Income-based co-pay could cut costs

WASHINGTON, May 10 (UPI) -- A progressive health insurance plan could bridle burgeoning healthcare costs while protecting poor families, U.S. policy experts said Thursday.

Current insurance plans cushion consumers from the true cost of healthcare, causing a dramatic increase in spending over the past four decades, Jason Furman, with the Washington-based Brookings Institution, told a gathering of economists.

In 1965, the typical American spent the equivalent of $995 on healthcare, with a total of $483 in out-of-pocket expenses.

In contrast, per capita health spending increased by 2006 to $6,640, but out-of-pocket expenses remained fairly stagnant at $837.

While this sounds like a great deal, Furman pointed out the negative side effects of this ratio.

"Households may be insulated from paying for healthcare out of pocket, but they cannot be shielded from paying the full cost through other means, including premium payments, forgone wages to cover the cost of employer premium contributions and higher taxes to pay for public programs," Furman wrote in the Brookings report presented Thursday.

At the same time, roughly 45 million Americans have no health insurance -- a number due to high costs, said Daniel Bean, programs vice president for the National Economists Club.

"Health insurance is failing a lot of people on the grounds of affordability," he said.

Furman's "progressive cost-sharing plan" would attempt to address these problems by charging consumers a 50 percent coinsurance of up to 7.5 percent of their incomes, instead of a flat rate.

However, families below the poverty line would pay no coinsurance and affluent individuals would have out-of-pocket expenses capped at $15,000. Furman estimates the plan would lower total health spending by 13 to 34 percent and insurance premiums by 22 to 34 percent, decreasing the number of uninsured.