Assets, debts and health insurance for middle-income families
Thin Protections: High-Deductible Plans Provide Little Comfort for Asset Poor Middle-Income Families
Health Access
June 22, 2007
Our research shows that many middle-income families, some who are uninsured and earn too much to qualify for subsidized coverage, have few assets and significant debt.
In this paper, we show that forcing families to have a bare-bones, high-deductible health plan is of little comfort to the majority of middle-income families with few to no assets that need to be protected.
Middle income families — earning as much as $70,000 a year — are:
- Struggling to buy and hold onto a home,
- Saving few dollars in the bank and for retirement, and
- Tying up as much as one-third of their income in credit card debt.
An individual mandate would have the opposite of its intended effect — exposing middle-income families to even more financial burden.
…the high deductible plans would only add more stress to the thin financial resources of middle-income families and do little to protect families from significant medical debts of thousands of dollars. An individual mandate for a high-deductible plan would have a perverse result of bringing a middle-income family closer to bankruptcy, not protecting it.
http://www.health-access.org/Assets_Debt07.pdf
Comment:
By Don McCanne, MD
This paper is an important addition to the dialogue on health care reform. Its primary contribution is that it demonstrates that middle-income families now have too few assets and too much debt to be able to tolerate the additional financial burden of out-of-pocket costs that result from plans with high-deductibles and reduced benefits - plans that are designed to keep premiums affordable.
Plans that would be effective in preventing financial hardship for middle-income families with health care needs would have to charge much higher premiums that still would place an excessive financial burden on those families.
The point is that health care costs are now so high that private insurance plans are no longer capable of protecting the finances of middle-income families. Most reform proponents agree that, under our current system of financing health care, the poor must be subsidized if they are to have affordable access to health care. This study shows that a system of subsidies would also have to be applied to middle-income families as well. It defies logic to suggest that the complex process of providing the majority of Americans with variable tax-funded subsidies to purchase administratively-wasteful, over-priced private health plans is somehow an efficient method of financing care.
Rather than assessing the assets and debts of each individual and each family, it would be much more efficient, more effective, and less expensive to establish a single, universal risk pool and fund it through equitable tax policies. We already have the money. We just need to fix our financing system.