Uninsured most vulnerable to financial strain

The financial strain of getting sick or injured leaves roughly one out of five U.S. households with medical debt, data from the Centers for Disease Control and Prevention show.

The data include children and working-age adults, but not those older than 65.

The uninsured were most vulnerable to financial hardship from illness. But more than one in 10 privately insured households reported unpaid family medical bills in the first half of 2012, and one out of four publicly insured households could not pay all their healthcare expenses during the same period.

The snapshot of the first half of last year found 36.3% of children and working-age adults were in uninsured households struggling with medical debt. That's an increase from 35.6% for the prior six months and 35.7% during the first half of 2011.

Insurance coverage is expected to expand significantly starting next year with new insurance subsidies and regulation and broader eligibility for Medicaid under the healthcare reform law, which requires almost everyone to be insured or pay a penalty. Greater coverage could help reduce household medical debt burden. Nonetheless, some may choose the penalty while some states have rejected Medicaid expansion. And high cost sharing even for those who gain insurance could perpetuate the medical debt problem.

For the uninsured, medical bills may also carry prices higher than those paid by public and private insurers, which negotiate or set payment rates. In California, where 2006 legislation required hospitals to cap prices for low-income patients, nearly one out of five uninsured pay prices that are higher than Medicare and may be the full price, researchers reported in Health Affairs this week.

“If you're unlucky enough to be in that group, you're going to get these big bills,” said Glenn Melnick, a professor of healthcare finance at the University of Southern California and co-author of the study.

Medical debt burdens can be severe and push households into bankruptcy or leave families struggling to pay for other necessities or future medical care. Households with medical bills of more than $5,000 increased to nearly 33% in 2010 compared with 29% in 2008, the Center for Studying Health System Change reported.

Despite the high percentage of households facing medical debt, the latest CDC results found a modest decline in the overall number of debt-burdened households, regardless of insurance. The total share of children and working-age adults in families with medical debt dropped to 20.3% during the first six months of 2012, down from 21.7% the same period the prior year.

Follow Melanie Evans on Twitter: @MHmevans