Affordable Coverage for Low-Income Americans at Stake as Senate Merges Two Starkly Different Health Reform Bills
(Boston, MA and Washington, DC) – The Senate Finance Committee health care reform legislation approved last week does not go far enough to make health care affordable for low-income families and should be changed to reflect what they can truly afford, according to a report released today by Community Catalyst and the PICO National Network.
According to estimates provided by MIT economist Jonathan Gruber, it would cost $142.5 billion over 10 years to improve the affordability of coverage for low-income Americans in the Senate Finance bill. Community Catalyst and PICO propose five measures that would reduce costs and raise revenue that would more than cover that price tag.
“Common Sense Affordability Protections: How the Senate Can Deliver Health Reform that Works for Low-Income Families and the Country” examines economic data to determine what low-income families, defined as those earning below 200 percent of the federal poverty level (or $36,620 for a family of three), can truly afford to pay for coverage and what they would be expected to pay for coverage under bills approved by the Senate Finance Committee, the Senate Health, Labor, Education and Pensions (HELP) Committee, and the three House Committees.
The report concludes that while all three bills would expand access to health insurance coverage for many low-income American families, the Senate Finance Committee proposal would impose health insurance premiums that are unaffordable for families earning just over the federal poverty level (FPL), and would not sufficiently cap out-of-pocket health care expenses, leaving many low-income families vulnerable to economic hardship in the event of a serious illness. Under the Senate Finance proposal, a family of three earning $27,465 with a catastrophic or chronic illness could spend up to 14 percent of their income on out-of-pocket costs, while the House and HELP bills would cap them at 5 percent or 8 percent respectively.
“The success of healthcare reform hinges on making healthcare affordable for all Americans,” said Robert Restuccia, Executive Director of Community Catalyst. “While all of the proposals being considered by Congress make important strides in this direction, this report shows the Senate Finance bill would leave many low-income working families with health care costs they simply cannot manage. It’s time for Congress to put the interests of working Americans ahead of wealthy and powerful special interests.”
To protect low-income families from potentially devastating financial consequences of unaffordable premiums and high out of pocket expenses, the report recommends Senate leaders merging the Senate Finance and HELP bills:
1. Adopt the HELP bill’s Medicaid expansion up to 150 percent of FPL and recommended subsidies for those earning between 150 percent to 200 percent FPL.
2. Reduce out-of-pocket costs for low income families by adopting the lower cost sharing limits proposed in the Senate HELP bill and capping annual out-of-pocket expenses at no more than 5 percent of family income, an amount lower than the HELP or Senate Finance bills currently offer, but similar to provisions in House legislation.
The report proposes the following fiscally responsible cost-saving and revenue-raising provisions to pay for the affordability fixes that preserve the net $81 billion reduction in federal budget deficits the Senate Finance bill is projected to produce in the next 10 years:
- Introducing a public plan: Projected savings is $25 billion to $110 billion over 10 years, depending on whether it has the power to set provider rates based on Medicare rates. The HELP bill includes a public plan.
- Requiring drug companies to pay the Medicaid rebate for “dual eligibles”: Projected savings is $50 billion over 10 years. The Medicaid Drug Rebate Program requires drug manufacturers to offer rebates to state governments for prescription drugs the states purchase for Medicaid beneficiaries. This rebate program, however, does not apply to “dual-eligibles”– Medicare-recipients who are poor enough to also qualify for Medicaid.
- Requiring employers to pay their fair share: An employer mandate could raise between $29 billion to $140 billion over 10 years. The HELP bill includes an employer mandate.
- Creation of a Community Living Assisted Services and Supports (CLASS) program: According to the CBO, projected savings is $58 billion over 10 years. CLASS was proposed in the HELP bill.
- Freezing the value of itemized deductions for those in the top two income tax brackets: Projected savings is $68 billion to $89 billion.
According to the report, a typical family of three living in a large metropolitan area needs at least $37,087 in income (equivalent to about twice the FPL) to meet their basic needs for housing, food and transportation before factoring in health care costs. Below this level, families will have a hard time keeping up with regular monthly premiums and could face penalties as a result while remaining uninsured. According to the Community Catalyst-PICO analysis, the Senate HELP Committee comes closest to meeting the needs of low-wage working families while the Senate Finance proposal falls short.
“Under the Senate Finance proposal, many low-wage working Americans may still face very difficult choices – whether to put food on the table or face penalties for not paying health insurance premiums,” said Rev. Cory Sparks of Lafayette, LA, clergy spokesperson of PICO National Network. “And many may not get the care they need, and may decide to skip tests or not take the drugs prescribed by their doctor, if they are unable to pay the out-of-pocket costs. This defeats the very purpose of health care reform.”
Unaffordable premiums can deter enrollment, result in frequent losses of coverage based on small income changes, and cause serious financial stress among low-income families. For example, in 2003 Oregon increased premiums for adults under the poverty level to $6-$20, depending on their income. These seemingly low premiums had a dramatic effect on access to health insurance for low-income adults: enrollment in the Medicaid program dropped by nearly half, or roughly 50,000 people.
The report can be found at: http://www.communitycatalyst.org/doc_store/publications/Comparing_Affordability_Protections_for_Low_Income_Families.pdf
About Community Catalyst
Community Catalyst is a national non-profit advocacy organization dedicated to quality affordable health care for all. Since 1997, Community Catalyst has been working to build the consumer and community leadership required to transform the American health system. With the belief that this transformation will happen when consumers are fully engaged and have an organized voice, Community Catalyst works in partnership with national, state and local consumer organizations, policymakers, and foundations, providing leadership and support to change the health care system so it serves everyone—especially vulnerable members of society. For more information, visit www.communitycatalyst.org.
PICO National Network is a national network of faith-based community organizations working to expand health care coverage and improve communities in 17 states. www.piconetwork.org