25 Million Americans Are 'Underinsured'

June 11 --

TUESDAY, June 10 (HealthDay News) -- The number of American adults who had inadequate health insurance to cover their medical expenses rose 60 percent from 2003 to 2007, from 16 million to more than 25 million people.

Hardest hit were families with middle and higher incomes, those whose income was 200 percent above the federal poverty level or those with an annual income of $40,000 or more, a new report by The Commonwealth Fund found.

"Insurance coverage is the ticket into the health-care system," Karen Davis, president of The Commonwealth Fund, said during a Monday teleconference. "For too many, that ticket does not buy financial security or genuine access to care.

"We need to extend effective, affordable health insurance to all," added Davis. "Shifting costs to patients is not an equitable or effective solution to rising health-care costs. It is time for serious consideration of changes in the way we pay for and deliver health services. Ultimately, we need a national solution to the problem of millions of uninsured and underinsured Americans."

The report is published in the June 10 issue of Health Affairs.

To make their estimates, the researchers conducted a national survey in 2007 of 3,501 adults. They found that among adults aged 19 to 64, 25.2 million were "underinsured." That number was based on out-of-pocket health-care costs as a proportion of income.

"Overall, the study finds a startling 60 percent increase in the number of underinsured working age adults over the past four years," said study co-author Cathy Schoen, a senior vice president at The Commonwealth Fund. "A jump up to 25 million underinsured in 2007, compared to only 16 million in 2003."

Approximately 42 percent of adults aged 19 to 64 years old -- 75 million people -- were either underinsured or didn't have health insurance in 2007. That represents an increase of 33 percent since 2003, when the last survey was done, Schoen said.

People who are underinsured are people who have health insurance but spend 10 percent or more of their income on out-of-pocket medical expenses. For people below 200 percent of the federal poverty level, being underinsured means spending more than 5 percent of income on out-of-pocket medical costs.

Being underinsured also means paying deductibles of 5 percent or more of family income.

The researchers found that people who were underinsured were more likely to go without needed health care and have problems paying medical bills, compared with people who have adequate health insurance.

In fact, 53 percent of the underinsured and 68 percent of those without health insurance had to forgo needed medical care, such as not seeing a doctor when sick, not filling prescriptions, and not getting recommended diagnostic tests or treatments. "The underinsured look a lot like the uninsured," Schoen said.

Among the underinsured, 45 percent reported having difficulty paying bills, being contacted by collection agencies for unpaid bills, and curtailing their way of life to pay their medical bills, compared with 21 percent of people with adequate health insurance.

Also, underinsured people were more likely to have insurance plans that limit payments. They were also more likely to have high deductibles. For example, one quarter of underinsured people had deductibles of $1,000 or more, the report found.

However, premiums for the underinsured were similar to or higher than those paid by people with adequate insurance, the researchers found.

"Today in the United States you can have health insurance all year long but still go into medical debt or face bankruptcy when you get sick," Schoen said. "This erosion of insurance protection is putting patients, families and the nation's health and economic security at risk."

Kim Bailey, a senior policy analyst at Families USA, a health-care advocacy group, said she thinks the trend toward greater out-of-pocket costs for health care is likely to continue.

"It is clear that American families are facing a growing burden of out-of-pocket costs, and this is consistent with a decay in the comprehensiveness of health benefits being offered," she said.

Bailey noted that between 2000 and 2007, the average family premium for employer-sponsored insurance rose more than 90 percent. "We are getting to a place were a number of people are feeling the squeeze," she said. "This report highlights the thinning of benefits on higher income people and that is new. That indicates to me that a call for change is likely to be strengthened."

Another expert said the new report probably underestimates the problem of underinsurance.

"There are a whole lot of ways to be underinsured that the report does not capture," said Dr. Steffie Woolhandler, an associate professor of medicine at Harvard Medical School and co-founder of Physicians for a National Health Program.

The deductible is only a fraction of the total amount one has to pay out-of-pocket, Woolhandler said. "In addition to the deductible, there are issues such as co-insurance and the issue of uncovered services, which are not part of the deductible," she said.

Woolhandler also noted that many people lose their job and their health insurance when they become disabled. "At least 25 percent of employers terminate employment the day you become disabled," she said.

More information

For more on health insurance, visit The Commonwealth Fund.

SOURCES: Kim Bailey, senior policy analyst, Families USA, Washington, D.C.; Steffie Woolhandler, M.D., associate professor, medicine, Harvard Medical School, Boston, and co-founder, Physicians for a National Health Program; June 9, 2008, teleconference with Karen Davis, president, and Cathy Schoen, senior vice president, The Commonwealth Fund, New York City; June 10, 2008, Health Affairs