Missouri policymakers should develop a progressive sliding scale of affordability based on household income when designing health coverage policies for Missouri.

The sliding scale of affordability - wherein people earning less income pay a smaller percentage of their income for health insurance - should progress from 1.8 percent to 8.5 percent of income for individuals earning between 150 percent and 500 percent of the federal poverty level (FPL) - $15,600 and $52,000, respectively.

In Missouri, there are over 700,000 people that lack health coverage, most because they cannot afford it. As Missouri policymakers wrestle with policy options to reduce the number of uninsured in our state, it is critical that they understand what Missourians can actually afford in terms of coverage. Because a health reform plan not grounded in the reality of what Missouri families can afford will not succeed in reducing the number of uninsured in our state.

Recently, the Missouri Foundation for Health, through the Cover Missouri project, released a report titled, "Defining Affordable Health Care for Missouri." The report looks at a number of factors that impact whether a family can afford health insurance and develops a model for establishing health care affordability for the state. The report defines affordability as "the percentage of income a household can devote to health care while still having sufficient income to address other necessities" such as food, housing, and basic transportation.

The report develops an affordability scale for Missouri by examining household budgets; income guidelines for non-health public programs such as the Missouri Low Income Home Energy Assistance Program, the Food Stamp Program, and the Earned Income Tax Credit; current health spending; and the experience of the state of Massachusetts, which implemented an affordability schedule as part of its recent health reform law.

The report recommends Missouri policymakers consider the following when designing health coverage policies for the state:

- Any affordability schedule should utilize a progressive scale as incomes increase. A progressive sliding scale will prevent people with lower incomes from paying a disproportionately higher share of their income for health insurance. Using an affordability scale with assumptions about the ability to pay will lead to more people buying health insurance.

- People with very low incomes can pay only small amounts toward health care. Research shows that many low-income people struggle to pay for basic necessities and are likely to have negative cash flow. Studies of household budgets in Missouri indicate that individuals below about 150 percent FPL ($15,600) and families below about 200 percent FPL ($35,200 for a family of three) may not earn enough to cover their basic needs. People at these income levels should pay only nominal amounts of health costs and will need public programs and subsidies to obtain insurance.

- The upper bound of affordability should be set around 8.5 percent, even for those with good incomes. Data suggests that people with higher incomes can reasonably afford to spend about 8.5 percent of income on health insurance. In Missouri, this point corresponds to incomes above 500 percent FPL ($52,000). People with unsubsidized, nongroup premiums currently pay an average of 8.5 percent of income. After meeting basic needs, most people at a higher income level have sufficient discretionary income to cover health expenses. Because premium and cost-sharing variations may render insurance unaffordable for some people with incomes above this level, it is recommended that 8.5 percent of income be used as the upper limit for people with incomes above 500 percent FPL.

- A progressive sliding scale of affordability is needed. For those earning enough to make some contribution to their health care (although not necessarily the full cost), a sliding scale of affordability is recommended as a protection from financial hardship. In Missouri, this scale should progress from 1.8 percent to 8.5 percent of income for individuals earning between 150 and 500 percent FPL ($15,600 and $52,000).

Recent polls have shown that the rising cost of health care is the top economic concern for Missourians. It is our hope that this report provides our newly-elected governor and the new and returning members of our state legislature with a framework for establishing affordability as they work to pass policies to extend health insurance coverage to all Missourians.

James R. Kimmey MD MPH, is president and CEO of the Missouri Foundation for Health.