Smith-Wyden Unveil Health Care Plan
Proposal Targets Catastrophic Costs and the Uninsured
PORTLAND, OR - Today, U.S. Senators Gordon Smith (R-OR) and Ron Wyden (D-OR) unveiled a proposal creating a pilot program to give access to provide health insurance to uninsured Americans and those with catastrophic health care costs. The Catastrophic Health Coverage Promotion Act creates at least four state-based pilot projects that target the uninsured and individuals with catastrophic health care costs. Oregon is guaranteed to be awarded at least one of the projects.
"The number of uninsured and catastrophic costs are two driving factors in the high cost of health care," Smith said. "This bill would provide individuals, families and small businesses access to basic health coverage so they will be protected from financial hardship should they experience a serious illness or other catastrophic health problem."
"No one should go to bed at night wondering if they are going to lose their home and all they worked for in a lifetime because they or someone in their family had a health care tragedy," Wyden said. "Our legislation would bring peace of mind to Oregonians dealing with catastrophic health expenses."
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 a year. The bill will provide additional support for low-income workers and families to reduce the costs of premiums.
Two other projects will target catastrophic costs by assisting individuals who have private insurance, but have out- of-pocket costs that exceed $10,500 in a given year (this 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 or medical providers must 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.