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“Health care costs are the single largest expense in my family’s budget – larger than our mortgage - even larger than my daughter’s college tuition.”

 

I have a wife and two children. My daughter just finished her freshman year in college; my son is in high school. I have lived in California for most of my life, and have worked in marketing research most of my career. I spent the first 20 years of my career working for larger companies, but in 1997, I went off on my own. My health care was covered under COBRA for a while, and I started an individual (family) policy with Anthem Blue Cross in 1998 paying $151 each month for a plan with no deductible and a $10 co-pay for office visits.

We are now paying a premium of $2,132 per month for our family coverage, an increase of more than 1,300%.  That does not even count the fact that we now have a $5,900 deductible each year for each family member and a co-pay for doctor visits of $45. Our total health care expenses have risen from $1,751 in 1998 to $45,894 in 2014. We do not have dental or vision coverage with Anthem Blue Cross, so some of the costs are in those areas. Most of them, however, are costs that we still had to pay on top of our insurance premiums, because we had to meet our deductibles each year for each person.

Health care costs are the single largest expense in my family’s budget – larger than our mortgage, larger than our gas and transportation expenses, even larger than my daughter’s college tuition.

I have felt for years like the frog siting in a pot on the stove while the water gets hotter and hotter. He keeps wondering if he should jump out, but the temperature increases gradually, and he is never sure whether or not it is the right time to jump.  Eventually, the water is boiling pretty fast, and the frog is in deep trouble.

Well, the water is boiling pretty fast all around us, and anyone with an individual health insurance policy in California is in deep trouble.

Why didn’t my family jump out of the pot? Like a lot of other families, we have pre-existing conditions, and did not know if other companies would cover us. 

More important, though, we had nowhere to jump.  Anthem Blue Cross, Blue Shield, and Kaiser together control about 85% of the individual insurance market in California.  Anthem Blue Cross and Blue Shield have raised their rates in lockstep over the years, so it is hard to argue that they compete on price.  Kaiser has lower rates, but Kaiser’s rates have been increasing as well; besides, if we switched to Kaiser, we would have had to change all of our doctors.

My family thought about switching to Covered California this year, and that might have saved a few hundred dollars a month.  In fact, we will probably switch next year.  For this year, Anthem told us that we could not carry over our spending from the first three months of 2014 toward our deductible, even if we switched to one of Anthem’s own Covered California plans on April 1, so it would actually have cost us more to switch this year.

Covered California will help in some important ways, and it will take about 10% off our premiums.  But it won’t solve the larger problem.

Without regulation, the health insurance companies seem likely to keep increasing premiums, deductibles, and co-pays as fast as they can.  Proposition 45 will allow California to regulate health insurance rates, and that can only help. 

Prop 45 will also promote transparency in the financial operations of our State’s insurance companies.  Why should a company that operates honestly, fear transparency?

Allowing oversight on health insurance rates has worked well in other states, in the same way that allowing our State’s Insurance Commissioner to review auto insurance rates has worked well right here. 

I think the initiative is an important step, and is long overdue.  I urge you to support it.