrollment to a record high of 80 million.

The recent increase was largely due to the spike in sign-ups among the unemployed or workers who saw their hours reduced and lost some of their wages. The relief packages passed by Congress in March 2020 and this year encouraged Medicaid enrollment by giving states additional funding to pay medical costs and sign up more people.

Beyond Medicaid, sales of regular health insurance policies sold on the state insurance exchanges also rose last year, as COVID-19 raced through the population. A 5 percent increase in enrollment in the policies, which are often subsidized, pushed total enrollment to 12 million.

Earlier this year, the American Rescue Plan continued to shore up health coverage by reducing insurance premiums for people who buy the policies. Unfortunately, these and earlier federal supports were temporary measures put in place for the pandemic, and some progress will be reversed when the supports expire at the end of this year or next year.

Despite the recent coverage gains, it has been a bumpy ride. Prior to COVID-19, sales of ACA policies had been slowing after years of marked progress in reducing the U.S. uninsured rate. And in the states that have not expanded Medicaid to reach more residents, the uninsured rates are nearly double the rates in the expansion states – 15.5 percent vs 8.3 percent. …Learn More

Money Culture

June 15, 2021

The cost of employer health insurance has skyrocketed, and workers are picking up some of that growing tab. Amid employees’ grumbling, employers are loath to push more of the cost onto their workers.

That’s why the consensus view among major employers, expressed in a recent survey, sounded like a cry for help. Calling rising insurance costs “unsustainable,” the vast majority said they need help from the government either to provide alternative forms of coverage or control health care and prescription costs.

Employers “have reached their limit,” said Elizabeth Mitchell, chief executive of the Purchaser Business Group on Health, an employer advocacy organization that collaborated with the Kaiser Family Foundation on the survey.

Employers, she said, “are tired of pouring tons of money into a broken health care market that delivers uneven quality at bloated costs.”

And these are the major corporations and non-profits with more than 5,000 employees. They have some leverage to negotiate with insurers and more financial wherewithal to pay for the plans. Smaller employers – if they provide health insurance at all – pay roughly the same premiums as large employers, and their workers shoulder a larger share of the cost for family plans.

Last year, employers with more than 50 workers paid $21,342 in premiums to cover employees with family plans – that’s still 50 percent more than a decade ago, despite a recent slowdown in health care inflation, according to Kaiser.

When employers’ insurance costs rise so quickly, that squeezes out money they might use for wages and other benefits. Workers are also paying more, though each employer decides how much of the added costs to pass on to workers.

In 2020, employees paid nearly $5,600 – more than a quarter – of employers’ total costs for family plans. To curb their health insurance expenses, employers increasingly are offering high-deductible plans, and the deductibles workers pay for these plans are also rising.

The major employers said in the survey that they’re open to a range of federal policies that would either cut health care costs or get the government more involved in providing health care. …Learn More

Money Culture

May 27, 2021

An impressive consensus has emerged around the benefits of working from home.

More employers have come to accept the practice after being pleasantly surprised at how productive their employees are. If remote workers were once viewed as insufficiently committed to the company, they no longer feel as marginalized. And people seem to like it – with the notable exception of the mothers juggling Zoom meetings and childcare.

An NBER study out this month estimates that about 20 percent of the workdays in this country, post-pandemic, will be carried out at home. That’s less than half the at-home time that was clocked last year as the pandemic raged but is multiples of the very low levels prior to COVID-19.

There is “little doubt that the stigma associated with [working from home] diminished during the pandemic,” concluded the study, based on a series of surveys last year. This seismic shift in workplace conventions “will stick long after the pandemic ends.”

But a second theme running through this research is just as important: the benefits of telecommuting flow mainly to the more educated, higher-paid labor force.

More than 50 percent of U.S. workers earning more than $100,000 a year have been allowed to work at home, rather than in the office, giving them more protection from layoffs during the economic shutdowns and from COVID-19. On the other end of the spectrum are lower-paid and minority workers, who have been much more likely to lose their jobs and be exposed to the disease. Just 25 percent of employees earning under $50,000 work at home – and only 10 percent of the lowest-paid workers who didn’t complete high school work.

Yet the desire to work at home is pervasive. Regardless of their income, years of education, or family situation, workers view it as a perk – so much so that most people said they would accept a pay cut if they could work remotely two or three days a week.

Another potential impact on equity in the study is the effect of remote work on commerce in the urban centers. …Learn More