Does insurance make health care affordable?
Health Insurance: Can Californians Afford It?
California HealthCare Foundation
May 3, 2005
For minimum-wage workers and the chronically ill, the cost of health insurance is increasingly unaffordable and may not be providing the financial protection for which it is intended, according to Health Insurance: Can Californians Afford It?, a new analysis from the California HealthCare foundation (CHCF). The snapshot of health insurance costs reveals, however, that the issue of affordability is not isolated to those groups.
“We have to consider that these worrisome affordability figures may be a sign of things to come for a greater number of Californians,” said Mark D. Smith, M.D., M.B.A., president and CEO of CHCF.
The snapshot compares health insurance premiums and out-of-pocket expenses to hourly wages and household spending across California and within six local markets: Fresno, Los Angeles, Sacramento, San Diego, San Francisco, and Shasta. The results show the significant financial pressure health care costs are putting on insured Californians.
”… we should recognize that even for those Californians who are insured, it can be a struggle to pay their share of premiums and out-of-pocket expenses. If health insurance becomes unaffordable, this will increase the numbers of uninsured Californians,” (said Dr. Smith).
Press release:
http://www.chcf.org/press/view.cfm?itemID=110808&archive=2005
The report (22 slides):
http://www.chcf.org/documents/insurance/HealthInsuranceAffordability.pdf
Comment: Some important numbers from the report:
The premium for Blue Cross or Blue Shield plans with more limited benefits and higher cost sharing is 66% of the entire income of minimum wage employees (or 77% if standard higher option plans were selected).
For employees with median wages, the median premium is 14% (PPO) to 17% (HMO) of wages.
For small group coverage, the employee’s contribution to the premium plus the out-of-pocket payments for a moderate PPO plan is $370 for the healthy but $5304 for the chronically ill. For limited PPO individual coverage, the premiums paid plus out-of-pocket expenses are $1128 for the healthy and $11,556 for the chronically ill. For an after tax income of $29,458, that means that the chronically ill would be paying 39% of income for this coverage.
Because of the obvious concerns about the uninsured, most efforts at reform today are directed toward patching together coverage by expanding our existing, fragmented system. But this is yet one more report that should make us question the wisdom of continuing on this path of pseudo-reform.
We are paying the insurance industry a couple hundred billion dollars to design insurance plans for us. But the plans they have produced protect their own industry from loss by passing financial risk on to those who most need the protection. This defeats the traditional concept of insurance: pooling funds to provide a source of payment for specified losses, in this case the cost of medical care. And at today’s cost of health care, such financial protection has become essential for all but the very wealthy.
What is ironic is that we do not have a lack of funds to pay for health care. The $1.9 trillion that we are already spending is enough to provide comprehensive health care services for everyone. But we are diverting a significant portion of these funds to an insurance industry that has proven that it cannot competently provide financial protection for those with significant needs. And it continues to get worse.
We would never tolerate that level of incompetence and waste in a government bureaucracy. So maybe it is time to establish our own governmental insurance bureaucracy. At least we’ll be in a position to demand, as voting taxpayers, that health care dollars be spent on health care.