The Underinsured: Health Insurance’s Dirty Little Secret

By Jill Zorn 

Head shot of man scowlingThanks to the Affordable Care Act (ACA), the number of uninsured in Connecticut and across the country has dropped dramatically, yet recent reports show that many people with insurance face challenges in paying for health care.

The Commonwealth Fund has been tracking the number and percent of those who are underinsured.  They define those who are underinsured as people with insurance who may not be able to afford health care, should they need it.  Affordability is related to both people’s incomes and the amount they would have to pay in deductibles and co-pays.

Their most recent report, shows that the percentage of underinsured rose from 11 percent in 2003 to 23 percent in 2014.  While this growth has leveled off since 2010, one noticeable change is the increase in people facing unaffordable deductibles.

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Families USA also published a report recently that highlights how being underinsured can keep people from getting the care they need.  They focused on people who buy their own insurance rather than get it through an employer.  Referred to as “non-group insurance,” this coverage was obtained by individuals both through the ACA insurance marketplaces like Access Health CT or outside the marketplaces.

Featured in this brief NPR radio story, the report found that one in four people put off getting needed health care because they could not afford it.  And high deductibles were one of the main concerns.

Some approaches already exist to mediate the challenges posed by high out-of-pocket costs. One important solution is to offer extra financial support and protections for people with lower incomes.  Through the ACA marketplaces, this is referred to as Cost Sharing Reduction (CSR), people with incomes up to 250 percent of the Federal Poverty Level, ($29,425 for an individual in 2015) face lower co-pays and deductibles as long as they purchase a Silver level plan.

Interestingly, employer-sponsored insurance seldom offers insurance coverage that is sensitive to employee income.  This means that low-wage workers may face far greater hurdles to affording their coverage than employees in the same organization that have higher incomes.

Another method is to avoid “one size fits all” insurance that sets the same deductibles and co-pays, regardless of how important a given service or prescription is to maintain someone’s health.  There is a growing movement, referred to as Value-Based Benefit Design (VBID), to lower or eliminate some out-of-pocket costs to make sure people don’t avoid needed care.  For example, diabetics do not pay co-pays for regular follow up visits, eye exams and foot checks or for the medication they need to control their blood sugar.

Still, both of these approaches are missing from many health insurance policies, making rising deductibles and other out-of-pocket costs a growing threat to health and peace of mind.  Without more sensitivity to income level and more nuanced benefit design, there will be way too many insured people afraid to use their health insurance or, as we discussed in a previous blog, holding bake sales to pay for health care.

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One Response to The Underinsured: Health Insurance’s Dirty Little Secret

  1. Pingback: Insurer “Merger Mania” Hurts Us | Universal Health Care Foundation of Connecticut

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