This is the first post in the Labor Center’s blog series “Rising Health Care Costs in California: A Worker Issue.”
California workers with job-based health coverage are feeling the pain of high and ever-increasing health care costs. Some have difficulty affording their premium contributions. Others delay or skip needed care because of out-of-pocket costs. Still others have difficulty paying medical bills or are burdened by medical debt. Even for California workers who find that they are able to afford their share of the premium and any copayments or deductible, the rapidly growing cost of health care can stifle potential wage growth. These trends contribute to the broader struggles many California working families are facing today in affording health care as well as other basics like housing, food, and childcare.
In the coming months, the Labor Center will publish a series of blog posts detailing current problems and concerns of Californians with job-based coverage, including the inequities faced by low-income workers, immigrant workers, and workers of color. We will also highlight that much of the burden of health care costs falls on the shoulders of working families, making health care cost growth a worker issue.
Key points we will make in this blog post series include:
- Most mid- and high-wage California workers have job-based coverage;
- Rates of job-based coverage are significantly lower for low-income, black and Latino, immigrant, and young adult workers than they are for Californians overall;
- Premiums in California have grown much faster than wages, with family coverage costing more than $20,000 per year, the equivalent of $10 per hour for a full-time worker;
- Workers bear much of the burden of rising health care costs, not only through higher premiums and out-of-pocket costs but also through foregone wages;
- Many Californians are paying a high share of income on premium contributions, particularly low-income workers and certain workers with family coverage;
- Some Californians who are offered job-based coverage are nonetheless uninsured due to their inability to afford it;
- Approximately half of Californians with job-based coverage have no deductible, but for the other half deductible amounts have grown rapidly over the last decade;
- High out-of-pocket costs cause some to delay or avoid using needed care, a problem that is more common for low-income individuals and those with chronic health conditions;
- High and often unexpected health care expenses cause financial precarity, with some Californians struggling to afford medical bills and other basic necessities; and
- The primary driver of rising health care costs is price, not utilization.
We will also discuss actions that employers and government purchasers of health care have taken to attempt to rein in health care costs, exploring solutions that have proven to be effective as well as those that have not. Finally, we will discuss the policy implications of these health care trends to help inform policy discussions underway at the state and federal levels—discussions that are increasingly acknowledging the extent of the affordability concerns for workers with job-based coverage.
The national spotlight on job-based coverage is growing
While job-based coverage remains the most common form of health coverage in the U.S., it has not been the main focus of national health policy discussions over the last decade. As the Affordable Care Act (ACA) was enacted and implemented—and as Republicans in Congress repeatedly attempted to repeal it—the focus has primarily been on Americans most affected by the ACA: those who lack insurance or are enrolled in Medicaid or the individual market. (Even so, the ACA included a number of provisions affecting job-based coverage, such as expanding dependent coverage to young adults; protecting families from certain out-of-pocket costs; requiring large employers to offer coverage or pay a penalty; and establishing a tax on high-cost employer plans scheduled for 2022.)
This year, however, job-based coverage has come under a brighter spotlight as Democratic presidential candidates have highlighted many Americans’ dissatisfaction with the current health care system and debated whether the best step forward is building on the reforms of the ACA or completely overhauling the system through a Medicare-for-all approach.
California is taking its own steps
In the last few years, California has continued to protect and build on its progress under the ACA through actions such as expanding Medi-Cal to low-income children and young adults regardless of immigration status, providing state subsidies to make insurance through Covered California more affordable, and implementing a state requirement to have insurance or pay a penalty, among many other policies enacted.
California policymakers are also preparing to explore a more fundamental overhaul of our health care system through the Healthy California for All Commission, created following the California Senate’s passage of a single-payer proposal in 2017 and a series of legislative hearings on universal coverage and health care delivery in the Assembly in 2017-2018. The Commission will develop options for providing health care coverage and access for all Californians through a unified financing system, including, but not limited to, a single-payer system.
State-level actions to directly regulate the cost that workers pay for job-based coverage premiums and out-of-pocket expenses have not been a major focus of recent policy discussions, largely due to federal laws that limit states’ ability to regulate employer offer of health insurance. However, states can address job-based coverage affordability by tackling the underlying cost of health care.
California has taken steps in recent years to control health care costs, such as through laws that have:
- protected consumers from surprise medical bills and limited the prices out-of-network providers can charge in in-network settings,
- improved the transparency of drug pricing,
- expanded rate review for health plans purchased by large employers, and
- banned a practice used by drug companies to keep the price high for certain generic drugs.
Other bills proposed in recent years have stalled due to opposition from hospitals or physician groups, such as a 2018 bill that would have established a commission to regulate hospital and physician prices and another bill to limit high out-of-network emergency room pricing (consideration of that bill will continue in 2020).
All of these enacted laws and bills have been sponsored by labor and consumer advocates in recognition of the extent to which the burden of rising health care costs falls on workers and consumers.
Watch the Labor Center’s blog over the coming months or sign up for email updates to follow this series as we highlight the challenges that Californians with job-based coverage face and discuss the implications for the policy discussions underway.
Up Next: Our next blog post will describe the role that job-based coverage plays in the context of California’s overall health care system.