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Even with private health insurance, the Christensens still spent 20% of their income on medical bills…

Julie & Marshall Christensen: Provo, UT

Luckily, the Christensens have private insurance for their family and Medicaid for their daughter. Marshall has Type 1 Diabetes, Julie has epilepsy, and their daughter has Dravet Syndrome, a severe form of epilepsy. But before their daughter qualified for Medicaid, this Utah family was spending 20% of their income on medical bills, even with private insurance.

Twenty Percent of a family’s income going to medical bills is not affordable

Before my daughter qualified for Medicaid, we put out 20% of our paycheck to medical bills each month-- even with private health insurance for our family. Then we struggled to find the money for rent, bills and food on top of that,” says Julie. “We were going bankrupt.” Weekly doctors visits, co-pays, prescriptions, and Jessica’s hospital stays led to skyrocketing expenses.

Even basic necessities became unaffordable. Luckily, their church’s storehouse helped with food costs. Their family helped as they could. But, the Christensens can’t afford to own a home. “The first time something would have needed to be repaired or Jessica would have needed to be in the hospital, we would not have been able to make the mortgage payment,” Julie explains. The bills eventually made having more children unfeasible. And, on top of it all, Marshall had to repay his student loans.

With Medicaid as a secondary insurance for their daughter, the Christensens’ out-of-pocket expenses have dropped to 6% of their paycheck, which is “better, but still difficult at times.” With the severity of Jessica's condition and its resistance to treatment, the Christensens’ will be accessing drugs and alternative treatments that are not covered by insurance. This will be a huge increase to their out-of-pocket expenses.

The Patient Protection and Affordable Care Act (PPACA)will lower costs, improve choices and competition and offer assistance to ensure that Americans can afford health insurance.

PPACA places a cap on what insurance companies can require individuals to pay in out-of-pocket expenses, such as co-pays and deductibles. This will ensure that Americans are not forced to file bankruptcy due to high health care costs. It also eliminates lifetime limits on how much insurance companies cover if you get sick and regulates plans’ use of annual coverage limits until 2014, when they are prohibited.

Effective 2014, premium assistance tax credits will limit the amount an individual spends on their health care premium for the essential benefits package from two percent at 100 percent of the Federal Poverty Level (FPL) to 9.5 percent of income at 300-400 percent of the FPL. The amount of the credit is tied to the premium of the second-lowest cost (silver) plan in each area.

PPACA also provides credits to reduce the amount of cost-sharing for lower-income individuals. Their annual out-of-pocket limits would be a fraction of the standard amount: one-third for those with income below 200 percent of the FPL, 50 percent for those with income from 200 to 300 percent of the FPL, and two-thirds for those with income from 300 to 400 percent of the FPL. In addition, there will be state-based Exchanges will help eligible individuals and small employers compare and purchase health care coverage at competitive prices online.

To ensure that low-income individuals and families receive the benefits they need, effective 2014, individuals and families with income at or below 133 percent of poverty ($14,403 for an individual in 2010) will be eligible for Medicaid, regardless of the state in which they live.  Individuals and families who are eligible for Medicaid will not have to pay premiums to enroll and are subject to only nominal cost-sharing requirements.