Thirty-one million people, or 23 percent, with health coverage in the U.S. were underinsured in 2014, according to a recent report released by The Commonwealth Fund. The share of working-age adults who had health insurance all year but were underinsured was statistically unchanged since 2010, after nearly doubling, from 12 percent to 22 percent, between 2003 and 2010.
People are considered underinsured if they have had health insurance for a full year, but have high deductibles or out-of-pocket expenses relative to their income, according to a news release on the report. The study, The Problem of Underinsurance and How Rising Deductibles Will Make It Worse, is based on The Commonwealth Fund’s Biennial Health Insurance survey, which interviewed people 19-64 years old between July and December 2014.
It could not separately assess the effects of the Affordable Care Act on underinsurance because people insured all year in the survey had coverage that began prior to the law’s major insurance expansions going into effect. The financial consequences of being underinsured are significant. Approximately 50 percent of those who were underinsured had problems paying medical bills or were paying off medical debt over time, according to the news release.
More than one-third either had trouble paying or couldn’t pay their medical bills (38 percent) and one-third had medical debt they were paying off over time (34 percent). More than one-fifth were contacted by a collection agency about unpaid medical bills (23 percent) or said they had to change their way of life in order to pay their medical bills (22 percent). “The financial and health insecurity that comes from being underinsured is substantial and puts people’s health and well-being at risk,” said Commonwealth Fund President David Blumenthal.
“If health insurance costs continue to be shifted to consumers at the rates we have seen over the past 10 years, the problem will likely grow.” Underinsured adults who had difficulties paying their medical bills reported the following consequences:
-44 percent received a lower credit rating.
-47 percent used all of their savings.
-34 percent took on credit card debt.
-9 percent took out a mortgage against their home or a loan.
-7 percent declared bankruptcy.
In addition to financial strain, people who were underinsured also skipped needed healthcare—44 percent either didn’t go to the doctor when they were sick; did not fill a prescription; skipped a physician-recommended medical test or follow-up visit; or didn’t see a specialist when their doctor told them to do so.
Employment and Insurance
Underinsured rates are increasing among people with health insurance through their employers, particularly at companies with 100 or fewer employees. Those companies are sharing more of their healthcare costs with employees, especially in the form of higher deductibles, according to The Commonwealth Fund.
While people buying coverage on their own are still more likely to be underinsured than those with employer coverage (37percent versus 20 percent), the share of people with employer insurance who are underinsured has doubled since 2003, when it was 10 percent.
Rising Deductibles Contribute to the Underinsured Rate
Over the past 10 years, deductibles have contributed to underinsured rates in two ways: More people than ever before have plans with deductibles, and those deductibles are taking up larger shares of people’s incomes. According to the report, in 2003, 40 percent of people with private health insurance had no deductible, while in 2014 just 25 percent didn’t have one.
In 2014, 14 million people had deductibles that were 5 percent or more of their income, while only four million had deductibles that high in 2003. Also, in 2014, 11 percent of adults enrolled in a private plan had a deductible of $3,000 or more, up from just 1 percent in 2003. While many people were underinsured because they had high out-of-pocket costs and high deductibles, 7 million people were underinsured due to deductibles alone in 2014, The Commonwealth Fund reported.
“People with health insurance should be able to get the healthcare they need without depleting their savings accounts or worrying about potential bankruptcy,” said Sara Collins, vice president for health care coverage and access at The Commonwealth Fund and the report’s lead author. “Changing the way we design health insurance benefits to keep rising deductibles in check could help keep health care affordable.” More information: http://bit.ly/1dmDnB7