For high-income individuals and families, a visit to a doctor’s office is a financial non-event. They typically have robust health insurance to cover the out-of-pocket costs, and their co-pays are low and easily affordable.

But for poor and even middle-income families lacking health insurance—or trapped in plans with poor coverage and high deductibles—a simple visit to the doctor can be financially devastating.  

As the recent government shutdown revealed, nearly 80% of American workers live paycheck to paycheck. Given this reality, it’s no surprise that high healthcare costs are all-too-often the straw that breaks the proverbial camel’s back and drives people facing overwhelming medical costs into bankruptcy.  

The American Dream is at risk   

Tragically, the inability for many to afford quality healthcare is the primary reason why fully 13.3% of Georgians lack any health insurance today. Indeed, the exponentially exploding cost of healthcare significantly discourages poor and even middle-class people from visiting the doctor—resulting in longer term, poorer, and ultimately more expensive health consequences.

The bottom line is that despite its name, the ACA has not improved the health insurance system, nor has it achieved its two primary goals—universal coverage and affordable healthcare.

Indeed, in the nine years since passage of the ACA in 2010, not only is a significant percentage of the population not insured, health insurance premiums have grown 60 percent faster than the general inflation rate—while medical care services have increased 90 percent faster and hospital services more than three times as fast.

Simply put, when 17.9% of our nation’s GDP is spent on healthcare—totaling $3.5 trillion, or $10,739 per person annually—how can people in the lower and middle income levels ever hope to move up the ladder of economic mobility and achieve the American dream?

Healthcare costs are devastating for the poor

One study from 2018 in the American Journal of Public Health showed that 7 million people who make above 150 percent of the poverty level were pushed below the poverty line due to medical expenses. And 4 million of that number fell into extreme poverty (50 percent below the poverty line). Other facts throw even more fuel on the fire:

• Medical debt is a major cause of bankruptcy in the U.S.
• Poor and middle class people spend a higher percentage of their income on healthcare than the rich do.
• A significant story—often overshadowed by rising premiums—is the fact that health-insurance deductibles have also risen. This means that even when people need to use their high-cost health insurance plans, they still end up paying more and more out of pocket before their insurance benefits kick in.

Given this reality, it’s clear that when poor and middle-class Georgians are buried under an avalanche of medical expenses they have a much harder time pursuing the things we know increase upward mobility, including getting a better education, which leads to landing a better job with better medical insurance and a greater ability to save money, buy a house, and not be forced to live month-to-month.

Encouraging upward mobility through healthcare reform

Here at GCO, our mission is to remove barriers that keep people from thriving. In a very real sense, the overwhelming costs associated with healthcare are a burden that prevents both poor and middle class Georgians from moving upward on the economic ladder and achieving their dreams.

This is why we are calling for a comprehensive set of consumer-driven, market-based reforms to stabilize the current safety net program and achieve universal coverage for all Georgians by:

• Untethering healthcare from its close association with employment so that people won’t lose their insurance because they lose or change a job.
• Making shopping for health insurance just like buying any other insurance product so that consumers can identify coverage and price options—and compare apples to apples.
• Providing subsidies from the government—run by the Georgia Gateway—to allow low-income individuals and families to purchase insurance on the private market. This system would be means-tested by an eligibility engine that eliminates welfare cliffs and marriage penalties.

Thanks to federal waiver applications offered through the Trump Administration that allow states to come up with their own solutions to the healthcare crisis, Georgia has a unique opportunity to enact meaningful health-insurance reform that not only addresses access to high quality insurance coverage, but also keeps families from falling down the economic ladder into poverty because of a medical crisis.

Read more:

A Real Solution for Health Insurance and Medical Assistance Reform

What Does an Ideal Solution to the Health Insurance Crisis Look Like?

Imagine being a worker on government assistance because your job doesn’t quite meet your bills. Then, finally, you get that raise to put you over the top and relieve some stress.

The one catch: You lose assistance needed for things like health insurance. Now, you bring home less than before.

This is called the “welfare cliff,” and it’s a situation for far too many people working to get off government assistance.

And the biggest culprit of this “welfare cliff”? Healthcare. 

A practical example

Picture a single person earning the equivalent of $8.25 per hour in a full-time job with no health benefits. She would qualify for Medicaid under the Affordable Care Act’s expansion rules. But just by earning a five-cent-per-hour raise would disqualify her entirely from Medicare due to the benefit cliff.

What’s more, the welfare system is also discouraging this single mom from marrying. Only in a situation where the dad earns enough to overcome the loss in benefits would marriage be financially worthwhile.

This example shows the negative impacts of welfare cliffs in preventing people from transitioning off assistance, moving up the economic ladder, and creating better lives for themselves and their families. While well-intentioned, these welfare benefits end up trapping people in a low-income existence.

The real tragedy of welfare cliffs is that hard-working welfare recipients who are striving to get ahead find that becoming independent of public assistance is virtually impossible because of the financial hardship they will have to endure.

What’s the solution?

We all want a welfare system that truly serves as a safety net, helping those who can’t help themselves while encouraging able-bodied adults to find work, improve their lives, and form stable marriages and families.

The Georgia Center for Opportunity has proposed welfare reforms that would:

• Combine programs and reduce confusion and redundancy
• Not punish welfare recipients for earning more
• Encourage marriage and family formation

For healthcare specifically, our goal is to create a market-driven system that improves healthcare access for everyone by equalizing risk across the entire insured pool (as insurance is supposed to do), driving down prices while enhancing quality, having health insurance follow people rather than employers, and eliminating welfare cliffs and marriage penalties.

For those who are able to work, the ultimate question is this: Should the purpose of government-sponsored, means-tested healthcare programs, like Medicaid, be to get people back on their feet as they transition into the workforce? Or should the purpose be to provide perpetual benefits, with no end in sight?

Read more: A Real Solution for Health Insurance and Medical Assistance Reform

Read more: What Does an Ideal Solution to the Health Insurance Crisis Look Like?

Some in Georgia are pushing for a full expansion of Medicaid. As the Georgia Center for Opportunity (GCO) team has outlined before, this step would do more harm than good for low-income Georgia families.

But there’s another narrative unfolding that tends to not get much attention: expanding Medicaid doesn’t solve the problem of uninsured middle-class families in the Peach State. Far from it, in fact.

“Georgia lags most of the rest of the nation on health insurance“

The un-affordability problem

Proposals to expand Medicaid would extend the program to households earning 138 percent or less of the federal poverty limit ($35,535 for a family of four). As GCO scholar Erik Randolph writes in a new report (What Does an Ideal Solution to the Health Insurance Crisis Look Like?), nearly 60 percent of Georgians have incomes above that threshold.  

So, what does that mean in plain language? Simply that even with tax credits available under the Affordable Care Act (ACA) that subsidize the cost of insurance, hundreds of thousands of Georgia families still consider the cost unaffordable. 

The statistics on who is insured and uninsured in Georgia bear this out:

• Nearly half (46 percent) of uninsured families of four have annual incomes between $35,535 and $103,000.

A newly released report from the consulting firm Deloitte found that Georgia lags most of the rest of the nation on health insurance:

• Georgia’s uninsured rate is 14.8 percent, compared to 10.5 percent nationally.

• Around 28.5 percent of the uninsured population is below the poverty line (478,000 people) compared to 19.6 percent nationally.

• Minorities are particularly impacted: 33 percent of Hispanics and 15 percent of African-Americans are uninsured, compared to 12 percent of whites.

While those near or at the poverty level are impacted by the current healthcare crisis, they’re not alone. Even the middle class can’t afford health insurance. Average prices for plans on the ACA exchanges have increased by around 70 percent since 2014. And in some Georgia counties, they’ve more than doubled.

A new system is needed

Earlier this year, Governor Brian Kemp and lawmakers in the General Assembly took the right step when they passed a bill authorizing healthcare waivers for Georgia. This is a crucial step toward full healthcare reforms that help the truly needy while lifting people out of poverty and encouraging healthy family formation. However, this is not a comprehensive solution because once families are lifted out of poverty, they still face the mounting costs of health insurance.

The answer comes in the form of a market-based, consumer-directed health insurance system. Under GCO proposals, Medicaid in our state would be fundamentally changed and consolidated with other programs so that the most underserved can access the same health insurance as everyone else. As a result, no one gets trapped in the welfare system.

These proposals also make health insurance affordable for the middle class, empower consumers to shop for the right plan, and solve the portability problem by no longer tying health insurance to employers.

In the end, everyone will benefit—poor, middle-class, and rich—under these proposals that bring common sense and sanity back into the healthcare marketplace.

Read more: A Real Solution for Health Insurance and Medical Assistance Reform

Read more: What Does an Ideal Solution to the Health Insurance Crisis Look Like?

A look at the correlation between health care insurance coverage and poverty in Georgia reveals some sobering facts:  

• 41 percent of uninsured Georgians have annual incomes at or below $35,535.

• Lack of insurance coverage is one of the prime reasons why life expectancy for those in poor neighborhoods is fully 10 years shorter than in the richest areas. 

• Premiums in the individual health insurance market have more than doubled since passage of the Affordable Care Act (ACA) in 2010. 

• For low-income families and those stuck at or below the poverty threshold, healthcare is one of the top expenses and plays heavily into the welfare cliff, which keeps folks mired in poverty. 

• Despite generous government tax credits, premiums for low-income families on the ACA health care exchanges are still unaffordable. 

“The health care crisis is a poverty crisis.“

Clearly, America’s failing healthcare system disproportionately impacts the poor. And despite multiple federal and state programs aimed at creating a safety net, the poor still aren’t getting adequate health care. The bottom line is that our health care crisis is a poverty crisis. 

A complicated, fragmented system

Imagine going to the doctor and not knowing whether your visit will be covered or what you should expect to pay. That’s the exact scenario that plays out for millions of low-income Americans every week. That’s partly because of rather than receiving health care coverage through one unified plan, low-income families in Georgia frequently cobble together fragmented plans.

For Georgians under the age of 18 living in a family at 138 percent of the poverty level or less, 60 percent have different coverage from their mother and 70 percent have different coverage from their father.  

And depending on individual circumstances, health insurance can come through a job, individual markets, ACA exchanges, and government programs such as Medicaid, PeachCare, Medicare, TriCare, VA services, and the Indian Health Service—all with different rules for eligibility.

The time is ripe for meaningful reforms in Georgia

Instead of simply expanding Medicaid and trapping more people in the welfare system, we must explore options that help pull people out of poverty.

The solution is a consumer-directed market system coupled with a reform safety net program that achieves universal coverage for all Georgians by:  

• Untethering health care from its close association with employment so that people won’t lose their insurance because they lose or change a job.

• Making shopping for health insurance just like buying any other insurance product so that consumers can identify coverage and price options—and compare apples to apples.
• Providing subsidies from the government—run by the Georgia Gateway—to allow low-income individuals and families to purchase insurance on the private market. This system would be means-tested by an eligibility engine that eliminates welfare cliffs and marriage penalties.

A Hope For Georgians

The good news is that the President’s Administration is encouraging states to come up with their own solutions to the health care crisis through federal waiver applications. This means Georgia has a unique opportunity to enact meaningful health-insurance reform that not only addresses the health care crisis, but also helps pull families out of poverty.

Read more: A Real Solution for Health Insurance and Medical Assistance Reform

Read more: What Does an Ideal Solution to the Health Insurance Crisis Look Like?