The conclusion from the Basic Economic Security Table (BEST) report didn’t come as a surprise – It’s expensive to live in Connecticut.
The report published by Wider Opportunities for Women and released by the Permanent Commission on the Status of Women earlier this week shows the challenges faced by residents trying to make ends meet in our state. While providing information on the cost of living in Connecticut, including information on the essentials of housing, food and transportation, it also shows the amount of money needed to build assets toward a secure retirement.
The report highlights the difference between those who receive employer sponsored benefits and those who don’t – and the cost, almost $18,000 more per year for a family of four. Nearly two-thirds of that difference is accounted for in the healthcare line item, illustrating how expensive it is for families when they have to purchase health insurance on their own. In 2014, the Affordable Care Act (ACA) begins to address some of those inequities by expanding Medicaid coverage to low- income residents, those with incomes below 133 percent of the federal poverty level (FPL). Those above 133 percent FPL are slated to purchase health insurance from a new marketplace, known as the Health Insurance Exchange. While there are subsidies for premium expenses and caps on out- of- pocket expenses set to a sliding scale, there is still a segment of the population for whom these costs are too much.
Because Congress recognized this potential hardship, the ACA allows states to create a State Basic Health Program as an alternative to the Exchange for individuals who have incomes between 133 percent FPL and 200 percent FPL. The BEST report arrives at an opportune time to illustrate the wisdom of Connecticut adopting the State Basic Health Program. According to the report, economic security requires an annual income of just over $37,000 for an individual and just under $83,000 for a family of four. Even if only basic expenses are considered, an individual or family at 200 percent FPL is not close to making ends meet in Connecticut, never mind able to pay out-of-pocket costs for health care of up to 13 percent of their income.
This table shows how the numbers stack up:
|One worker||Family with two workers and two children|
|BEST annual income without employer-based benefits||$ 43,920||$100,656|
|BEST annual income with employer-based benefits||$ 37,188||$ 82,848|
|BEST annual income for basic living expenses only*||$ 32,652||$ 72,840|
|200% FPL||$ 22,430||$ 46,100|
|Estimated annual out-of-pocket costs in the Health Insurance Exchange**||$1,787-$2,904||$3,688-5,993|
*Cost of housing, utilities, food, transportation, personal and household items, and taxes (minus tax credits); cost of childcare also included for the family with children
**Out of pocket costs will vary based on the need to visit the doctor or fill prescriptions
Sources: The Basic Economic Security Tables for Connecticut, Wider Opportunities for Women, 2012, pp. 36-37
Health Insurance Exchange Planning Report: The State of Connecticut, Mercer Government Human Services Consulting (January 2012), pp. 181 and 225-226
In contrast to the Exchange, a State Basic Health Program, modeled after the state’s Medicaid program, would require no out-of-pocket expenses. Studies have also shown it will be cost-neutral to the state.
Policymakers would do well to consult the BEST report while they consider whether to adopt the State Basic Health Program. Right now, the Connecticut General Assembly is considering two possible bills to establish a State Basic Health Program. In addition, a work group of the SustiNet Health Care Cabinet has been established to study the issue.
As the BEST report clearly illustrates, Connecticut’s residents with incomes just above Medicaid eligibility lack the financial wherewithal to purchase insurance in the Exchange. In contrast, a properly designed State Basic Health Program will provide comprehensive coverage, and will remove the burden of paying for premiums and co-pays from families, an expense that they simply cannot afford. Without a State Basic Health Program, the predictable outcome will be that many people in this income range will remain uninsured, defeating the goals of the Affordable Care Act, and continuing to shift the costs for expensive emergency and catastrophic care of the uninsured to those who have insurance.
Jill Zorn is the Senior Program Officer at the Universal Health Care Foundation of Connecticut.