Public Policy
The way we pay for medical care, and how much we pay, is shaped by public policy as well as market forces.

Underinsurance

More than twenty-five million Americans are underinsured, meaning that they spend a significant amount of their income on health care needs that their health insurance fails to cover, according to a recent analysis by the Commonwealth Fund.  The Commonwealth Fund also found that the percentage of Americans in this situation has tripled since 2003, and that the largest increase in underinsurance has been among the middle-class. 

Are you underinsured?

The Commonwealth Fund classifies people as underinsured if they had insurance all year, and either:

  • spent more than 10% of their income on out-of-pocket medical expenses (OOPs), OR
  • had an income level below 200% FPL and spent more than 5% of income on OOPs, OR
  • had a deductible that took 5% or more of their income.

Use our Underinsurance Calculator to see whether you are underinsured. 

We can prevent underinsurance by setting some basic standards for health insurance. 

States and the federal government both have the power to set basic standards for health insurance to ensure that people who buy health insurance can trust that it will be there when they need it. As we write, many of these ideas are being considered for inclusion in comprehensive health reform at the national level, and in individual bills at the state level. 

Insurance standards that could help to reduce underinsurance and medical debt include:

  • Limit Out-of-Pocket Expenses: Set yearly caps on how how much insurance companies can require patients to pay out-of-pocket for care, including deductibles and co-pays.  Legislation to do this has been sponsored by Health Access and introduced as AB 786 (Jones). 
  • Cover Preventive Care: Require insurance companies to cover basic regular checkups and tests that help prevent illness, such as mammograms or eye and foot exams for diabetics.  AB 786 (Jones) originally included this requirement but it was dropped after the insurance companies lobbied against it. 
  • No Dropping of Coverage for Seriously Ill: Prohibit insurance companies from dropping or reducing coverage for those who become seriously ill. Legislation to do this has been introduced in California as AB 2 (De La Torre) and AB 730 (De La Torre). 
  • No Gender Discrimination: Prohibit insurance companies from charging women more because of their gender.  Legislation to do this has been introduced in California as  SB 54 (Leno) and AB 119 (Jones). 
  • No Annual or Lifetime Caps on Coverage: Prevent insurance companies from placing annual or lifetime caps on the dollar amount of coverage you receive.
  • Extend Family Coverage for Young Adults: Allow dependent children to stay on their family's insurance through the age of 26. Legislation to do this has been introduced in California as AB 29 (Price). 
  • Guaranteed Renewal: Require insurance companies to renew any policy as long as the policyholder pays their premium in full, and prohibit them from refusing renewal because someone became sick. 

  • Make it easier for consumers to compare plans:  Label health insurance plans so consumers can know if a certain plan is comprehensive, "bare bones" or something in between, and so consumers can compare the cost and quality of plans with similar coverage levels.   Currently, consumers have no information to go on except insurance companies' own marketing materials, which are often misleading or deceptive.  Legislation to do this has been sponsored by Health Access and introduced as AB 786 (Jones). 

Health Insurance Standards in California

California has some of the strongest patient's rights laws in the nation, but those laws vary widely according to the kind of insurance you have. 

If you have an HMO, Blue Cross PPO or Blue Shield PPO, your consumer rights are protected by the Department of Managed Health Care (DMHC).  Health insurance plans regulated by DMHC are governed by California's Knox-Keene Act, which sets minimum coverage standards and other important consumer protections. 

If you have a PPO from any insurer other than Blue Cross or Blue Shield, or any other kind of health insurance product such as a high-deductible plan or a limited benefit plan, your consumer rights are protected by the Department of Insurance (CDI). Health insurance plans regulated by CDI are governed by the California Insurance Code, which has no minimum coverage standards.

More resources on underinsurance: