Could This Reason Make Repealing Obamacare a Mistake?

Image source: Flickr use Dan Moyle.

Obamacare's passage has done little to curb rising health insurance premiums or drug costs, but it has increased the number of Americans with insurance and at least one study suggests that an increasingly insured America may lead to fewer life-changing bankruptcies caused by sky-high medical expenses.

Medical debt and bankruptcy

Northeastern law professor Daniel Austin pored over 5.400 Massachusetts bankruptcies filed between 2005 and 2013 to gauge whether the 2005 passage of Obamacare-style reform in that state reduced the likelihood of going broke.

He discovered that Massachusetts' residents filing for bankruptcy were saddled with far less debt than the average American. Specifically, Massachusetts bankruptcy filers reported just $3,041 in medical debt versus the national average of $8,594.

Austin also discovered that Massachusetts is the only state in the U.S. where medical debt isn't the most cited cause of personal bankruptcy. Overall, between 3% and 9% of bankruptcy cases in Massachusetts were filed because of medical debt versus between 18% and 25% of filings nationwide.

His findings may indicate that increasing enrollment in health insurance nationally via Obamacare has a positive effect on the average American's financial security, and if so, then repealing Obamacare could pose a bigger financial risk for the 10 million Americans who are buying health insurance through the exchanges this year.

Source: Flickr user pictures of money

A growing problem

An increasingly larger and longer-living America and costly next-generation treatment leave just 18% of working Americans very confident that they'll have enough money in retirement to pay their medical bills.

Those concerns are heightened when we consider that more people are being diagnosed with costly diseases such as heart disease and diabetes.

According to the American Heart Association, 40.5% of Americans will have some form of cardiovascular disease by 2030 and the cost of caring for those Americans will soar to $818 billion from $272.5 billion in 2010.

The outlook for diabetes is equally concerning. According to the Centers for Disease Control and Prevention over 29 million Americans suffer from diabetes currently and the cost of direct care for diabetics eclipses $176 billion. Given 1.7 million Americans are newly diagnosed with diabetes every year, billions more will be spent caring for these patients in the coming years.

The problem becomes even more pressing when we consider that the cost of next-generation medicine designed to rein in these diseases is climbing, too.

This past summer, two new cholesterol-lowering medicines that target cholesterol in an entirely new way were approved with price tags eclipsing $14,000 per year. Those drugs, Praluent and Repatha, can lower bad cholesterol levels by up to 60% when used alongside statins, but their costs, which dwarf the hundreds of dollars it costs for statin therapy, suggest that patient spending on heart disease prevention could soar over the next decade.

Similarly, new drugs that better manage blood sugar levels for diabetics have reached the market in the past two years that also command premium pricing. Invokana, a medicine that boosts how much glucose is eliminated from the body, won FDA approval in 2013 and costs about $10 per pill, far more than the widely used metformin, which costs as little as $0.25 per pill.

Looking ahead

It will be a while before data can be parsed to see if the decrease in bankruptcy in Massachusetts due to medical expenses is mirrored nationally, but the findings remain intriguing -- especially given that if you include Americans who are newly qualified under Obamacare for Medicaid, more than 20 million people could be affected by Obamacare's repeal. Regardless, the debate over healthcare costs and how to pay for them isn't likely to end anytime soon and, in fact, it will probably escalate as more next-generation treatments make their way to market.

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