insured against medical expenses is growing alarmingly, warns the
Commonwealth Fund (CF), a charitable foundation focused on
promoting healthcare in the US. Of significant concern to the
foundation it is that the problem is not confined to the poor but
is afflicting middle class America as well.
In its 2008 Biennial Health Insurance Survey the CF found that
between 2003 and 2007 the number of underinsured adults with
incomes of 200 percent or more of the federal poverty level
($40,000 per year for a family), nearly tripled from 4 million to
11.4 million.
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The number of completely uninsured in this income category
increased from 13 million to 16.6 million while the number of fully
insured fell from 83 million to 73.9 million.
The situation is particularly acute among adults in the income
category 200 percent to 299 percent of the federal poverty level,
where the CF’s survey found 31 percent to be uninsured and 16
percent uninsured.
Including all income categories the CF found that among adults aged
below 65, 28 percent had no insurance (49.5 million people) and 14
percent (25.2 million people) had inadequate insurance in 2007 – up
from 26 percent and 9 percent respectively in 2003. People were
defined as underinsured if they spent 10 percent or more of their
income (or 5 percent if they were low-income) on out-of-pocket
medical expenses, or if they had deductibles that equaled 5 percent
or more of their income.
Being under- or uninsured had a number of serious consequences. One
was that 53 percent of those underinsured and 68 percent of those
uninsured went without needed care. In contrast only 31 percent of
adequately insured adults went without such care.
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By GlobalDataFinancial difficulties are another serious consequence. The CF
found that 45 percent of under-insured and 51 percent of uninsured
reported difficulty paying bills, being contacted by collection
agencies for unpaid bills, or changing their way of life to pay
medical bills. In contrast, only 21 percent of adequately insured
adults reported financial stress related to medical bills.
Analysing the financial situation faced by many of those
underinsured the authors said it was partly due to design changes
in insurance benefits. In particular underinsured adults were more
likely than those with adequate insurance to report benefit
limits—for example, restrictions on the total amount a plan would
pay for medical care or on the number of physicians’ visits
allowed.
Underinsured adults were also far more likely to report high cost
deductibles: 26 percent had annual per-person deductibles of $1,000
or more. However, despite benefit limits and higher deductibles the
CF noted that underinsured adults often reported high annual
premium costs, in line with those reported by more adequately
insured people.
The study’s authors questioned the logic behind cost sharing
between insured and insurer. They stressed that health care costs
are highly concentrated among the sickest patients, with 10 percent
of patients accounting for 64 percent of all spending. The
healthiest half of the population accounts for only 3 percent of
total spending.
“To the extent that higher cost sharing, particularly deductibles,
is intended to create more prudent care decisions, the skewed
distribution suggests that such a strategy will have little overall
impact on spending,” concluded the authors.
However, they warned that the impact of higher cost sharing will be
to increase the number of families at risk for medical debt and
loss of savings for retirement, education or other long-term
needs.
“Indeed, handling medical debt appears to be a new growth
industry,” noted the CF study’s authors.
Notably, the proportion of families with health insurance that had
out of pocket medical expenses of 10 percent or more of total
family income increased from 7.1 percent in 2003 to 13.5 percent in
2007.
