CaliforniaBudget Project

May 11, 2007

How Much Is Too Much?: A Framework for Evaluating Health Care Affordability

The Governor and legislative leaders have proposed to substantially expand health coverage for uninsured Californians. However, these proposals may not go far enough to make health coverage affordable. A new California Budget Project Budget Brief, "How Much Is Too Much?: A Framework for Evaluating Health Care Affordability," recommends that any reform ensure that families can afford to buy and use health coverage.

The Budget Brief recommends that health care reform proposals:

- Make realistic assessments about what families can afford to pay for health care, including premiums and out-of-pocket costs such as deductibles and co-payments. These assessments should reflect demands on families at different income levels and recognize the need for additional protections for families with high health care costs.

- Ensure that families can afford to use, and not simply buy, coverage.Coverage that does not pay for many services, such as high-deductible plans, exposes families to financial risk and discourages them from accessing necessary health care.

- Provide adequate assistance to families who cannot afford the cost of coverage. Subsidies should be sufficient to allow families to afford health coverage and other necessities, such as food and housing.

- Take into account the cost of essential services - such as dental and vision care - that are not included in the basic benefits package.Reform proposals also should take into account families with particularly high costs - such as for child care - when determining what families can contribute toward health care.

- Ensure that increases in health care costs do not erode these protections.Policymakers could require a periodic review of the income levels that determine which families receive subsidized premiums, or automatically adjust income levels at the same rate as health care costs.

This Budget Brief is available at www.cbp.org.