It’s time for policy-makers to think about the underinsured
In all the recent discussions about ways to solve the problem of the uninsured in the United States, little attention has been paid to the plight of the underinsured. But a new Commonwealth Fund study reported in Health Affairs estimates that nearly 16 million adults were underinsured in 2003.
And that’s a problem because underinsured adults were more likely to forgo needed care than those with more adequate coverage.
Lead author Cathy Schoen, Commonwealth Fund senior vice president for research and evaluation, tells State Health Watch that for the past several years, the researchers have observed a steep rise in out-of-pocket health care expenses for insured people younger than 65, often through higher deductibles and greater cost sharing.
"The literature tends to look at it as either you’re insured or you’re not," she says. "There’s been too little attention paid to how well insurance coverage meets the goals of access and protection against large costs," she says.
To date, the study authors say, efforts to redesign insurance have proceeded with little regard to patients’ or families’ ability to pay or the consequences of exposure to financial risk.
"To the extent that patient cost sharing or benefit gaps leave insured adults without adequate financial protection in the event of a major illness, erosion in the quality of insurance coverage will raise the number of Americans who are underinsured," they write. "If inadequate protection erects barriers to appropriate care, market trends could undermine the central goals of health insurance: to facilitate timely access to care when needed and to protect patients from costs that would be catastrophic relative to their income."
The researchers used data from the Commonwealth Fund 2003 Biennial Health Insurance Survey, a nationally representative telephone survey of 4,052 adults. When surveyed, 36% of all respondents had health problems and rated their health as either fair or poor or had some type of disability or one of four chronic conditions.
Defining underinsured
The study uses indicators of financial risk to define "underinsured." Risk was assessed by comparing cost exposure to family income. Using respondents’ estimates of out-of-pocket medical care expenses, plan deductibles, and income, they were classified as underinsured if they were insured all year but reported at least one of three indicators:
- Medical expenses amounted to 10% of income or more.
- Among low-income adults (below 200% of the federal poverty level), medical expenses amounted to at least 5% of income.
- Health plan deductibles equaled or exceeded 5% of income.
Ms. Schoen says the 10% of income threshold was chosen because it was the threshold most commonly used in past studies of the uninsured or analyses of catastrophic costs. The lower 5% threshold for low-income adults was chosen based on the national policy implicit in SCHIP that permits some cost sharing for low-income families but limits total exposure to 5% of income.
The researchers found that three of four people ages 19 to 64 said they were insured all year. When the three underinsured indicators were applied to them, 12% of the insured adults — or nearly 16 million people — were underinsured.
Based on reported expenses and income, about 7% of continuously insured adults spent 10% or more of their income on family medical expenses during the year. Adding low-income adults who reached or exceeded the threshold of 5% of income, 11% of adults had expenses at or above the two income-related out-of-pocket indicators during the past year and 3% faced deductibles that amounted to more than 5% of their income.
When uninsured adults (estimated at 45 million) were added to those who were underinsured based on financial indicators, the researchers concluded that an estimated 61 million adults, or 35% of the population ages 19 to 64, either had no insurance, sporadic coverage, or insurance that exposed them to catastrophic medical costs during 2003.
Adults with lower incomes were more likely to be uninsured and when insured to be underinsured. In total, 70% of low-income adults (under 200% of the federal poverty level) were either uninsured or underinsured during the year. Similarly, underinsured adults had disproportionately low incomes; 73% had annual incomes below 200% of poverty.
Sicker adults likely underinsured
Underinsured rates also were high among adults with health problems reflecting, the authors say, the use of indicators based on recent out-of-pocket expenses.
Among sicker adults defined broadly, 43% were either uninsured or inadequately insured compared with 31% of healthier adults. African American and Hispanic adults were at high risk of being uninsured and, when insured, were somewhat more likely than white, non-Hispanic adults to have inadequate insurance.
Comparisons of care, satisfaction, and confidence among the three insurance groups revealed the importance of having adequate insurance to facilitate access and more positive medical care experiences, the researchers found.
Relative to adults with more adequate insurance, underinsured as well as uninsured adults were significantly more likely to go without care because of costs, to lack confidence that they would receive high-quality care when they needed it, and to rate care experiences negatively, they note.
Interestingly, despite being insured all year, underinsured adults reported negative care experiences and rates similar to those of uninsured adults.
Having a regular doctor was the only measure for which underinsured adults’ responses were similar to those of adults with adequate insurance.
Underinsured adults also were significantly less confident about their ability to get care in the future and less satisfied with the quality of the care received than were those with better coverage.
The researchers said one proof of this was the fact that half the underinsured adults thought they would have received better care if they had been covered by a different insurance plan.
At financial risk
Underinsured and uninsured adults also were at risk for facing collection agencies and enduring high levels of financial stress as a result of medical bills. Access and care concerns reportedly were most acute among adults with health problems who either were underinsured or uninsured.
Two-thirds of sicker adults who were underinsured and three-fourths of sicker adults who were uninsured went without needed care because of costs during the year.
Nearly half of underinsured sicker adults with chronic diseases or poor health did not adhere to medications, and one-third did not follow up on diagnostic treatments or care recommended by their doctors because of cost.
The researchers say the findings reflect the "double jeopardy of health problems and low incomes among the uninsured and problems with policies that entail substantial cost sharing relative to income."
Overall, according to the study, underinsured adults were more likely than those with more adequate coverage to face higher cost sharing, plan limits, and more restrictive benefits. Yet despite more limited coverage, underinsured adults often incurred high annual premium costs.
One-third had annual premium cost shares of $1,500 or higher, and 47% paid premiums that amounted to 5% or more of their annual incomes. According to Ms. Schoen, some policy-makers and researchers have endorsed the move toward greater cost sharing, arguing that encouraging people to pay more of the health care bill will make them more prudent consumers of health care services and help moderate health care cost inflation.
However, her study indicates that without targeted protections, insurance policies that expose patients to costs that are high relative to income are likely to have a negative effect on access and adherence to recommended care. And the risks are particularly high, she says, for low-income patients and those with chronic illnesses.
"A clear consequence of deductibles and cost sharing will be to shift more of the costs of medical care to the sickest patients and their families," Ms. Schoen writes.
"Given the concentration of health expenditures, this shift may do little to address underlying cost trends yet unduly burden families that are already under stress because of poor health," she explains.
Symptoms of more to come
Ms. Schoen says the study findings are likely to be symptoms of more to come. In the survey, a small percentage of insured adults, just 6%, reported deductibles of $1,000 or more.
She suggests that 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," Ms. Schoen declares.
The survey points to a need for new policy and research attention to health insurance benefit design, Ms. Schoen says, with a focus on assessing design effects on access and financial protection relative to income.
International studies repeatedly find that the United States often lags behind other countries in key measures of health status and timely access to care while leading the world in exposure to medical care costs.
Without attention to insurance adequacy and whether patients receive effective care, an increase in the number of underinsured people could undermine health, productivity, and financial security in the future, she concludes.
Looking like the uninsured
Ms. Schoen tells State Health Watch researchers were surprised at how much the underinsured look like the uninsured in terms of financial stress and ability to get needed care.
The research is raising an important policy issue — the importance of considering insurance design as well as ensuring that people have insurance coverage. Insurance protection needs to take into account income, she says.
Because the data for this survey came from 2003, Ms. Schoen says there is a need to update the impact to reflect the sharp jump in front-end deductibles that has occurred.
"We’ll look at what happened to modest income families and those with low incomes," she points out.
Ms. Schoen says there are implications for savings and for families’ ability to meet other needs such as education and retirement.
[Contact Ms. Schoen at (212) 606-3864.]
In all the recent discussions about ways to solve the problem of the uninsured in the United States, little attention has been paid to the plight of the underinsured. But a new Commonwealth Fund study reported in Health Affairs estimates that nearly 16 million adults were underinsured in 2003.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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