What Does It Take for a Family to Afford to Pay for Health Care?

A new report jointly authored by the California Budget Project and the UCLA Center for Health Policy Research finds that many families spend a substantial amount on health care premiums and out-of-pocket costs, and could face financially devastating medical expenses if they are not adequately protected. The report, "What Does It Take for a Family to Afford to Pay for Health Care?" recommends that health care reform proposals - such as those proposed by the Governor and Democratic legislative leaders - ensure that families can realistically afford premiums and out-of-pocket costs, such as copayments and deductibles.

The report recommends that policymakers consider:

Fully subsidizing health care coverage for those who make up to 200 percent of the poverty line ($41,300 for a family of four) because the cost of housing, food, and other necessities leaves these families with few or no resources to contribute toward health care costs.

Providing partial subsidies for families with incomes higher than 300 percent of the poverty line. The report determines that families need incomes near 300 percent of the poverty line ($61,950 for a family of four) just to afford typical health care costs. Because some families face much higher health care costs, the report recommends that policymakers consider providing subsidies for families.

Limiting families' out-of-pocket costs. Some insured families have very high health care costs because they have very high copayments, deductibles, or other out-of-pocket costs. Placing limits on out-of-pocket costs is as important as premium subsidies in ensuring affordable health care.

Taking into account expenses families face, such as housing and child care, when determining how much families can afford to pay for health care. Because families face very different costs, such as housing and child care, income alone is an imprecise measure of what families can afford to spend on health care.

The new report can be found at www.cbp.org