Rising Health Care Costs, Rising Underinsurance – Say Ahhh! A Children’s Health Policy Blog

Two studies just out in the September issue of Health
 highlight the troubles many face in affording health care

The first study by researchers at the Commonwealth
Fund found that over the past 7 years the number of people who had coverage
year-round, but were considered “underinsured” rose by 80%. (The authors define
“underinsured” as having out-of-pocket medical expenses amounting to 10% or
more of income (5% for those under 200% FPL) or a per person deductible of at
least 5% of income.) As a result, 81 million adults (44%) were either uninsured
or underinsured in 2010, up from 61 million in 2003. The risk was greatest for
those with lower incomes – 77% of those with income less than 133% of the FPL
were either underinsured or uninsured.

The study also found that these folks go without needed
health care and struggle to pay medical bills. In fact, the rates of forgone
care among the uninsured were three times as high and the rates among the
underinsured were twice as high as rates reported by adults with adequate

Couple this with the second study and you get a
more complete picture of why a greater number of people are spending such a
large share of their income on health care and are considered “underinsured.”
The authors, two RAND researchers, found that between 1999 and 2009, the median
income for a family of four with ESI grew about 30%, from $76,000 to $99,000.
However, this gain was almost entirely offset by an increase in what they spent
on health care. During this same time period, premiums rose 128% and
out-of-pocket spending rose 78%. After taking into account other necessary
spending, such as food and shelter, families were left with just $95 extra to
spend on other priorities.

As the Commonwealth researchers say in their conclusion,
“the erosion of health insurance for the working-age population, combined with
stagnation in real family incomes over the past decade, has put uninsured and
insured adults alike at risk of spending substantial shares of their income on
medical care.” But health reform provides hope – if it guarantees affordable
and adequate coverage to those with modest incomes, the number of underinsured
could drop by 70%. 

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