As chief health care advocate for the state of Vermont, Mike Fisher spends a lot of time thinking about rising medical costs. And he’s trying a new way to put the issue of affordability at the forefront of the health care debate.
Every year, state regulators have to decide how much private insurance companies can charge for health premiums; the affordability of those plans for consumers is one of the factors they’re supposed to consider.
But Fisher says there’s really no legal definition spelling out what’s “affordable,” and what isn’t.
“And so that motivated us to really try and quantify, try and ground source this concept of affordability,” Fisher says.
The result of that effort is a new tool that Fisher will unveil to health industry regulators at a meeting on Thursday afternoon. It’s a calculator of sorts, and Fisher hopes it will recast the way policymakers think about health-related expenses.
“We all talk about affordability without putting it in real terms, and so one of the goals is for us to move toward having a standard,” Fisher says.
What Fisher’s office has tried to do is demonstrate the financial stress that even middle-income households face when it comes to covering basic needs. The calculator adds up expected costs for things such as living expenses, travel, childcare, and utilities. Then it adds in what those same families can expect to pay for plans sold on the state’s health insurance exchange.
Fisher says the results are revealing. Consider a two-parent household in rural area with two kids, where both adults are working, and have a household income of $75,000: Even with a modest insurance plan, the family would come up almost $4,000 short of meeting its basic needs, according to the calculator. That calculation assumes $8,147 in health expenses - an amount they'd hit if they had to spend 10 percent of their deductible.
The cost of the “basic needs” is based on an annual calculation done by the Legislature’s Joint Fiscal Office.
“I think it needs to be just clear and up front and in front of policymakers when they’re discussing anything health care - just how families are faring today in Vermont,” Fisher says.
A single adult, who lives in an urban area and makes $35,000 a year, would come up about $340 short of covering his or her basic needs, according to Fisher. And that’s including the state and federal subsidies the person would receive for health insurance costs. That calculation assumes about $3,000 in health expenses, which the person would hit if they had to cover 10 percent of his or her deductible.
“They are scraping to get by, and there’s a great deal of embarrassment and secrecy about that, and a great deal of blame,” Fisher says.
Fisher says he’s not offering up a proposal for how policymakers should solve what he says is an affordability problem. But he says he hopes elected officials and regulators will bear in mind the financial realities of regular Vermonters when they contemplate the future of health care reform.