This week, the author of a health care bill identified by the California Chamber of Commerce as a Cost Driver that will increase premiums for employers and employees said she will delay action until next year.
AB 298 (Bonta; D-Alameda) increases premiums for California’s employers and employees by restricting insurers from imposing a deductible, coinsurance, or copayment for in-network health care services provided to an enrollee under 21 years of age.
Although AB 298 aims to alleviate cost burdens for families with children, it overlooks the fundamental economic principle that elimination of cost-sharing mechanisms will be offset by increased monthly premiums. This will have a disproportionate impact on California’s middle class families, who already face escalating health care costs that surpass the national average, as documented by the California Health Care Foundation.
The recently released report of the California Health Benefits Review Program (CHBRP) lays out the medical, financial and public health impacts of AB 298. While AB 298 will reduce enrollee cost sharing for some consumers, total premiums would increase by more than $1.405 billion over various health insurance market segments, including the California Public Employees’ Retirement System (CalPERS).
In addition, when monthly premium increases exceed a certain level, CHBRP can estimate that 6,430 Californians could become uninsured because the cost per month became unaffordable.
Historically, legislative attempts to alter the delicate balance between premiums and cost-sharing have resulted in substantial cost increases, and AB 298 is expected to follow this trend.
In the current economic climate, where businesses and individuals are grappling with rising costs across all sectors, a premium increase like that projected from AB 298 will likely lead to employers reconsidering or reducing health benefit offerings, increased employee cost-sharing, and ultimately consumers being unable to afford monthly premiums.
Worth noting is that a comprehensive range of preventive care services for children is provided currently at no cost, even before deductibles are met. These services already are factored into premium calculations, which are subject to approval by the Department of Managed Health Care.
