As attention in Washington turns to healthcare reform, consumer advocates are warning about the growing problem of the underinsuredthose with low coverage limit health plans through their employer or on the individual market who continue to struggle with high medical bills and often forgo medical care.
Underinsured problem grows as more people enroll in high-deductible plans
The plethora of low coverage-limit plans is creating an epidemic in healthcare almost equal to the uninsured crisis, some are warning, and Congress needs to address this issue in any reform measure.
High levels of cost-sharing and caps on covered benefits can compromise the level of protection health insurance provides, and lead to both reduced access to needed care and serious financial burdens and medical debt, says Diane Rowland, executive vice president of the Kaiser Family Foundation, testifying before the Senate Health, Education, Labor and Pensions Committee in late February.
The Kaiser Family Foundation has come out with a series of reports on the underinsured in the past year, and other consumer and policy groups are reporting that patients are finding that just having health insurance is not enough to protect them from high medical costs.
Last year, 18% of workers with employer-sponsored health benefits were enrolled in plans with deductibles of $1,000 or more for single coverage, up from 10% of workers in high-deductible plans in 2006, according to the Kaiser Family Foundation.
While high-deductible health plans can often be a good option for the healthy, they can create financial headaches for those who do fall ill. With an ongoing recession, record unemployment levels and a nationwide housing crisis, health plans that may have previously seemed affordable no longer are, experts say.
Among the insured nonelderly population, one in four adults reported that they are very worried about their ability to afford needed care, and more than one-third said that they are very worried about their ability to pay for more healthcare or insurance, according to a Kaiser Foundation survey conducted last October.
The foundation interviewed 27 families a year ago about their healthcare costs. Ron, 59, and his wife live in Wichita, Kan., and struggle to pay for healthcare. Last year, Ron had an annual income of $30,000 and employer-sponsored health coverage. The couples insurance included a $4,750 deductible and $90 per month in prescription drug copayments for six medications his wife needs for diabetes, heart disease and glaucoma. Ron has borrowed from his 401(k) plan to pay thousands of dollars owed for his wifes hospitalization for pneumonia six years prior. Ron now pays $25 a month to reduce the $1,800 in leftover medical debt. In December, Ron was laid off.
This family is not alone. About 25 million adults under age 65 were underinsured in 2007, a 60% increase since 2003, according to the Commonwealth Fund.
As Congress and President Barack Obama consider healthcare reform, they will undoubtedly be under pressure to limit the scope of coverage and impose individual cost-sharing, Rowland says. But cost concerns need to be balanced against the expectation that health reform will bring improved coverage and lower health spending for families, she adds.
Often, people are unaware of how much they must pay in out-of-pocket costs until long after theyve chosen a health plan.
Two-thirds of consumers dont fully understand their health coverage, according to a study released last month of 33,000 insured people nationwide by J.D. Power and Associates.
Thats a huge amount, and its bigger than last year, says Jim Dougherty, executive director of health practice at J.D. Power.
Consumers dissatisfaction with their health plan increases with utilization, according to the survey. If someone is dissatisfied, they often express it as a cost problem, but its an information problem because they dont understand their benefits, Dougherty says.
People with individual health plans and those covered through smaller employers were considerably less satisfied than those covered by large employers, according to the survey. Individual policies and small employer policies tend to have higher deductibles and more cost-sharing.
Regardless of the policy, the health plans that rated the best in the survey of 131 plans in 17 regions were those that were best at communicating benefit options with consumers, including Kaiser Foundation Health Plan, Blue Cross and Blue Shield of Florida and Humana.
Theres a shift going on for health plans, Dougherty says. They have to satisfy the individual, not just the employer.
Consolidation in the insurance industry can lead to dissatisfaction, too. For instance, Aetna rated poorly among insurers across regions in the J.D. Power report, but it has also grown its business tremendously in the past few years. One side effect of growing your members is that in the first 18 months you are going to see a drop in satisfaction, he says.
The largest publicly traded insurers, such as UnitedHealth Group, have shed membership in the past three years, in part because of poor customer service. UnitedHealth executives have said that they are turning that ship around, with more personalized service. Five years ago, UnitedHealth stopped requiring members to get referrals from their primary-care physicians to see a specialist, but many members still dont know about this change, Dougherty says.
Humana, however, consistently rates high in consumer satisfaction across plans, largely because of its SmartSummary Rx, a personalized monthly statement the insurer sends to members. The statement was started as part of Humanas Medicare prescription drug benefit program, and includes a picture of each medication for which the member has a prescription. Consumer feedback was so positive that Humana has rolled out SmartSummary to all of its benefit packages. Other health plans are playing catch-up in this area, Dougherty says.
Consumer Reports and the American Cancer Society are also warning consumers about loopholes in coverage on the individual market, in a report released earlier this month called Hazardous Health Plans. I think people dont understand insurance, period, says Stephen Finan, associate director of policy at the American Cancer Society Cancer Action Network. They dont understand the language, and insurance companies go to great lengths to make it incomprehensible.
In California last week, consumer advocates blasted what they termed junk insurance, and a state representative said that he would present a new bill to prevent the sale of such plans and allow consumers to better comparison shop and understand their benefits.
Recently, the health insurance industry has made concessions in negotiations on national healthcare reform, including an agreement to stop screening individual applicants for pre-existing conditions and to halt the practice of charging people different prices for coverage based on their health status, provided every American is required to have health insurance. With an individual mandate and federal subsidies for low-income people, This changes what can be done on healthcare reform very dramatically, says Karen Ignagni, president and CEO of Americas Health Insurance Plans, the lobbying group for health insurers.
One proposal is to establish a floor of coverage for all Americans. Massachusetts, which enacted healthcare reform in 2006, set standards for minimum creditable coverage that mandates essential benefits such as preventive and primary care, prescription drugs, and maximum deductibles and out-of-pocket spending. In January, the state made some changes to the minimum creditable coverage required for health plans to participate, leading to further coverage expansions.
In the first year of health reform, the percentage of Massachusetts residents who were underinsured dropped from 7.3% in fall 2006 to 5.6% a year later, according to a report by the Urban Institute released last October.
Larger drops were reported for lower-income insured adults and insured adults with health problems, according to Urban Institute economist Sharon Long, who wrote the report. These are the two groups most vulnerable to the risks of underinsurance.
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