Healthcare Costs Could Hit $12,320–or 25% of Income–on Premiums and Deductible Before Insurers Pay for Any Care
Total Out-of-Pocket Costs Could Exceed 36% of Household Income
California Nurses Association
Press Release
March 15, 2007
Gov. Arnold Schwarzenegger’s health plan could cost the typical California household from 25% to 36 percent of their family income, according to data released today by the California Nurses Association.
Schwarzenegger’s health proposal, based on a new Massachusetts law, would require all California residents to purchase health insurance. But with no controls on rising premiums — which have risen 87 percent this decade — most Californians are likely to opt for bare bones plans that carry a heavy price tag and limited benefits.
Under the Governor’s minimum plan, the typical California resident would likely be expected to pay $12,320 per year in medical expenses and premiums—before any medical care is paid for by their insurance company.
Schwarzenegger has proposed that the minimum, cheapest plans include a $5,000 deductible prior to an insurance payment. The deductible is on top of the insurance company’s premium charges, which are likely to cost up to $7,320 per household, the amount established in eastern Massachusetts for those required to buy health insurance.
For the typical California household, that means being forced to spend 25 percent of their income on medical costs—before any care is paid for by the insurance they are forced to buy (based on the median household income of $48,440 as of 2003 U.S. Census Bureau data).
The real costs could be far more. Schwarzenegger’s proposal further says that out-of-pocket costs could rise to $10,000 per household if more extensive care is needed — which would drive out of pocket costs up to 35 percent of the median family income. (Any hospital stay would expose a family to the $10,000 cost quickly; the average hospital charge per discharge in California is nearly $33,000.)
And since the Governor’s projected costs are for the least expensive coverage, it is likely that most families would have to spend extra for dental, vision, mental health, long-term care, and other care.
“Many families may end up having to make the terrible choice of assuming more medical debt which can lead to financial ruin, or foregoing needed care,” said CNA President Deborah Burger, RN. “Schwarzenegger’s healthcare plan could lead to financial ruin and bankruptcy, instead of nursing them back to health.”
Health care experts say health costs constitute a “financial burden” if they exceed 10 percent of a family’s post-tax income. In testimony to the House Ways and Means Committee in January, Diane Rowland, vice president of the Kaiser Family Foundation, noted that one in six adults who are privately insured “report having substantial problems paying their medical bills” and that two-thirds of the privately insured who have medical debt have family incomes of up to $75,000.
Additionally, a recent study by the American Academy of Pediatrics found that high-cost, high-deductible insurance plans are a hazard to patient health, because they provide parents and other patients with an incentive to skip or delay preventive care, immunizations, compliance with recommended treatment, and other needed care.
SB 840 Would Provide Affordable Care to Californians:
CNA has long advocated for a universal, single-payer healthcare plan as the only affordable and fair way to ensure that every patient receives a single standard of high-quality care. Governor Schwarzenegger vetoed just such a plan, Sen. Sheila Kuehl’s SB 840, last year.
Upon reintroducing her bill this year, Senator Kuehl remarked, “SB 840 works by pooling our health care resources so everyone — state and federal government, income earners and employers – contributes something and we all get coverage. This allows us to consolidate the administrative functions of thousands of different insurance companies and plans into one comprehensive insurance plan, saving businesses and consumers, as well as the state, billions of dollars in the first year alone.”
CNA is the principal sponsor of SB 840 and is engaging in an active campaign to ensure its passage, including direct mail to households, a radio ad, and a new web site, www.SinglePayer.com.
Representing 75,000 RNs from California to Maine, the California Nurses Association/National Nurses Organizing Committee is the fastest-growing association of direct-care RNs in the nation. Learn more at www.CalNurses.org
