While California has made tremendous gains in expanding the number of residents with health insurance, hundreds of thousands of people are taking a gamble that they won’t face catastrophic health-care costs.
In a report released Monday , UC Berkeley researchers Laurel Lucia and Ken Jacobs say California can address this affordability gap by undertaking measures that have succeeded in other states.
Roughly 1.2 million people are eligible for policies under Covered California but don’t sign up because of costs, Lucia said, and others are buying high-deductible policies, even though they don’t have the wherewithal to cover the deductible.
“You think about when you purchase car insurance, for example,” Lucia said. “If you’re going to struggle to pay your car insurance rates, you might sign up for the lower rate and risk paying higher costs if you get into a collision. The same thing is happening with the choices some people are making under the Affordable Care Act.”
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More than a million people in California need further assistance with covering health-care costs, Lucia said, and this is an especially important time to consider policy options like this in California, given that many people could opt to drop coverage since the ACA tax penalty will be eliminated next year.
People are struggling with the high cost of living in the state, Lucia said, and they are making difficult choices. In parts of the state that have high housing costs, she said, people have little left over after rent to pay health insurance and their other basic needs.
Even with ACA subsidies, premiums combined with high out-of-pocket costs can eat up more than 10 percent of a budget for a person with middle-of-the-range health care spending, and it can easily exceed 20 to 30 percent for those who require high medical use.
“The income limit for Affordable Care Act premium assistance is four times the federal poverty level, and that’s equivalent to five times the federal poverty limit in California and six times the limit in places such as San Francisco,” said Lucia, director of the health care program at Berkeley’s Center for Labor Research and Education. “People in this state need assistance up to a higher level than the Affordable Care Act provides because of our high cost of living.”
Other states are trying other approaches to expand health coverage, Lucia said, and she and Jacobs make several policy recommendations in their report titled “Towards Universal Health Care: California Policy Options for Improving Individual Market Affordability and Enrollment.” Among the recommendations:
- Use state funds to enhance premium subsidies for individuals with income at or below 400 percent of the federal poverty level. In 2017, the income for an individual at 400 percent of the federal poverty was $48,240; for a household of two, $64,960; for a family of three, $81,680; and for four, $98,400.
- Lower copayments, deductibles and other cost-sharing by increasing subsidies. This and the previous measure would also likely expand the number of people signing up for coverage.
- Limit premiums to an equitable percentage of income for people who are not currently eligible for subsidies, and provide a credit when premiums rise above that amount.
- Help insurers pay for high-cost claims or high-cost enrollees. This would reduce the size of premiums across the individual market, the researchers said, and it would improve affordability for unsubsidized enrollees. Alaska, Minnesota and Oregon are trying this tactic. They will receive federal pass-through funds to offset some of the state costs.
Consumer advocate Anthony Wright, leader of Health Access California, urged legislators to take action: “This new report shows the specific options that California has to improve affordability and further expand and secure coverage for all of our residents — action we can take immediately, without the need for federal approval. Even as Congress continues to consider cutting and capping key health programs, California can and should take steps, this year, in the opposite direction toward the goal of affordability and universality.”