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Automakers Jobs Moving to Canada Because of High Health Costs—Why We Need Health Care Reform in California--and What We Don’t Need

By Hanh Kim Quach
Health Care Policy Coordinator
Health Access California

The Associated Press reports that the Canadian Auto Workers have signed a three-year contract with Ford. Chrysler is next.

High health care costs have been a primary source of angst for automakers, who two years ago made headlines by appealing to Washington for some kind of help. Since 2005, though, automakers' health care costs have declined by $2.1 billion. The United Auto Workers agreed to some changes, that resulted in increases costs for retirees and workers.

Salaried workers have seen premiums increase as much as 30%, out-of-pocket maximums increase by 33% to $4,000, and a tripling deductibles from $500 to $1,500.

All this -- and automakers are still moving to Canada.

Why We Don’t Need High Deductible Health Insurance in California

Health Affairs has just released an excellent new study, which challenges the notion that high-deductible health plans with their low premiums are offering the otherwise a good alternative to going uninsured. Based on this research, and an updated report from the Government Accountability Office tells us who does benefit from these plans.

The Health Affairs study just confirms what advocates have been saying -- and debunks what insurance companies argue: high deductible plans are not a sound choice for families who are uninsured. One medical emergency would leave these families vulnerable to tens of thousands in medical debt, if not bankruptcy.

Among the report's findings:

• Only 21% of households with one uninsured person could cover a $1,000, along with their other obligations.

• No more than 9 percent of households with one uninsured person could meet the out-of-pocket maximum of $5,000.

Also interesting:

$300: Uninsured families earning less than 300% of poverty ($63,600 for a family of four) had an average of $300 (!) in liquid financial assets. Incidentally, this is pretty much all they have too.

Higher income assets thin: Even for those families, who were uninsured, earning more than $63,600 -- assets were pretty scant. Gross financial assets -- which include stocks and mutual funds -- totalled $3,600 for these families. Families WITH insurance had more than four times that amount: $16,420.

So who are these high deductible plans for anyway? Well, a new GAO report tells us that:

The Government Accountability Office just updated their 2006 report on Health Savings Accounts, which can only be opened with a qualifying high-deductible health plan.

First -- only about half of the 4.5 million HSA-eligible plan enrollees opened an HSA.

And -- those who opened them have more money. The average income for the enrollees of these plans was $57,000. For those who opened an account, though, the average income was $139,000 -- more than twice as much.

I'm hoping some insurer folks or defenders of high-deductible plans can explain, again, why they still believe in light of this research that these plans are a good idea for the uninsured.

Hanh Kim Quach is the Health Care Policy Coordinator for Health Access California. Before joining the organization, she worked as a journalist for nearly 9 years covering issues in California. Health Access California is a statewide health care consumer advocacy coalition of over 200 groups. This article has also been published on the Health Access Weblog.

Posted on May 05, 2008

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