Spiraling health care costs are financially crippling employers and families and driving our long-term federal deficit.  Health reform bills are designed to slow the growth in health care costs, which:

• reduces the federal deficit,
• helps shore up Medicare, and
• allows employers to increase wages, hire new employees or make other investments in their business with money that would otherwise be eaten up by skyrocketing health insurance premiums.

Today, access to coverage is unreliable. Insurers can cancel coverage after people get sick, and insurers can deny applicants with pre-existing conditions or impose waiting periods before their care is covered. On top of that, job loss often also means losing health insurance.  Health reform makes health insurance coverage more secure, which:

• reduces bankruptcies caused by medical bills,
• allows entrepreneurs to start new ventures without fear that leaving a current job will mean losing health coverage,
• lets small firms operate without providing health benefits while ensuring that their employees still have access to high-quality affordable coverage, and increases the pool of employees available to small businesses.

To learn more about heaath reform’s economic benefits to small businesses, families, the state economy, and the federal budget, see our new Policy Page Health Reform Will Benefit Texas Small Businesses and State Economy.

The Kaiser Family Foundation released mid-January poll results that found Americans squarely divided on national health reform proposals—at least at first glance. The poll went on to show that large proportions of Americans are unaware of the major provisions of heath reform bills, and their support increases dramatically when told about provisions like tax credits to help small businesses cover their employees, health insurance exchanges where coverage options can be compared; closing the Medicare drug benefit “doughnut hole,” and eliminating denials and rate hikes because of pre-existing conditions.

The sometimes raucous debate over hot-button issues (and outright untruths) of the last 6 months has worked against Americans getting a clear picture of the framework of health reform. This Policy Page provides a high-level outline of the key insurance coverage elements of the Senate bill, noting areas in which compromises with the House are likely.

The confusion surrounding the definition of costs for the proposed health reform legislation has clouded the debate, making it difficult for most Americans to wrap their head around how health reform will help them. The government’s official scorekeeper, the Congressional Budget Office, has primarily focused its analysis on the impact of health reform on federal spending. While CBO projections suggest that both bills will lower deficits and maintain or lower premium costs for most Americans, this message has been lost in the sound bites.

A recent report by the Commonwealth Fund and the Center for American Progress goes beyond the budgetary perspective and provides much needed clarity in this complex debate.  The study takes a more holistic approach, accounting for the effects the proposed legislation will have on the entire health care system including federal health spending, businesses, and American families.

The report finds the House and Senate bills will yield savings of at least $683 billion over ten years for national health care spending and achieve savings between 15-20 percent by 2019. The Commonwealth’s assessment also projects American families would see their premiums reduced by nearly $2,000 annually by 2019.

The temporary subsides last for 9 months and are available to people who were laid off from September 1, 2008 to December 31, 2009.  Today subsidies will expire for the first recipients who started getting subsidies in March.  Without subsidies, COBRA premiums are too expensive for most to afford.  According to a report released today by Families USA,

• the average monthly COBRA premium for family coverage in Texas is $1,081.  
• COBRA coverage would eat up 78% of the average monthly unemployment benefit in Texas ($1,385).  
• But with the subsidy, average family premiums in Texas are $378 a month.

More people will lose their coverage each month as subsidies expire unless Congress acts to extend the subsidies.  Because the economy is still shedding jobs, the assistance is still needed.

To help Texans struggling to maintain health coverage after a layoff, COBRA subsidies should be extended so that: (1) the period of subsidy for those currently eligible is extended by at least 6 months; (2) people laid off as of January 1, 2010 are made eligible; and (3) people who lose coverage because their work hours have been cut are made eligible.  Of course, this is just a temporary fix.  The long-term fix lies in health reform and the ability in the future for those losing jobs and job-based health insurance to buy comprehensive coverage on a sliding scale through a health insurance exchange.

• making sure affordable insurance is available to the average consumer (79 percent named this as “extremely” or “very” important)
• requiring insurers to cover those with pre-existing conditions (71 percent)
• not adding to the budget deficit (69 percent)
• filling the so-called donut hole in Medicare prescription drug coverage (68 percent)
• providing enough government financial help so that as many uninsured people as possible can get coverage (65 percent)

Georgetown University’s Center for Children and Families and Lake Research Partners survey (November 3-10) asked families to rank their reform priorities, and asked about how families are dealing with the costs of health care coverage.  Top responses were:

• cutting back on household spending to pay for health care(44%);
• building up credit card and medical debt (23%);
• using up all or most of their savings(21%);
• and/or having someone in their household do without health insurance (21%).

Like the Kaiser poll, affordable coverage was the #1 choice for top reform priority, and when asked, “What is more important to you (1) making sure that health care reform makes coverage more affordable to families or (2) making sure health reform does not cost the country too much,” 66% chose affordable coverage.  The poll also found that families rated the House’s proposed health insurance premiums more affordable than those proposed in the Senate bill.

The poll also reflected a strong belief that children not be left worse off through health reform.  By a 3-1 majority, Americans indicated they would oppose the elimination of CHIP through health reform if it was replaced with coverage through a Health Insurance Exchange that costs more for families and offers fewer benefits to children.

Just how untenable is the status quo for working Texans?

Families USA released a new report, Costly Coverage: Premiums Outpace Paychecks in Texas, which shows how rapidly premiums have outpaced earnings.  Over a 10-year period family health insurance premiums for Texas rose 4.6 times faster than median earnings.  Key findings from the report include:

•    Health insurance premiums for Texas’s working families grew quickly over the last 10 years, increasing by 91.6 percent from 2000 to 2009.
•    For family health coverage in Texas, the average annual premium (employer and worker share of premiums combined) rose from $6,638 to $12, 721, an increase of $6,083.
•    For family health coverage in the state, the employer’s portion of annual premiums rose from $4,879 to $8,599 (a difference of $3,720), while the worker’s portion rose from $1,759 to $4,122 (a difference of $2,363).
•    For individual health coverage in Texas, the average annual premium (employer and worker share of premiums combined) rose from $2,627 to $4,470, an increase of $1,843.
•    For individual health coverage in the state, the employer’s portion of annual premiums rose from $2,220 to $3,571 (a difference of $1,352), while the worker’s portion rose from $407 to $898 (a difference of $491).

Read Costly Coverage: Premiums Outpace Paychecks in Texas.

Read Physicians Views on the Public Health Insurance Option and Medicare Expansions.

Read The Path to a High Performance U.S. Health System.