The University of Kansas conducted a small study in 2005 to gain a more personal understanding of the consequences of being underinsured. Researchers interviewed a sample of fifteen underinsured Kansans. Some said they had exhausted lifetime savings to pay medical bills. Others said they had lost homes or had been forced to fi le bankruptcy. Also, many of those interviewed said both they and family members had delayed or gone without recommended medical care or cut back on their prescription medications because of cost concerns. Some also reported that they had difficulty qualifying for credit and paying for housing. For these Kansans and many others like them, having health insurance was not sufficient to protect them from unaffordable health care expenses.
The Challenge of Defining and Measuring the Underinsured
One of the biggest challenges to understanding the prevalence of the underinsured is the lack of agreement on a definition and approach to measurement. Although defining and measuring the underinsured is challenging, many agree that out-of-pocket medical expenses and adequacy of health insurance benefits are important factors to consider. To date, researchers have taken various approaches:
One frequently-used approach is to count as underinsured those individuals who were insured for the full year, but reported at least one of the following:
- Out-of-pocket medical expenses equal to 10 percent or more of household income
- Out-of-pocket medical expenses equal to or greater than 5 percent of income if the household income is below 200 percent of the Federal Poverty Level
- Health plan deductibles equal to or exceeding 5 percent of the household income.
Some studies have assessed an individual’s risk for spending a defined percent of annual income on health care, while others count the numbers of insured patients who report delaying or not getting recommended health care due to cost concerns.
These approaches have limits because there is little consensus on what level of out-of-pocket medical expense is both adequate and reasonable. Measurement of expenditures incurred for health care services is likely to underestimate rates of underinsurance, because it fails to capture “non-users” of health care services. Nonusers may have good health and not yet need medical care or may have postponed or not sought care due to cost concerns. Within this array of approaches, further variations exist, such as whether insurance premium costs are included in the total expenditure tally and whether Medicare-aged adults should be considered.
Adequacy of Health Insurance Benefits
Some studies define and measure the underinsured based on the adequacy of their health insurance coverage compared to a pre-established set of benchmark benefits. Others measure the individual’s perception of the adequacy of his/her health insurance benefits.
Attempts to define and measure the underinsured by assessing the adequacy of a bene.t package is complicated by the lack of consensus on a standard minimum benefits package and on what constitutes “adequate” coverage. Using consumer surveys to measure the adequacy of insurance coverage is problematic because consumers often do not know whether their plan is sufficient until they have an acute or chronic health problem.
As illustrated above, there is not a perfect approach to defining and measuring the underinsured. This lack of agreement in an approach can result in policy discussions being derailed by debate over the definition and measurement of the underinsured. Therefore, both a common definition of the problem and means of measuring it is needed to ensure that policy discussions remain focused on the challenges faced by the underinsured and the policy options for addressing them.
Studies indicate that the number of underinsured in the U.S. is growing and that increasing numbers of insured families are incurring medical debt. Studies also con.rm that people don’t seek or receive needed health care when they are underinsured and concerned about medical debt. Although the scope of the underinsurance problem in Kansas is unknown, it is clear that many insured Kansans are postponing or foregoing recommended care because of cost. In addition, high health care costs and medical debt are causing financial problems for some Kansans, up to and including bankruptcy.
As policymakers seek to address the increasingly urgent issues of rising health care costs and growing numbers of uninsured, they may be tempted to focus on options that attempt to make insurance premiums more affordable by increasing out-of-pocket expenses and reducing the number of required benefits. Policy options like high-deductible plans, increasing minimum co-pays, and reducing bene.t mandates for small businesses and young adults might help to reduce health care expenditures and the number of uninsured, but they could also increase the number of people with inadequate insurance — the underinsured. These people, including many Kansans, could find themselves paying for insurance they can’t afford to use. As policymakers face challenging health policy decisions, they should carefully consider the adequacy of proposed insurance options and the potential unintended consequences of shifting costs to consumers.
Funding for this project was provided by:
- The Health Care Foundation of Greater Kansas City — Providing leadership, advocacy and resources that eliminate barriers to quality health for the uninsured and underserved in our service area.
- The Kansas Health Foundation — A private philanthropy dedicated to improving the health of all Kansans. For more information about the Kansas Health Foundation, visit www.kansashealth.org.
- The REACH Healthcare Foundation — A nonpro.t charitable organization dedicated to improving access to quality health care for poor and medically underserved people.
- The Sunflower Foundation: Health Care for Kansans — A Topeka-based philanthropic organization with the mission to serve as a catalyst for improving the health of Kansans.
- The United Methodist Health Ministry Fund — A foundation based in Hutchinson with the following mission: “Healthy Kansans through cooperative and strategic philanthropy guided by Christian principles.”
- The Wyandotte Health Foundation — A private charitable organization located in Kansas City, Kansas, that has this mission: “To promote and improve the health of Wyandotte County citizens, particularly the indigent, through grants and collaborative efforts.”