By Michael Teitelbaum, CQ Staff
July 21, 2006 -- Two senators who have experience on health care issues introduced legislation this week designed to deal with catastrophic health care costs.
The bill (S 3701)—introduced Thursday by both of Oregon's senators, Republican Gordon H. Smith and Democrat Ron Wyden—would create up to six pilot projects for which states can apply through the Department of Health and Human Services. These projects would provide basic coverage for the uninsured with additional protection for those with high out-of-pocket health costs.
Wyden noted, "no one should go to bed at night wondering if they are going to lose their home . . . because they or someone in their family had a health care tragedy. Our legislation would bring peace of mind to Oregonians dealing with catastrophic health expenses."
At least two projects would help states create a hybrid health insurance plan that would combine a primary and preventive health care benefit with high-deductible catastrophic coverage. Private insurance providers would be able to market the plans to uninsured individuals and small businesses.
At least two other projects would target catastrophic costs by assisting individuals who have private insurance but have out-of-pocket costs that exceed $10,500 in a given year (the threshold can be as low as $8,000 to reflect a state's average out-of-pocket costs).
In addition, to allow low-income workers to pay for the premiums of these plans, the bill would institute a graduated subsidy. Individuals with incomes at or below 200 percent of the federal poverty level would be eligible for the help.
The bill would allow for catastrophic coverage through high-risk pools, reinsurance mechanisms for small businesses, or other public/private arrangements.
Smith said that with 46 million uninsured people, including 600,000 in his state, and the fact they get their health care from hospital emergency rooms, which are uncompensated for the care, health care is costing state governments, hospitals, and other health care providers millions of dollars. In turn, uncompensated care is a major factor in the form of higher prices for health care services, which insurance companies pass onto their policyholders.
With health costs increasing, small businesses might stop providing health insurance benefits to their employees. This legislation, as Smith noted, might allow a small business, if they had a catastrophic policy for their employees, to offer or extend their health care coverage.
