New Study

Americans Increasingly Facing Lack of Insurance, High Medical Costs, Study Finds

The proportion of working-age Americans who have medical bill problems or who are paying off medical debt climbed from 34 percent to 41 percent between 2005 and 2007, a new report from the New York City-based Commonwealth Fund finds.

Based on data from four years of the Commonwealth Fund Biennial Health Insurance Survey, Losing Ground: How the Loss of Adequate Health Insurance is Burdening Working Families (51 pages, PDF) found that a "perfect storm" of negative economic trends is battering working families across the country: the federal minimum wage is now three dollars an hour lower, in real terms, than it was forty years ago; gas and food prices are soaring; home values are declining; and growth in healthcare costs is far outstripping income growth. As a result, insurance coverage deteriorated over the past six years, with declines in coverage most severe for moderate-income families. Nearly 9 million U.S. adults under age 65 have lost their health insurance since 2000.

At the same time, the number of insured adults who spend more than 5 percent or 10 percent of income on health care and insurance rose across all income groups between 2001 and 2007. As a result, the number of underinsured adults climbed to 25 million people in 2007, up from 16 million in 2003. An additional 7 million adults age 65 and older also reported bill or debt problems. While the increase occurred across all income groups, families with low and moderate incomes were particularly hard hit; more than half of adults with incomes under $40,000 reported problems with their medical bills in 2007.

All told, in 2007 nearly two-thirds of U.S. adults — some 116 million people — struggled to pay medical bills, went without needed care because of cost, were uninsured for a time, or were underinsured. According to the report, declining insurance coverage and rising healthcare costs are likely contributing to skimping on needed care.

"Healthcare costs are climbing much more rapidly than incomes or the growth in the overall economy," Sara R. Collins, assistant vice president of the Commonwealth Fund and one of the authors of the report told the Washington Post. "What is notable is how these problems are spreading up the income scale."

“New Survey Findings: 79 Million U.S. Adults Have Medical Bill Problems or Are Paying Off Medical Debt.” Commonwealth Fund Press Release 8/18/08.

Joshi, Sopan. “Lack of Insurance, High Medical Costs Put More in a Bind.” Washington Post 8/20/08.

Primary Subject: Health
Secondary Subject(s): Civil Society
Location(s): National, New York, New York City

INSURANCE VS. BENEFITS

ARTICLE: INSURANCE VS. BENEFITS

Last week, the government announced that the number of Americans who have no health insurance rose to 47 million, or nearly 16 percent of the population, from 44.8 million.

But even people who have coverage through their employers are struggling
with health care costs.

Insurance, Not Assurance
According to a new study by Consumer Reports, 4 in 10 Americans can't depend on their health insurance. "Of the people who had health insurance, some told us they postponed getting tests or treatment, going to doctor, or filling prescriptions because they couldn't afford it," says Consumer Reports senior editor Nancy Metcalf, the report's author. "They could not pay
for their share of their health care over and above what insurance covered."

Respondents said they raided retirement accounts, borrowed from friends and family, or ran up credit cards to pay medical bills. Three percent of insured respondents said medical bills forced them to declare bankruptcy.

Coverage Uncovered
The Consumer Reports National Research Center surveyed 3,000 Americans between age 18 and 64. Its results mirrored the U.S. Census findings: 16 percent had nohealth plan at all. Between 2001 and 2005, the number of middle-income families --those earning $40,000 to $80,000 for a family of four -- who received health insurance through their employers declined
by 4 percentage points. Half of those were because the employer stopped offering coverage
altogether, or offering dependent coverage; 15 percent gave it up because they could no longer afford the premiums.

Slow to Change
The United States spends $2 billion a year on health care, more than any other country. But efforts to slow the growth in healthcare costs have failed for a number of reasons, Metcalf explains. "People have been conditioned to believe that insurance companies are making tons of money by denying care," says Metcalf. "That was something they tried to do back in the'90s -- make people go through their primary care doctor, make sure the care they authorized was necessary. "But our entire culture of healthcare rebelled against it," she adds."Doctors hated being second-guessed, patients felt they were being jerked around; hospitals and specialists formed alliances and maneuvered themselves into much stronger bargaining positions."

A Wage-Care Gap
Meanwhile, employers heard loud and clear from workers, who demanded more choice. "What you see now is that a majority of employees are in PPOs [preferred provider organizations], which are much more permissive kinds of health plans where you have a large choice of doctors and you don't need permission to see a specialist," says Metcalf. "The truth is that during that window when HMOs [health maintenance organizations] were really strictly managing care, health care costs slowed. Once the brakes came off, health care costs started running at
two to three times inflation. It's not a sustainable thing when wages aren't going up."

The average family health care plan costs an employer about $12,000 annually, the report found. To maintain the same level of benefits, companies are either keeping wages stagnant or asking employees to pay more medical costs -- in higher premium shares or higher co-pays and
deductibles. For example, between 2000 and 2006, the percentage of workers with single PPO coverage who had adeductible of more than $500 rose to 38 percent from 14 percent. Last year, one in five employees enrolled in HMOs and PPOs had plans that set no upper limit on the amount of co-pays and deductibles they might have to pay in a year, according to a survey by the Kaiser Family Foundation.

Open Questions
With open enrollment scheduled for October at many companies, employees may be considering switching plans to save money. But do an analysis that goes beyond the cost of the monthly premium. "Experts told us over and over to think of health care the way you think of homeowners insurance,"says Metcalf. "Don't evaluate your coverage on the basis of how it works when you're healthy; evaluate what it will do when someone gets unexpectedly ill." Most employers provide a summary plan description. Here are a few items to look for before you choose:

Calculate the worst-case scenario for hospitalization.
This is the most expensive medical liability. What's the maximum out-of-pocket cost per family member on anannual basis if an even like an auto accident results in a long hospital stay?

Is prescription drug coverage included in the maximum amount payable every year?
"It's the catastrophic illnesses-- cancer in particular -- that can blindside people," says Metcalf."Prescription drugs to treat lymphoma can run $25,000 a year."

What's the coverage for outpatient therapies?
This includes tests, physical therapy, home health care, and mental health treatment. Also be sure to check if the plan covers "durable medical equipment." This is a must when oxygen equipment is needed at home for a child who has asthma, say, or for other equipment such as a
wheelchair.

If you're choosing among several plans, check online to see if your state
department of insurance has received complaints about them.

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