WHEREAS:
The Affordable Care Act (ACA) made major strides in ensuring fair access to health insurance at an affordable price for those who had been left behind for decades. Nonetheless, health care costs across the system continue to grow, typically in excess of general inflation, placing an ever-greater burden on working families, communities and public budgets; and
WHEREAS:
In the absence of more comprehensive systemwide cost containment reforms, workers and their families are continually asked to shoulder more of the cost burden in the form of higher premiums, higher out-of-pocket costs and foregone wages. In 2026, the average deductible for a bronze plan nationwide is nearly $7,500 for an individual. Meanwhile, the protection found in federal law meant to limit financial risk to plan participants allows group health plans and ACA marketplace plans to charge families up to $21,200 in total out-of-pocket costs this year; and
WHEREAS:
Individual Coverage Health Reimbursement Arrangements (ICHRAs) appear on the surface to offer workers choice and potential cost savings. However, their key design feature is to explicitly limit the employer’s liability, thereby offloading the financial risk onto the employee to choose an individual market plan that may or may not match the value of their current plan. Similar to the shift away from defined benefit pensions that began decades ago, these arrangements run the risk of becoming the new 401(k), as employers set it and forget it and leave employees to fend for themselves against steep medical bills; and
WHEREAS:
Medical costs are already crushing the finances of millions of Americans, with more than 40% of U.S. residents carrying some sort of medical debt, while a quarter of Americans are considering filing for bankruptcy to resolve a medical debt issue. Medical debt is cited as a reason for two-thirds of those who do ultimately declare bankruptcy; and
WHEREAS:
Large, entrenched health care organizations have grown into vertically integrated behemoths, reaching too-big-to-fail status and behaving like monopolies. These entities contain business units spanning the health care ecosystem, many of which operate at cross purposes. Health insurance companies own provider groups, pharmacy benefit managers (PBMs) and all manner of other middlemen. Regulators have been slow to use the traditional antitrust tools against this out-of-control vertical consolidation. Employer plan sponsors and trustees face incredible difficulty sorting through the self-dealing and other conflicts of interests of these arrangements in attempting to efficiently operate health plans in the interest of plan participants; and
WHEREAS:
The current pharmaceutical intellectual property regime unfairly benefits branded prescription drug manufacturers, granting them the ability to price-gouge the public on the back of publicly funded research. Meanwhile, basic generic medications that are critical to the daily operation of a hospital or clinic are too often in short supply, in part because private manufacturers do not view the market as sufficiently profitable.
THEREFORE BE IT RESOLVED:
That AFSCME supports efforts to reduce the maximum out-of-pocket cost people are required to pay in individual market and group health plans; and
BE IT FURTHER RESOLVED:
That AFSCME opposes legislation codifying Individual Coverage Health Reimbursement Arrangements that offload health care cost liability onto individuals, and supports the repeal of their underlying regulatory authority; and
BE IT FURTHER RESOLVED:
That AFSCME supports policies at the state and federal level to unwind predatory corporate health care conglomerates; and
BE IT FINALLY RESOLVED:
That AFSCME supports efforts to create a public option for the manufacturing and provision of key generic drugs and innovative drug products that are critical to the health and security of all Americans.
SUBMITTED BY:
Charmaine Morales, President
Peter Sidhu, Executive Vice President
UNAC/UHCP, NUHHCE/AFSCME Local 1199
California