Underinsured Risking Debt to Pay Health Bills

By Steven Reinberg
HealthDay Reporter

TUESDAY, Aug. 7 (HealthDay News) -- One in four Americans with health insurance are still underinsured -- meaning they are often using up their savings or turning to credit cards to cover medical expenses, according to a survey in the September Consumer Reports.

And overall, the survey of 37,000 people found, 40 percent of Americans between the ages of 18 and 64 have inadequate access to health care.

"Four out of 10 Americans can't count on having health insurance when they need it," said senior project editor Nancy Metcalf, the article's author. "This includes people who don't have health insurance, but also the 3-in-10 people whose health insurance is so bad or so costly to them that are having trouble accessing and paying for medical care."

According to the report, 49 percent of all those surveyed, and 43 percent of those with insurance, said they were "somewhat" to "completely" unprepared for a costly medical emergency.

In addition, 16 percent of those surveyed said they had no health insurance. This included many whose jobs didn't offer insurance or who couldn't afford the premiums of deductibles of the available plan, Metcalf said.

This means that some 40 percent of Americans between the ages of 18 and 64 have inadequate access to health care. Most employers are struggling to keep their employees insured, even as large health insurance companies continue to reap huge profits, the report said.

The reason more people are seeing their health care coverage eroded includes rising costs, which have in turn raised deductibles, employee contributions and co-payments, Metcalf said.

"In 2005, we passed a milestone that no country should be proud of, which is that the average cost of a family plan in a workplace-based policy was more than a full-time employee making minimum wage gets in a year," Metcalf said.

"Employers, too, are feeling the strain of rising costs. In 2000, the average employer contribution for a family plan was $135 a month; by 2006, the cost was $248," Metcalf said.

Metcalf noted that for many working families, an increase in their deductibles directly affects their health. "Parents put off medical care they need for themselves, because they can't afford it as long as they are paying off their deductible before tapping into their credit cards or savings," she said. "Because health care is so expensive, it's coming up to bite ordinary people."

Efforts to solve these problems have already begun, Metcalf said. For example, Maine, Massachusetts, and Vermont now have laws that aim at providing health insurance to everyone, with help given to those who do not gain insurance through their jobs and can't afford to buy it on their own.

In addition, Consumers Union, the parent of Consumer Reports, has lobbied for universal health care for most of its 70-year history.

One expert agreed that "underinsurance" is a growing problem.

"They are picking up a trend that is very troubling," said Karen Davis, the president of The Commonwealth Fund. "It's not enough to have health insurance. You have to make sure it's good coverage," she said.

Being underinsured often means limited access to medical care and incurring unmanageable debt, Davis said.

Increasingly, middle-class families are being squeezed by out-of-pocket costs, Davis said. She agrees that the answer lies in universal health coverage, but it also has to be adequate coverage, she cautioned.

In addition, Davis believes insurance plans need to be tailored to suit individual needs. "We have to limit the financial liability of individuals, including premiums and out-of-pocket costs, to an affordable share of their income," Davis said.

Another expert believes individuals, not just government, have a key role to play.

"The insurance system is a mess," said Greg Scandlen, the founder of Consumers for Health Care Choices, which advocates for private health insurance. "That's why we support health savings accounts," he said.

With health savings accounts, insurance companies, doctors and hospitals can save on administrative costs and pass those savings on to consumers, Scandlen explained. These costs take 56 percent of every health care dollar, he said.

With the savings accounts, individuals can also put tax free money away and spend it on the health care they want, he added. "You get a dollar's worth of service for the dollar you spend," he said. "That's more efficient than a third-party payer system. And you can put money away for future health care expenses."

But Davis disagreed, saying that health care savings accounts are taking Americans in the wrong direction. "It hasn't made a dent in the number of people who are uninsured. In fact, those numbers have been going up," she said. "What it's done is help erode the quality of coverage and forced people to spend their savings."

SOURCES: Nancy Metcalf, senior project editor, Consumer Reports, Yonkers, N.Y.; Karen Davis, Ph.D., president, The Commonwealth Fund, New York City; Greg Scandlen, founder, Consumers for Health Care Choices, Hagerstown, Md.; September 2007, Consumer Reports

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