April 25, 2007

Smith-Wyden Look at Options to Cover the Uninsured

Senators reintroduce the Catastrophic Health Coverage Promotion Act

Washington, D.C. - U.S. Senators Gordon H. Smith (R-OR) and Ron Wyden (D-OR) reintroduced legislation today that would improve access to health insurance for uninsured Americans and those with catastrophic health care costs. The measure, the Catastrophic Health Coverage Promotion Act, would create at least four state-based pilot projects that target the uninsured and individuals with catastrophic health care costs. Under the legislation, Oregon is guaranteed to be awarded at least one of the projects.

"Ensuring the health of our nation is one of the greatest responsibilities and challenges our government faces," said Senator Smith. "Given that there are approximately 46 million Americans without insurance, we need to do a better job. This legislation grew from a strong desire that both Senator Wyden and I share to get affordable coverage to those in need. This modest, yet workable, solution will provide basic coverage to those who are uninsured, as well as additional protection for individuals with significant out-of-pocket health costs. If an individual loses their health, they should not have to lose their home. This legislation would bring us closer to achieving this goal."

"It's a sad statement that even today, in the 21st Century, Oregonians and their families can be brought to their financial knees because of a health care problem," Wyden said. "Our legislation will show us the best path for helping people who are trying to deal with a health catastrophe from also falling victim to a financial catastrophe."

The legislation creates several pilot programs for which states can apply through the U.S. Department of Health and Human Services. Two pilot projects will help states offer a hybrid health insurance plan that combines a primary and preventive health care benefit with high-deductible catastrophic coverage. Private insurance providers will market these plans to uninsured individuals and to small businesses that have not offered coverage to their employees for at least one year. The bill will provide additional support for low-income workers and families to reduce the cost of premiums.

Two other projects will target catastrophic costs by assisting individuals who have insurance, but have out-of-pocket costs that exceed $10,500 in a given year (the catastrophic threshold can be adjusted to as low as $8,000 to reflect a state's average out-of-pocket costs). A 2005 Health Affairs study showed that nearly half of personal bankruptcies are filed because of medical expenses. Among those whose illness led to bankruptcy, out-of-pocket costs averaged $11,854 from the start of the illness. Individuals in Medicare who have exhausted benefits and additional private insurance would be eligible for coverage as well. The bill allows for catastrophic coverage through high risk pools, reinsurance mechanisms for small businesses or other private/public arrangements.

Over 600,000 people in Oregon went without health insurance in 2004. During the same year, Oregon hospitals provided over $500,000,000 in uncompensated care, a 262 percent increase since 1995. Taxpayers and medical providers absorb these costs or pass them along to consumers when individuals are not able to pay for their medical expenses. To alleviate this financial burden, the legislation establishes pilot health insurance programs for individuals and small businesses as well as providing assistance for catastrophic health problems.