Are You Underinsured? How Would You Know?

An estimated 25-30 million Americans are underinsured, as in they have some kind of insurance, but it’s insufficient or doesn’t cover them as well as they think it does.  It’s coverage you can’t believe in, and the consequences are dire.  Of the personal bankruptcies that involve medical debt, 75% of them happened to families with insurance at the onset of the illness or injury.  How do you know if you’re one accident or cancer diagnosis away from financial ruin?  Mostly, you don’t.

Big ups to Anthony Wright of California’s Health Access WeBlog who, together with Community Catalyst and Consumers Union (of Consumer Reports fame) released an in-depth report this week on the underinsured, entitled “When Coverage Fails.”  The trend is not promising:  the ranks of the underinsured are on the rise, over 60% since 2003.  At the same time, premiums for “junk coverage” – plans so restrictive that they only cover you in the event of hospitalization, say, or have so high deductible that you’d literally need to be hit by a Mack truck to qualify – are rising as much as regular, comprehensive insurance plans.  So you’re paying more for less.  In fact, the trend of medicine weakens the access you get from junk coverage plans even more.  The one thing they do tend to provide is limited coverage for is in-patient service, hospitalization, etc.  However, even the costliest treatments for chronic disease – including but not limited to chemotherapy – are predominately using or moving towards an outpatient model.  The why is obvious – it saves money and is a more pleasant experience for the patient.  But it leaves the underinsured even more out in the cold.

Why are people underinsured?  A complex web of factors.  First, they’re not offered benefits from their employer, don’t qualify for public programs and can’t afford the exorbitant costs of a comprehensive plan – a situation I found myself in a few years back.  Some of them go for the “emergency only” or “catastrophic coverage” plan because they figure their risk of injury and illness is small.  But many legitimately think they’re getting good coverage.  They don’t know about the loopholes, the reasons for exclusion, the outpatient vs. inpatient questions, the maximum benefits, etc.  Suffice to say, their brokers are usually not in a hurry to show them comparisons between plans.  As long as they don’t get sick, they continue to believe they’re covered.  As soon as they need to use their coverage, it’s a different story. Anthony Wright tells an all-too-typical story:

“When Laura retired from her corporate job of 30 years and became part owner of a small wine shop, she purchased health coverage through a broker, who promised that her new coverage was comparable to the comprehensive plan she had had through her employer. In 2008, Laura was bitten on the finger by a rattlesnake while weeding in her backyard, and spent twenty-nine hours in the local Intensive Care Unit. Her bill came to for over $73,000. Her insurance covered just $3,000 of that bill, leaving Laura in significant debt.”

Wright uses Laura’s story to introduce a bill by state Assemblyman Dave Jones of Sacramento, who’s pushing for more transparency in explaining coverage to customers, especially how the plan they’re looking at compares to other plans in a straight-up, apples to apples fashion.  That will help, but the real need is for a comprehensive set of benefits – a minimum set of requirements for any health insurance plan in the country, rather than the Swiss-cheese set of state mandates we operate under.

Speaking of Swiss cheese, I can’t help but remember the words of Swiss President Couchepin, whose country’s entirely-private model of universal health care is pointed to so often by conservatives and others.  There’s an essential element we’re missing by focusing just on the insurance aspect of the Swiss system:  the value of guaranteed protection.  As Couchepin says, “it is a profound need for people to be sure that, if they are struck by a stroke of destiny, they can have a good health system.”  Over 47 million Americans don’t have that protection, and as many as 30 million think they have it, but don’t.  When the stroke of destiny falls, it falls heavily.

(Photo credit:  Ken-Ichi on Flickr.)