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Smith-Wyden Unveil Health Care Plan
Proposal Targets Catastrophic Costs and the Uninsured
July 5, 2006
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.