Underinsurance is almost as bad as no insurance
Insured But Not Protected: How Many Adults Are Underinsured?
The experiences of adults with inadequate coverage mirror those of their uninsured peers, especially among the chronically ill.
By Cathy Schoen, Michelle M. Doty, Sara R. Collins, Alyssa L. Holmgren(Commonwealth Fund)
Health Affairs
June 14, 2005
Abstract: Health insurance is in the midst of a design shift toward greater financial risk for patients. Where medical cost exposure is high relative to income, the shift will increase the numbers of underinsured people. This study estimates that nearly sixteen million people ages 19-64 were underinsured in 2003. Underinsured adults were more likely to forgo needed care than those with more adequate coverage and had rates of financial stress similar to those of the uninsured. Including adults uninsured during the year, 35 percent (sixty-one million) were under- or uninsured. These findings highlight the need for policy attention to insurance design that considers the adequacy of coverage.
From the article:
Defining “underinsured.”
…we classified them as underinsured if they were insured all year but reported at least one of three indicators: (1) Medical expenses amounted to 10 percent of income or more; (2) among low-income adults (below 200 percent of the federal poverty level), medical expenses amounted to at least 5 percent of income; and (3) health plan deductibles equaled or exceeded 5 percent of income.
Two of three indicators (with deductibles as the exception) relied on current-year out-of-pocket costs and medical bills. As a result, unlike methods that simulate expenses based on analysis of insurance plans, age, and health, this “snapshot” approach will miss healthier adults with inadequate coverage who had little need for medical care during the year. The methodology thus likely underestimates the number of underinsured people.
Shifting trends.
The findings are likely to be symptoms of more to come. Given the public policy push and market trends toward higher deductibles, it will be important to track coverage adequacy and related care patterns over time.
The United States may well be on a path to where it becomes harder to distinguish the insured from the uninsured if insurance no longer provides either access or financial protection.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.289
Comment: The definition of underinsured used in this study was stringent enough to select out nearly 16 million individuals whose coverage left them almost as exposed to impaired access and medical debt as are the uninsured. One obvious conclusion is that health policy improvements must apply not only to the 45 million uninsured but also to these 16 million underinsured, or a total of 35% of the U.S. population.
Besides the uninsured and underinsured, there is another important category that we’ll call, for want of a better term, the “subinsured.” This is a very large group of individuals of moderate means who are healthy and have relatively infrequent needs to access the health care system. But the very reason that we have insurance is that anyone is vulnerable and could develop major health care problems.
And what could constitute subinsurance? Suppose an individual with an income of $52,000 had a significant medical event or developed a chronic problem and had to pay $5,000 in out-of-pocket medical expenses. That is under 10% of income, and therefore the individual is not underinsured by the criteria of this study. But most of us would believe that our coverage is not adequate under similar circumstances. Such a dent in our budgets would create difficulties in paying our bills, not to mention wiping out considerations such as voluntary contributions to our pension plans or replacement of that old clunker that you’re afraid to take out on the highway.
Insurance should prevent impairment to health care access, and it should prevent financial stress. Therefore we need policies that protect not only the uninsured and underinsured, but also the subinsured. Combined, that’s the majority of us. But at the cost of health care today, how could we fund the insurance pool without including the more affluent individuals who can easily accept the burden of contributing more to cover those who cannot fund their own share? We need the affluent as well.
We desperately need policies that would equitably fund an insurance pool that ensures affordable access for everyone, covering all important beneficial services. Is there really any other option than national health insurance?