Health bills limit out-of-pocket costs, but there's a catch in the fine print

Oct 29 2009

Health care bills pending in Congress could limit the out-of-pocket costs for consumers, but some of the fine print may cause sticker shock. "Consumers would be spared having to pay huge medical bills under Democratic health care legislation that's moving through Congress, as lawmakers agree on the need to put limits on how much people would pay out of their own pockets," McClatchy reports. "Bills pending before the House and the Senate would set different limits, but virtually everyone agrees on a key principle: 'You shouldn't go bankrupt' because of your medical costs, said Elizabeth Carpenter, a policy analyst at the New America Foundation, a center-left research center." A recent study found that the number of people going bankrupt because of illness and medical costs is rising. Experts and policy makers are debating whether the caps in congressional bills are "too high and whether the bankruptcy problem is exaggerated." In addition, "[t]here's some concern about whether the combination of premium costs and out-of-pocket expenses could be too much for some consumers" (Lightman, 10/28).

The details of the Finance bill may yield higher-than expected costs for consumers. "Proponents of the Senate Finance Committee's health care bill say the legislation will limit the amount that lower- and middle-income people must pay for health insurance to a maximum of 12 percent of their incomes," but KHN reports that "there's a catch: The fine print shows that, over time, the premium costs could rise well beyond those caps. That's because the cost of coverage would shift from a percentage of income to a percentage of the premium, no matter how high the premiums go."

"Because premiums generally rise faster than wages, consumers getting subsidies would pay a larger percentage of their incomes toward premiums over time. But the provision means slower-growing subsidy costs for the government. That trade-off reflects the difficult balancing act lawmakers face as they try to hold down the bill's overall price tag while also trying to provide financial help to millions who will be required to have coverage, but may not be able to afford it" (Appleby, 10/29).