Would A Health Overhaul Help The Underinsured?

By Jenny Gold

Published September 28, 2009 12:01 AM

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Who are the underinsured?

People who are described as underinsured have health benefits that don't adequately cover their medical expenses. Often, consumers discover they're underinsured the hard way when they break a leg or have a serious illness, such as cancer, and their medical bills exceed their benefits enough that it is difficult for them to pay.

In some cases, people who are underinsured have coverage through employer-sponsored plans, but they have high out-of-pocket expenses or skimpy benefits. In other cases, consumers have bought coverage on the individual market that covers only catastrophic costs. Some polices might feature high deductibles and copayments, as well as exemptions for specific conditions or expensive treatments, or limit annual and lifetime benefits.

How many people are underinsured?

An estimated 25 million Americans between the ages of 19 and 64 were underinsured in 2007 — a 60 percent increase since 2003, according to a study in the journal Health Affairs. Health experts say that the number of people who are underinsured is rising rapidly, and that the problem is increasingly affecting the middle class, in addition to people with lower incomes.

Individuals were considered underinsured if they spent more than 10 percent of their incomes on out-of-pocket medical expenses or more than 5 percent on deductibles. Those with low incomes are considered underinsured if they spent more than 5 percent on out-of-pocket medical expenses. Low-income adults were at the highest risk of being underinsured.

The increase in the underinsured is partly due to the fact that as health care and insurance costs have gone up, employers have bought policies with higher deductibles and copayments and asked their workers to pay a greater share of the premiums.

What kinds of problems do the underinsured face?

Some of the underinsured avoid going to the doctor or getting prescriptions filled because they can't afford it. Others end up with medical debt and other severe financial problems.

Often, sicker or older people — those just short of qualifying for Medicare — are underinsured because they can't afford comprehensive coverage. And only 18 states limit how much insurers can base premiums on factors such as age, health status and gender.

How will the health overhaul proposals affect the underinsured?

The major proposals being debated in Congress would require insurers to provide a minimum set of benefits, designed to take care of most patients' needs. Many proposals would also limit consumers' out-of-pocket costs — as long as they stay within network — and would prohibit insurers from imposing annual or lifetime limits on coverage.

In addition, the legislation would bar insurers from basing the premium costs on health status and gender. Supporters say that these regulations would make it easier for people to afford coverage that would reduce the number of underinsured. Moreover, pending proposals would provide subsidies for people who have low or modest incomes, in an effort to make comprehensive coverage more affordable. And Medicaid, the state-federal program for the poor and disabled, would be expanded to include more lower-income people.

This story was produced through a collaboration between NPR and Kaiser Health News (KHN), an editorially independent program of the Henry J. Kaiser Family Foundation, a nonpartisan health care policy research organization. The Kaiser Family Foundation is not affiliated with Kaiser Permanente.

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