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.
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.
Financial 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.