The Underinsurance Problem Explained

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Joy125

Posted Wednesday, September 30, 2009 9:07 PM

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FROM KAISERHEALTHNEWS.ORG

The 'Underinsurance' Problem Explained

By Jenny Gold, KHN Staff Writer
Sep 28, 2009

Who are the underinsured?

People who are described as underinsured have health benefits that don’t adequately cover their medical expenses. Often, consumers discover they’re underinsured the hard way – when they break a leg or have a serious illness, such as cancer, and their medical bills exceed their benefits enough that it is difficult for them to pay.

In some cases, people who are underinsured have coverage through employer-sponsored plans; they have high out-of-pocket expenses or skimpy benefits. In other cases, consumers have bought coverage on the individual market that covers only catastrophic costs. Some polices might feature high deductibles and co-payments, as well as exemptions for specific conditions or expensive treatments, or limit annual and lifetime benefits.

How many people are underinsured?

Health experts say that the number of people who are underinsured is rising rapidly, and that the problem is increasingly affecting the middle class, as well as people with lower incomes. An estimated 25 million Americans between the ages of 19 and 64 were underinsured in 2007 — a 60 percent increase since 2003, according to a study in the journal Health Affairs.

Individuals were considered underinsured if they spent more than 10 percent of their incomes on out-of-pocket medical expenses (5 percent if they were low-income) or more than 5 percent on deductibles. Low-income adults were at the highest risk of being underinsured.

The increase in the underinsured is partly due to the fact that as health care and insurance costs have gone up, employers have bought policies with higher deductibles and co-payments and asking their workers to pay a greater share of the premiums.

What kinds of problems do the underinsured face?

Some of the underinsured avoid going to the doctor or getting prescriptions filled because they can't afford it. Others end up with medical debt and other severe financial problems.

Often, sicker or older (those just short of qualifying for Medicare) people are underinsured because they can't afford comprehensive coverage. One reason? Only 18 states limit how much insurers can base premiums on factors such as age, health status and gender.

How will the health overhaul proposals affect the underinsured?

The major proposals being debated in Congress would require insurers to provide a minimum set of benefits that are designed to take care of most patients' needs. In addition, the proposals would limit consumers’ out-of-pocket costs – as long as they stay within network - and would prohibit insurers from imposing annual or lifetime limits on coverage.

In addition, the legislation would bar insurers from basing enrollees' premiums on health status and gender. Backers say that these regulations would make it easier for people to afford coverage that would reduce the number of underinsured. Moreover, pending proposals would provide subsidies for people who have low or modest incomes, in an effort to make comprehensive coverage more affordable. And Medicaid, the state-federal program for the poor and disabled, would be expanded to include more lower-income people.

http://www.kaiserhealthnews.org/Stories/2009/September/28/underinsured-explainer.aspx

__________________________________________________

Lift up your hand, oh God. Do not forget the helpless. Psalm 10:12

http://www.physiciansforpeace.org/

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Grandpavan

Posted Wednesday, September 30, 2009 10:29 PM

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Joy125 (9/30/2009)

The major proposals being debated in Congress would require insurers to provide a minimum set of benefits that are designed to take care of most patients' needs. In addition, the proposals would limit consumers’ out-of-pocket costs – as long as they stay within network - and would prohibit insurers from imposing annual or lifetime limits on coverage.

In addition, the legislation would bar insurers from basing enrollees' premiums on health status and gender.

These changes will increase the cost of insurance because the companies are not in business for a loss. They must take in more in premiums than they pay out in claims. If they cannot do this, they will go out of business. Insurance adds to the total cost of medical care rather than reducing the total cost. It does change who pays the cost. If employers have to pay, there will be fewer jobs. People simply need to tighten their belts, spend less and save more so that they can pay for their own health treatments. More insurance will increase the problem rather than reducing it. God bless.

Age 82, diagnosed RA 12/2001, married since 1952, 4 sons no daughters, 4 grandsons 1 granddaughter. Doing well on Methotrexate and Remicade.

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DonnaT

Posted Wednesday, September 30, 2009 11:30 PM

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Grandpa wrote: If employers have to pay, there will be fewer jobs.

Grandpavan you have a good point. If the cost goes to employers, one has to wonder if that would be a factor to influence who might be terminated in a cost-saving downsizing, layoff, etc. - especially since the economy is still so bad. Currently workers over 50 years of age (sometimes 45) face the issue of competition with younger workers. Companies are all too willing to get rid of the older, experienced employees in order to cut expenses with regard to higher salaries, bonuses, retirement pay, etc. This could throw a new hammer in the mix with regard to decision making on keeping an experienced, older employee versus saving on the bottomline with younger employees.

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Joy125

Posted Thursday, October 01, 2009 1:44 AM

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FROM NEW YORK TIMES ARTICLE:

" . . . some 70 percent of uninsured Americans come from families with one or two full-time workers. Most of those workers are employed by small businesses that don’t offer them health benefits or offer coverage that they can’t afford.

Small businesses would reap substantial benefits if their employees were insured. Their work forces would likely become healthier, and they would have an easier time attracting or holding talented employees. Even more striking, with health care reform, small firms could buy insurance at substantially lower rates. . . .

A vast majority of the nation’s small employers — those who have 25 or fewer workers in the Senate health bill or annual payrolls of $500,000 or less in the House version — would likely be exempted from the mandate.

An analysis by Jonathan Gruber, a respected health economist at the Massachusetts Institute of Technology, concluded that those small businesses that are not exempt would see little impact on employment or profits, although employers would reduce wages to compensate for providing added benefits. The nonpartisan Congressional Budget Office, the chief arbiter of the impact of legislation, has come to similar conclusions.

What’s been most lost in the furor is how much most small businesses would benefit from provisions that should make insurance more affordable — for businesses that already provide coverage and for those that have been deterred from providing coverage by cost.

Small businesses that currently offer coverage often pay significantly more per worker than larger employers do for the same coverage. Under all of the current bills, the smallest employers would gain quick access to new insurance exchanges — where plans would compete for their business with rates comparable to those enjoyed by large employers. . . .

And many small businesses with low-wage workers would be eligible for substantial tax credits to subsidize their coverage. . . .

. . . there are good reasons for requiring as many companies as possible to “play” — by offering coverage — or “pay” by paying a penalty. The most important is that the penalties would help deter employers from dropping their own coverage. The number of companies offering health insurance to their workers has been declining steadily, mostly among small firms, and it is important not to accelerate that erosion."

http://www.nytimes.com/2009/08/13/opinion/13thu1.html

__________________________________________________

Lift up your hand, oh God. Do not forget the helpless. Psalm 10:12

http://www.physiciansforpeace.org/

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DonnaT

Posted Thursday, October 01, 2009 9:29 AM

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Joy125 (10/1/2009)

Small businesses that currently offer coverage often pay significantly more per worker than larger employers do for the same coverage. Under all of the current bills, the smallest employers would gain quick access to new insurance exchanges — where plans would compete for their business with rates comparable to those enjoyed by large employers. . . .

http://www.nytimes.com/2009/08/13/opinion/13thu1.html

As posted previously, there are currently options for small businesses to avoid paying significantly more. There are human resource service providers who are able to "pool" clients, usually small businesses, which allows them to get the more competitive rates, similar to those normally afforded to large corporations only. It's similar to the idea of the "exchange" option being discussed. So, it's not like they do not have any options now. The question is, why don't they use these options.
Donna

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Grandpavan

Posted Thursday, October 01, 2009 1:07 PM

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Joy125 (10/1/2009)

Small businesses would reap substantial benefits if their employees were insured.

Small businesses reap more rapid and tangible benefits by keeping cost per employee low. Most small businesses are more interested in survival than they are in the distant future. Higher near-term costs are likely to cause many small businesses to close and thus increase unemployment. God bless.

Age 82, diagnosed RA 12/2001, married since 1952, 4 sons no daughters, 4 grandsons 1 granddaughter. Doing well on Methotrexate and Remicade.

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Joy125

Posted Thursday, October 01, 2009 1:23 PM

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DonnaT (10/1/2009)

Joy125 (10/1/2009)

Well, first of all, each state regulates individual and nongroup health insurance, so what may be offered in one state is not offered in another, so few small businesses have health insurance options comparable to large group employers. I think it is a matter of affordability, many small businesses are family owned -- they want insurance for themselves and their family and would like to provide insurance to their workers, but premiums are beyond their reach.

In a survey by the National Small Business Assoc., 69% of businesses in 2008 said they would like to offer insurance, but only 38% were able to do so -- down from 67% in 1995. (99% of large businesses offered health insurance in 2008).

The cost of health insurance premiums has increased by 199% since 2001, outpacing inflation which increased by 29%.

Due to a loophole in the tax code, self-employed individuals are prohibited from fully deducting their health insurance premiums, resulting in an additional 15.3% tax that no other individual is forced to pay.

Since 2005, more than one-fifth of small businesses reported annual premium increases in excess of 20%. In 2008, 28% reported an increase in excess of 20%.

http://www.nsba.biz/docs/SBN_HRT.pdf

__________________________________________________

Lift up your hand, oh God. Do not forget the helpless. Psalm 10:12

http://www.physiciansforpeace.org/

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Grandpavan

Posted Thursday, October 01, 2009 2:34 PM

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What is permitted in each state is determined by the voters of that state and if they want it changed they can do so. If we do not wish to follow the constitution we can have the federal government override the states to regulate something the constitution leaves to the individual states. How things are regulated is only one part of the proposed health care reform and does not justify any other changes to health care.

Health insurance reflects the cost of health care and as that increases the cost of insurance for it also increases. If people don’t like to pay for insurance they can avoid this by paying the providers directly and thus reduce hassle and the total cost of health care. Skipping insurance does change who pays for health care but it also decreases overall costs.

Loopholes in the tax code can be corrected without any of the other changes proposed in health care reform and do not justify any other changes to health care. God bless.

Age 82, diagnosed RA 12/2001, married since 1952, 4 sons no daughters, 4 grandsons 1 granddaughter. Doing well on Methotrexate and Remicade.

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