Health Insurance Costs: Pay Now or Pay Later?

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After narrowly dodging a bullet last year when officials feared they’d have to implement health insurance wait lists for the first time, it’s no surprise that Healthy Families again is before the budgetary firing squad.

The program, which insures families who make too much to qualify for Medi-Cal but can’t afford private insurance, was among the $5.5 billion package of social-service heavy cuts Gov. Arnold Schwarzenegger recommended Tuesday. The savings would be $250-million this year.

A $1.3 billion cut that would eliminate the state’s welfare-to-work program also was included.

Both proposals are sure to play well with the crowd that believes eliminating any aid to those welfare bums is a good thing. Because, after all, California would be golden again if the state didn’t spend so much to help the less fortunate.

A chunk of the “savings” that would come with eliminating Healthy Families, though, is anything but. It’s merely a cost shift. Someone will have to pay eventually. The question is whether to pay for insurance and the preventative care it carries, or pay for emergency room visits and shift the burden to hospitals later?

Eliminating Healthy Families would do the latter.

The program currently offers families of five who earn up to $48,4384 a year a chance to buy a $51-a-month plan. The premium had been $45 until February, when Health Families increased the costs to address part of its budget problems.

Back in November, the state Managed Risk Medical Insurance Board, which administers Healthy Families, said it would have to limit enrollment for the first time ever due to a $17.2 million deficit the program was facing.

A transfusion from the state’s cigarette tax saved the program then. An increase in the national income tax signed into law in February guaranteed federal funding for 4 1/2 years. Since federal money is two-thirds of the program’s budget, program advocates celebrated being in the clear for the next several years.

Until this week.

Aside from the irony of throwing back federal money, it’s also odd that the state is casting aside the program at a time when more families likely need it. The state’s unemployment rate was a mere 8.2 percent back in November, the third-highest in the nation. By April, the most recent month for which data are available, it was up to 11 percent though California’s rank had “improved” to fifth in the country.

In some parts of the state, up to 10 percent of children were uninsured in 2007 – a figure that has to be higher now.

“It costs Californians $7,000 every time an uninsured child visits a hospital for a preventable ailment,” the advocacy group Children Now says. “In contrast, only 17 percent of that amount ($1,200) is needed to provide health coverage for each uninsured child.

How’s that for return on investment? Still not enough for the welfare haters? Consider this, then: California hospitals already have been cutting back services and programs.

The California Hospital Association, hardly a hotbed of radical liberal thinking, reports a 73 percent increase in the number of patients having trouble paying bills as well as a 33 percent heavier caseload in emergency rooms.

“Including charity care and the cost of care for the indigent population, hospitals
are absorbing more than $10 billion a year in providing care to these vulnerable populations,” the association said in a January report.

Add to that total all the people thrown off Healthy Families.

If we don’t pay now, we’ll pay later.