Sen. Hillary Clinton said in The New York Times today that she wanted to cap health insurance premiums to no more than 5 or 10 percent of income. The statement gives a bit more specificity to her universal health care plan. Obama has also supported the capping of insurance rates, though without putting a number out.
I like that she is talking about tying the cost of health care to income. As we in the advocacy world know — and too many consumers have experienced — health care costs are extremely regressive and it’s smart to begin introducing the public to that connection.
That said, we also need to begin introducing the concept of capping out-of-pocket costs as well, something that was not included in the story. Cheap plans that cost about $150/month or less are abundant, meaning coverage would cost about 6% a year ($1,800/year) for a person earning $30,000 a year. The problem is that they cost a lot to use.
Office visits aren’t covered until the deductibles are met (or limited office visits are available.)
Prescription drugs aren’t covered. If they are, brand name drugs aren’t. Neither is maternity. Deductibles range from $2,500 to $5000. Out-of-pocket maximums, for one person, could be up to $8,000.
True, not everyone spends up to the out-of-pocket maximum, but in order to get any kind of value out of health coverage, a person would need to meet the deductible. That would mean that person earning $30,000 a year, who meets their deductible on such a plan would be spending 20% of their income on health care. That’s a lot.
What’s even worse is if you had an unexpected medical emergency, and had to spend up to the out-of-pocket max, that would be about one-third of a $30,000-a-year income. Not fair.
In California, we have spent a lot of time talking and thinking about the affordability of coverage — both to buy and to use. In AB8, the legislation that the governor vetoed last fall, the affordability limit that we liked was that families that earned less than 300% of the poverty level ($63,600 for a family of four) would have both premiums and out-of-pocket costs capped at 5%.
For ABx1 1, we took a different approach. Families with incomes up to 400% of poverty ($84,800 for a family of four), would spend no more than 5.5 percent on premium. This premium was pegged to a plan that — while having a $2,500 deductible — also included “prescription drugs, physician visits, and preventive services, including the services to manage chronic conditions, outside of the deductible. ”
Increasing health care costs are a real thing and is scary. Ignoring out-of-pocket costs as part of that equation would be ignoring the fastest growing part of health care and that needs to be part of the policy discussions.