Insurance Markets: Alternatives to Catastrophic Coverage for the Uninsured

Abstract:

With health care costs rising, more Americans are joining the ranks of the uninsured. In California, more than 20 percent of the non-elderly population, approximately 6.5 million people, lack health insurance. Employers and policymakers alike are interested in low-cost approaches to coverage. The most common form of low-cost health insurance, usually called catastrophic coverage, begins to pay a major share of costs only after significant out-of-pocket expense. Alternatives to Catastrophic Coverage for the Uninsured explores the potential for developing plans that have both relatively low premiums and generous primary care coverage. The brief includes several examples of benefit design options, but concedes that there are no simple solutions. For example, capping total benefits at a fairly low maximum will reduce premiums, but doing so leaves enrollees unprotected if catastrophe strikes. That represents a viable alternative only if mechanisms are in place to provide catastrophic coverage to the relatively small but real number of people who will need it.