Affordability threshold for family health care
The Cost of Keeping Up
By John Hill
The Sacramento Bee
California families must earn far more than the minimum wage and in some cases as much or more than the median hourly income just to keep up with the bare-bones expenses of living, a report released Tuesday said.
A family of four with two working parents needs a yearly income of $72,343 just to cover such costs as housing, medical care, transportation and food, according to the report, “Making Ends Meet,” by the California Budget Project, a nonprofit public policy research group that advocates for working Californians.
That figure doesn’t even include putting away savings for retirement or college, or extras such as cable television, an Internet connection or vacations, the report said.
The culprits are California’s perennial high cost of housing, even with the recent downturn in the market, and exploding health care costs.
Many Californians who make less than what it takes to pay the bills wouldn’t qualify for government programs, such as tax breaks and health insurance for children, said Jean Ross, executive director of the California Budget Project.
http://www.sacbee.com/111/story/436684.html
California Budget Project, “Making Ends Meet”
http://www.cbp.org/pdfs/2007/0710_mem.pdf
And…
What Does It Take for a Family to Afford to Pay for Health Care?
UCLA Center for Health Policy Research
August 2007
This report provides insight into how much Californians can afford to pay for health care by estimating how much they currently pay for health care — including both insurance premiums and out-of-pocket expenses — and how much they pay for the cost of other basic necessities — including housing, child care, transportation, food, and taxes on the income needed to purchase these necessities.
This research suggests that most Californians with incomes below twice the poverty line — $41,300 for a family of four — may not be able to contribute any resources toward their health care and that partial subsidies are needed for many families with incomes well above three times the poverty line — $61,950 for a family of four.
Proposals to extend health coverage to the uninsured should ensure that families are able to afford what policymakers ask them to pay for health coverage. In addition, policymakers should protect families from the risk of extraordinary health care costs by establishing affordable limits on out-of-pocket costs or through other means. While some families have conditions that require higher levels of health costs on an ongoing basis, families with low health costs most years face the possibility of an accident or illness that could require them to pay substantially higher health costs in a particular year. All families, regardless of health coverage, could face financially devastating medical costs if they are not adequately protected from these risks.
Policymakers should consider… taking into account costs families face, such as housing and child care, when determining how much families can afford to pay for health care. Because families face very different costs… income alone is an imprecise measure of what families can afford to spend on health care.
http://www.cbp.org/pdfs/2007/RevisedCBPUCLAAffordabilityReport.pdf
Comment:
By Don McCanne, MD
A median family income is no longer enough to pay for premiums plus out-of-pocket expenses for a family facing chronic conditions or facing a significant injury or major illness. Furthermore, there is no standard income level above which individuals could be assured that health care would be affordable.
If we are going to continue to insist that private plans serve as the basis for expanding coverage to everyone, look at the task we face. For each individual or family, we would have to craft a benefit package which would not only cover any existing chronic disorders and preventive services, but which also would cover cost surges due to significant acute problems. In addition, that benefit package must be tailored to keep premiums affordable, or must have a flexible system of public subsidies that would vary based not only on income but should also consider other living costs and personal reserves. It is no wonder that we waste so much on administration in our multi-payer system when we are trying to tailor benefits, premiums and subsidies to fit each individual circumstance, especially when those circumstances are changing constantly.
Wouldn’t it be smarter to establish one standard benefit package that included care for all acute and chronic disorders and preventive services? Wouldn’t it also be smarter to establish a single risk pool, include everyone, fund it with equitable progressive taxes, and simply pay for care as required? And what doesn’t seem very smart is that we keep asking the same questions over and over again, when we already know the answers.