Health Care Spending Caps Will Protect Minnesota Families from Catastrophic Medical Expenses

Accidents or Injuries, Diagnosis of Heart Disease, Cancer, or Diabetes Can Devastate Family Budgets; Affordable Care Act Offers Protection to All Minnesotans

Caps Will Help Minnesota’s Small Businesses and Have a Profound, Beneficial Impact on Minnesota Families’ Finances and Futures

Washington, D.C.— More than a quarter of a million Minnesotans currently face the threat of catastrophic family health care expenses from serious, unexpected injuries or illnesses, such as accidents, sports injuries, cancer, diabetes, and other diseases. A new cap on out-of-pocket expenses, a key provision of the Affordable Care Act, will help those families protect both their health and their budgets.

Although the spending caps go into effect in 2014, the consumer health group Families USA asked The Lewin Group, a health care policy research and management consulting firm, to look at the impact of the caps on Minnesota families as if the caps were going into effect in 2011. The resulting analysis for Minnesota spotlights the tremendous need for spending caps to protect family budgets:

• In 2011, 255,000 Minnesotans under the age of 65 are in families that will spend more than the out-of-pocket caps for services that will be covered in the Affordable Care Act’s essential benefits package.
• The Affordable Care Act's spending caps, when adjusted to 2011, would be $5,950 for individuals and $11,900 for families. Out-of-pocket health care spending by these Minnesota families will exceed the caps by nearly $434.1 million in one year alone.

The Families USA report, “Worry Less, Spend Less: Out-of-Pocket Spending Caps Protect Families in Minnesota,” found that more than three-quarters (78.7 percent) of the Minnesotans who will spend more than the out-of-pocket caps—an estimated 200,600 people—are in working families.

In particular, employees of Minnesota’s small businesses (those with fewer than 100 employees) face the threat of high out-of-pocket health care spending:

• An estimated 112,900 Minnesotans in families where the head of the household is employed by a small business will spend more than the out-of-pocket caps.
• More than two in five of all Minnesotans (44.3 percent) who will spend more than the out-of-pocket caps are in families where the head of the household works for a small business.
• Of those Minnesotans in families of small business workers, more than four in five (83.4 percent) have a head of household who works for a business with fewer than 25 employees.
• Families of Minnesota’s small business employees will spend nearly $190.3 million more than the out-of-pocket caps in 2011 alone. 

“Two decades of rising health care costs have squeezed families into coverage with higher premiums, higher copayments, and higher deductibles, and sometimes these costs have forced families out of health coverage altogether,” Ron Pollack, Executive Director of Families USA, said today. “These families are terribly vulnerable to the financial devastation caused by unexpected illness or injury, and they generally face only bad alternatives, including massive credit card debt, bankruptcy, even foreclosure.

“The report from Families USA clearly shows that 255,000 Minnesotans, and nearly 15 million people across the nation, will deal with this kind of health and financial crisis this year alone. The caps on out-of-pocket spending that will be put in place by the Affordable Care Act will have a profound, beneficial impact on the fortunes, finances, and futures of families in Minnesota.

Pollack noted that, between 2000 and 2010, the average premium for job-based family coverage grew from $6,438 to $13,770, an increase of 114 percent. These increases have been a special burden for small businesses, which, because of lower buying power and proportionately greater administrative costs, pay, on average, 18 percent more than large businesses for a comparable health insurance plan.

“These caps will be of special value to small businesses and the employees of small businesses,” Pollack said.

“This report is further evidence that the health reform law is good for America and good for the people of Minnesota,” said U.S. Senator Al Franken (D-MN). “When out-of-pocket spending caps go into effect in 2014, hundreds of thousands of Minnesotans will save hundreds of millions of dollars in health costs every year. More importantly, Minnesota's families will be protected from the catastrophic expenses that can result from unexpected injuries and illnesses, giving them more security and peace of mind.”

The spending cap provision of the Affordable Care Act includes a sliding scale that will ensure those with lower and middle incomes will pay less out of pocket than those with higher incomes.

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Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

1201 New York Avenue NW, Suite 1100 · Washington, DC 20005
202-628-3030 · Email: info@familiesusa.org · www.familiesusa.org