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Small Business Employee Benefits and HR Blog

Growing Health Insurance Concern: The Underinsured Epidemic

With the rising cost of health insurance comes another concern Growing Health Insurance Concern: The Underinsured Epidemicthat has historically received far less attention. The most recent Biennial Health Insurance Survey conducted by the Commonwealth Fund indicates that the number of Americans who are underinsured is increasing. Not only is this causing people to endure a higher burden of medical expenses, but it means that people are opting out of medical care in order to save money—which could have dangerous (and costly) consequences.

What Does Underinsured Mean?

The Commonwealth Fund uses an analysis of “out-of-pocket costs over the course of a year, not including premiums, and the health plan deductible” to determine if a person is underinsured. Their exact formula goes as follows:

  • “out-of-pocket costs, excluding premiums, over the prior 12 months are equal to 10 percent or more of household income; or
  • out-of-pocket costs, excluding premiums, are equal to 5 percent or more of household income if income is under 200 percent of the federal poverty level ($22,980 for an individual and $47,100 for a family of four); or
  • deductible is 5 percent or more of household income”

The Original Survey by the Commonwealth Fund

Every two years, the Commonwealth Fund conducts a health insurance survey to examine the state of health costs in America, allowing them to observe industry trends over time.

One of the more alarming trends appearing in the three most recent surveys (2010, 2012, and 2014) is the rising number of Americans, ages 19 to 64, who are classified as “underinsured.” This was a whopping 23 percent in 2014, up from 13 percent in 2005—20 percent of whom were enrolled in employer-provided health insurance.

The survey implies that being underinsured has adverse effects on people’s health and well-being. Fifty-one percent of the underinsured reported difficulty paying medical bills, undoubtedly causing stress and threatening mental health. Not to mention the physical toll that being underinsured is taking on the 44 percent who are not seeking medical attention for ailments in order to avoid the cost.

This study was conducted during 2014 and used data from the previous 12 months, which means that no one participating in the survey held Marketplace coverage during that time frame. It is important to note that because of the timetable, the effects of Affordable Care Act (ACA) can not yet be determined. The next biennial report should include that data.

Conclusion

The number of Americans classified as underinsured has increased 10 percent in the past 9 years. Higher deductibles and out-of-pocket costs are causing many people to be bogged down in medical debt and even to refuse medical treatment. The next Commonwealth Fund Biennial Health Insurance Survey is due mid-2017.

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What questions do you have about 2017 health insurance? Let us know in the comments below.

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