Covered, But Still at Risk
A new report of the Commonwealth Fund finds that last year, 31 million Americans with health insurance had inadequate coverage or were underinsured. People are considered underinsured if they have had health insurance for a full year, but have high deductibles or out-of-pocket expenses relative to their income. The report found that the consequences of being underinsured are significant. Half (51%) of those who were underinsured had problems paying medical bills or were paying down medical debt over time. More than one-third (38%) were struggling to pay or could not pay their medical bills and one-third (34%) had long-term medical debt. More than one-fifth (23%) were contacted by a collections agency concerning unpaid medical bills or said that had to make lifestyle changes in order to pay their medical bills (22%). Following on the JP Morgan Chase study, cited in a recent blog entry, about the difficulties people are having with volatile income and unpredictable expenses, this study provides insight into the financial stress many Americans are suffering. Is there a way you can reduce the burden on your employees, such as through the use of tax-advantaged Health Savings Accounts? High deductibles and co-payments may discourage over-utilization, but it is counter-productive to have people deferring necessary care because of the out-of-pocket costs only to have a more serious, and more expensive medical problem later. In Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses, I recommended that small business consider reducing their commercial insurance premiums by selecting higher deductibles (and saving and budgeting for those deductibles). But for medical insurance, I favor the opposite approach.