Making Health Care More Unaffordable

"Financial burdens have increased to the point at which private insurance is no longer able to provide financial protection for an increasing number of families."

That was the staggering conclusion of a recent study [1] published in the health policy journal Health Affairs.

What exactly is the point of having insurance if it does not protect you from financial ruin?

The study found that by 2004, 45.4 million people lived in families with high out-of-pocket health care burdens. Even after general inflation is accounted for, total out-of-pocket spending on health care rose by about 16 percent over the three-year period. In contrast, average family incomes were largely unchanged.

Many [2] — including Sen. John McCain [3] — have pointed to the individual insurance market as a solution to our health care crisis. But all the data shows nongroup insurance forces people to pay even more out-of-pocket for their health care, making it even less affordable.

The Health Affairs study found that "policies purchased in the nongroup market were much more likely than those in any other insurance group to bear high financial burdens during 2001-2004." Moreover, it found the percentage of people with nongroup plans experiencing high out-of-pocket burdens rose dramatically, from 39 percent in 2001 to 52.7 percent in 2004.

Similarly, a study [4] published in the Journal of the American Medical Association, found that "persons with nongroup plans face significantly greater risks of high out-of-pocket burdens, a result of the combination of high premiums plus high out-of-pocket spending on services." Specifically, it reports that:

• more than half of those with nongroup coverage incurred total burdens exceeding 10 percent of family income in 2003, which is nearly three times greater than that faced by people with employment-related coverage; and
• more than 20 percent incurred total burdens exceeding 20 percent of family income, which is nearly four times more than those with employment-related coverage.

 
In addition, the Commonwealth Fund reports [5] that half of all people in the individual market have policies that only cover 30 percent of the cost of their care. And a California HealthCare Foundation report [6] found that premiums in the California individual insurance market went up 23 percent between 2003 and 2006 while insurers went from paying 75 percent of medical costs to 55 percent.

That's not insurance.

The fact is insurers have driven up health care costs [7]; they have shown that they cannot rein them in. So long as the health insurance industry sets the rules, they will protect their profits and shift more costs to us.

We need the government to set the rules on behalf of all of us. We need wholesale bulk pricing. That's how we get the leverage to bring down costs [8] and ensure everyone has the coverage they need. So long as we are on our own, we're stuck with skyrocketing retail prices.

We need to test a public plan option [9] for anyone who wants it, to set the standard for the private plans. Medicare has already shown it can deliver care at far less cost than private plans. And, every other advanced nation [10] has used public insurance as a way to rein in costs and guarantee quality affordable health care. We shouldn't be forced to have the unstable private market as our only choice.