How States are Standardizing Consumer Affordability

Health care affordability is top of mind for policymakers and consumers alike, cutting across political affiliation, income, race and geography. However, the way affordability is framed in policy is much different than how consumers actually experience it. In a new brief, we’re highlighting state efforts to create new standards to improve how affordability is defined and addressed for both individual consumers and states. This brief builds off our previous work highlighting the need for more affordable coverage options and incorporating the critically-important voices and perspectives of impacted people.

Affordability for People 

Studies have found that an increasing share of household income is spent on health care costs, and that many low-income consumers spend a higher share of their income on premiums and out-of-pocket costs than those with higher incomes; meaning people have less money in their pocket to go to other necessities, such as food or housing. We also know that rising health care costs keep people from receiving necessary care due to fears related to their ability to pay.

To get a state-specific view, United States of Care conducted public opinion research in Colorado in August 2019. When we asked participants about what they would fix if they had a “magic wand,” they identified the areas of lowering cost; creating transparency; and expanding access. Across all demographics, Colorado consumers expressed frustration with both the cost of care and coverage, and shared their fears of unknown costs. We also found that consumers described issues with accessing care in terms of extra costs they face, such as paying for child care and transportation when they have doctor’s appointments. It is critical that policymakers first and foremost understand how people think about and experience health care affordability in their day to day lives. 

The Need for Affordability Standards

Given that the way people view affordability is not consistent with current policies and there is no agreed upon definition of what affordable health care really is, the need for consistent standards and definitions of health care affordability is clear. Unfortunately, current federal definitions of affordability are limited and fragmented. For example, federal policies fail to incorporate both premiums and out-of-pocket costs, as well as the wide geographic variations of costs consumers face, despite the fact that these impact consumers in major ways. And they certainly do not account for the other real costs, like transportation, that people incur when they seek care.  

To address these concerns and others, state policymakers and advocates are working to fill the voids left by the federal government to create more grounded, practical definitions and standards of affordability. 

Overview of State Efforts 

Colorado, Connecticut, Massachusetts, Rhode Island, and Vermont have taken a variety of approaches to creating affordability standards. Though efforts vary from state to state, all are aimed at improving consumers’ ability to pay for care and coverage. These policy options are not mutually exclusive, with some states taking a combined approach to meet their needs. 

On one end of the spectrum, states are creating standards tied to policies that make coverage more affordable to consumers by providing state-level financial assistance that wraps around federal financial assistance to make coverage more affordable for consumers, as Massachusetts has done. States can also target their efforts toward slowing the growth of health care costs to save money for both consumers and the system overall, including through investments in primary care (such as Rhode Island and Colorado is in the process of doing) or pairing affordability standards with health care cost growth targets to address rising health care costs (which is what Massachusetts did). Affordability standards may also be incorporated into state rate review processes, so that affordability for consumers is considered when rates are approved or denied (a choice reflected in efforts in Rhode Island and authority recently established via legislation in Colorado). 

States can also work to better understand the affordability issues consumers face before designing more robust policies. Colorado, Connecticut and Vermont have begun measuring the ability of families to pay for health care in relation to their other basic needs, such as food, housing, and transportation. This provides a more holistic look at the costs families actually have, and better aligns with how consumers think about affording health care. The tool being created in Connecticut will also allow policymakers to measure policy proposals against the standard they create in order to determine if the proposal is, in fact, affordable for consumers. While these initial steps may not immediately create more affordable coverage, they serve as a baseline for future policy changes and can help policymakers know when their proposals will actually move the needle and make health care more affordable. 

Considerations for States

When states create health care affordability standards, they should consider a number of consumer-centric perspectives to help guide their work, including:

• Measuring the full cost of health care people face by looking beyond just the cost of premiums; 
• Considering the best approaches to bringing the costs of care and coverage in line with the affordability standards that are developed;
• Deciding short- and long-term goals for usage of the standard; 
• Ensuring patients and consumers are involved in the development process; and
• Incorporating testing and evaluation so that the standard meets the core objectives and addresses consumer need. 

Affordable health care is a kitchen table issue that affects people of all walks of life. United States of Care is dedicated to helping improve affordability through a range of policies, including through the creation and implementation of affordability standards. This is one of many state-level policy levers that can move the needle on health care affordability and one that states should be paying close attention to to better align consumer needs with policy. We will continue to monitor and assist states in their efforts to create these standards, and look forward to working with more states as definitions and consumer needs evolve.