With Californians’ healthcare rates rising faster than expected, it is time to look into new solutions to keeping healthcare costs low and quality high.

I want to implement a reinsurance program that will drive down healthcare premiums and co-pays for Californians.

How it functions is rather clever, and works like this:  A large proportion of healthcare costs are borne by a small number of people with pre-existing conditions or traumatic injuries. In the Affordable Care Act (ACA) framework insurance companies cannot charge more for these people, which increases the average cost of a policy. This is one of the reasons healthy people see increases to their insurance premiums.

To offset this, the ACA gives people subsidies to pay for these increased costs based on income and has the unfortunate side-effect of increasing health costs for middle class people whose income is too high to qualify for these subsidies.

By creating a reinsurance program for the people that incur the highest costs, we can lower costs for most Californians. Basically I would craft legislation that would use State Funds to cover the costs of the most expensive users of healthcare. This would remove their impact from the insurance markets, and drive the prices for insurance premiums and co-pays down for most Californians.

While this may seem like an increase in state costs, it actually isn’t. The key is that since premiums are lower, the ACA subsidy to individual people would not need to be as high. Then money that would have been used for those ACA subsidies would come from the state to cover the costs for the most expensive users of the healthcare system.

Long story short, this would lower the cost of healthcare across the board while continuing to be revenue neutral. In fact, that has been the case where a similar plan was enacted in Alaska.

This would provide millions of dollars in relief to local families, while we continue the fight for Single Payer and Universal Coverage for all Californians.

 

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