Study shows cost burden on low- and moderate-income families a key factor
Boston, MA, April 18, 2007. Community Catalyst has released a new study that fills a major gap in defining affordability of health coverage for low- and moderate-income families. “Defining affordability is especially challenging because there is little existing research available. By factoring in research on health spending, household budgets, price sensitivity, and the costs of insurance we have built a new methodology for defining affordability, and applied this framework to Massachusetts’s individual mandate as a case study,” said Michael Miller, Policy Director at Community Catalyst.
The report urges caution, flexibility and common sense, stating that decisions about affordability demand new and careful analysis to assure fairness and avoid harming people.
“Affordability is in the eye of the beholder, or the wallet of the purchaser, in this case,” said Susan Sherry, Deputy Director of Community Catalyst. “Millions of Americans lack health coverage because they cannot afford it. Any state working to reform health care must address affordability, and this is even more critical in a state, such as Massachusetts, with an individual mandate.”
The study defines affordability as the percentage of income families can devote to health care while still having sufficient earnings for other basic necessities. In an acknowledgment that Americans are facing greater health costs, the paper includes all cost-sharing in the measure.
The key findings of the research are:
- Placing financial sanctions on people with low incomes for not buying insurance may only cause harm and not help to insure people. After paying for basic needs, people in Massachusetts earning less than 300% of the federal poverty level [FPL] ($30,630 for an individual) can only contribute small amounts for health care. Many people at this income level struggle to meet their basic needs such as food, shelter, and transportation.
- A progressive sliding scale of affordability is needed for people who earn enough to contribute toward their health care, but not necessarily afford the full cost of coverage. In Massachusetts, this scale progresses from 4% to 8.5% of income for people earning between 300% and 600% FPL, to protect people from financial hardship.
- One size does not fit all. The availability and cost of insurance can vary greatly–with older people paying much more for coverage. The study recommends an affordability scale that protects middle-income people, and potential reforms to address the costs of insurance.
“How states address questions of affordability of health coverage has enormous consequences” explained Miller. “Our study offers important new guideposts for states to navigate health reform. We look forward to working with groups to chart a course that meets the promise of expanded health coverage.”
About Community Catalyst:
Community Catalyst, Inc., located in Boston, Massachusetts, is a national nonprofit advocacy organization that builds consumer and community participation in shaping the U.S. health system to ensure quality, affordable health care for all. It works in numerous states with state and local organizations as well as with other national organizations. www.communitycatalyst.org/