Healthcare Sticker Shock

In less than six months, our country will embark on the largest expansion of national healthcare in our history, affecting each one of our lives.

The Affordable Care Act (ACA) was not the optimal solution, in my view, for providing Americans with affordable access to healthcare services. However, in light of Congress’ passage of the unprecedented measure, the Supreme Court decision that upheld it, and the re-election of the President, the challenge we face today as a state legislature is how to implement the ACA in a way that fulfills its promise of “affordable” care to 38 million Californians.

The key word here is “affordable.”

Officials from Covered California, the state’s new health insurance exchange, have claimed that the health insurance policies offered to the millions of uninsured will be “affordable.”

While Covered California will offer  a “one-stop shop” to purchase health insurance beginning Oct. 1 (with coverage to begin Jan. 1, 2014), many of those currently with health insurance may experience “sticker shock” and won’t be able to afford coverage under the new government-run program.

Under the new program, those without insurance will be required to purchase insurance or pay a penalty. For millions, the choice will come down to paying a penalty that will result in a few hundred dollars a year or unaffordable insurance that will cost several thousands of dollars per year.

If these new insurance rates are as “affordable” as Covered California is claiming, it’s fair to ask why many of these individuals aren’t currently purchasing health insurance through one of the California companies currently offering plans.

According to Kaiser Permanente’s website, Kaiser currently offers a plan for a 40-year-old in San Diego County with a $40 co-pay for approximately $291 a month. A similar plan with a $45 co-pay may cost as much as $336 a month through Covered California.

Is it reasonable to believe this person will pay $336 per month when they have already decided that $291 per month was too expensive?

While there are some people who have not been able to purchase health insurance due to pre-existing conditions, for many it’s strictly an economic decision: put food on the table or pay for health care coverage. 

While some individuals will qualify for the subsidies under the Affordable Care Act, there are millions of working Californians who will not qualify, which places the burden of paying for healthcare coverage on the backs of middle-class families.

According to Forbes, the rates released show that premiums in some regions of the state will increase by 64 to 146 percent – and that includes increases for those who are currently paying for private insurance. Even Covered California predicted that health insurance premiums could go up by approximately 30 percent.

As Forbes points out, a 25-year-old male in San Francisco earning $46,000 a year can currently purchase a PPO plan from a major insurance company for $177 a month. According to Covered California, that same plan will cost that individual between $245 and $270 a month – as much as a 65 percent increase in premium costs per month.

The alternative for these uninsured will be to pay the government-sanctioned penalty of up to one percent of their income.  In the case of the individual described above, that would be $460, compared to $3,240 in insurance premiums per year.  For those already living on a shoe-string budget, the choice will be simple.

As the ACA continues to barrel forward in the weeks and months ahead, I would encourage everyone to get informed on how the new law will impact you and your family.

What is becoming clear is that the government is going to be the determining factor on what “affordable” will mean in the healthcare arena – not the consumer.  As a result, the goal of insuring millions who currently live without health insurance is not likely to be met.

As Vice-Chair of the Senate Health Committee, your health is important to me and that’s why I encourage you to contact my office with your concerns at Senator.anderson@sen.ca.gov.  I will share your emails with the Chairman of the Senate Health Committee.  Californians deserve better and we can do better.                                             

Senator Anderson represents the 36th Senate District which includes parts of San Diego and Riverside Counties.

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