If the same woman were to find a full-time job that pays $4,000 a month but doesn’t offer health benefits, she would still be able to get coverage, this time through a commercial health plan on Arizona’s insurance marketplace.
Taxpayers would still pick up a portion of the cost of her health plan, in this case about $300 a month, or half the $606 monthly premium for a basic silver-level plan from health insurer Oscar, according to a subsidy calculator from KFF, a health policy nonprofit. The woman would have to pay the rest of the monthly premium.
Unlike Medicaid, however, her Oscar “Silver Saver” plan comes with a $6,200 deductible.
That means that the same broken arm from her fall would likely leave her with medical bills topping $4,700, according to cost estimates from the federal healthcare.gov marketplace.
The main reason commercial health plans cost more and saddle patients with higher medical bills is because they typically pay hospitals, doctors and other medical providers more than public programs such as Medicaid.
Often the price differences are dramatic.
For example, health insurers in the Atlanta area pay primary care physicians $93 on average for a basic patient visit, according to an analysis of 2017 commercial insurance data by the Health Care Cost Institute, a research nonprofit.
By contrast, Georgia’s Medicaid program would pay the same physician seeing a patient covered by the government health plan just $41, according to the state’s fee schedule.
“It’s much cheaper to deliver health coverage to people through public programs like Medicaid than through private insurance because the prices paid to doctors, hospitals and drug companies are so much less,” said Larry Levitt, executive vice president for health policy at KFF.
The price disparity also explains why the health care industry, including insurers and providers, for years has fought proposals to create a new government plan, or “public option,” that might pay less.
Industry officials frequently argue that hospitals and physicians couldn’t stay in business unless they charge higher prices to commercial insurers to offset the low prices paid by government programs.
The Biden administration and congressional Democrats for now skirted a battle over this issue by simply upping subsidies for private health insurers.
(KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.)(c)2021 Kaiser Health News Distributed by Tribune Content Agency, LLC