AB 2281 Caps Patients’ Out of Pocket Health Care Costs

Sacramento, CA — Lawmakers today moved forward a bill banning the kind of junk health insurance that left three California patients with over $680,000 in medical bills even though they were insured. The law would place a cap on the amount of money patients must pay out of pocket for health care. Supported by patient groups, consumer advocates and labor unions, AB 2281 (Chan) is opposed by the state’s largest health insurers, including Blue Cross, Health Net and Pacificare, which contributed over $750,000 in 2005 to Sacramento politicians.

AB 2281, which now moves to the Assembly floor, would cap the amount that patients with insurance must pay out-of-pocket for health care at $10,500 per year for families and $5,250 for individuals. It would also bar insurance companies from requiring patients to pay a deductible for preventive medical care, including cancer screenings and childhood immunizations.

“This bill would protect patients who have purchased insurance from being forced into bankruptcy with a serious illness. Insurance isn’t insurance if it doesn’t protect against financial disaster or provide basic coverage when we get sick,” said Carmen Balber with the nonprofit Foundation for Taxpayer and Consumer Rights. “California patients won’t be protected until we cap out-of-pocket costs and ban junk health insurance.”

The bill would bar the kind of insurance that left these three California consumers with hundreds of thousands of dollars in medical bills because their insurer did not cap out of pocket costs:

• Erik and Elizabeth Lehrer of Santa Rosa. Faced $30,000 in medical bills when their daughter suffered from diabetic shock and the family’s insurance company refused to cover hospital and other costs.
• Dana Christensen of Playa Del Rey owed more than $450,000 when her husband died of bone cancer even though they had insurance and had purchased a special rider for chemotherapy. On his deathbed, Dana’s husband, Doug, asked her to divorce him so she would not be responsible for the bills. She refused.
• David and Darlene Henderson of Penn Valley had unpaid medical bills of more than $180,000 after they coped with multiple surgeries. The Hendersons’ insurer eventually paid less than 15% of their costs.

“What’s the point of paying for health insurance and then when you need it, discovering the benefits you thought were promised and paid for just aren’t there?” asked Dana Christensen. “These plans aren’t worth a dime because they allow insurance companies to sell junk policies that gouge consumers when they are sickest and need coverage the most.”

Erik Lehrer, Dana Christensen and David Henderson spoke out against “bare bones” policies that shift the burden of health care costs to patients through high deductibles, co-pays and other charges. Christensen testified before the Assembly Health committee in support of the bill.

Read FTCR’s letter of support for the bill.

The stories of the Christensen, Henderson and Lehrer families can be found in an FTCR online resource that also outlines the plans’ skeletal benefits.

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