How Well Does Insurance Coverage Protect Consumers from Health Care Costs?
Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2016
(Excerpts only. Find complete report here . . . )
S. R. Collins, M. Z. Gunja, and M. M. Doty, How Well Does Insurance Coverage Protect Consumers from Health Care Costs? — Findings from the Commonwealth Fund Biennial Health Insurance Survey, 2016, The Commonwealth Fund, October 2017.
Abstract
- Issue: The United States has made historic progress on insurance coverage since the Affordable Care Act became law in 2010, with 20 million fewer people uninsured. However, we must also measure progress by assessing how well people who have insurance from all coverage sources are protected from high health care costs.
- Goals: To estimate the number and share of U.S. insured adults who are “underinsured” or have out-of-pocket costs and deductibles that are high relative to their incomes.
- Method: Analysis of the Commonwealth Fund Biennial Health Insurance Surveys, 2003–2016.
- Findings: As of late 2016, 28 percent of U.S. adults ages 19 to 64 who were insured all year were underinsured — or an estimated 41 million people. This is more than double the rate in 2003 when the measure was first introduced in the survey, and is up significantly from 23 percent, or 31 million people, in 2014. Rates climbed across most coverage sources, and, among privately insured, were highest among people with individual market coverage, most of whom have plans through the marketplaces. Half (52%) of underinsured adults reported problems with medical bills or debt and more than two of five (45%) reported not getting needed care because of cost.
Survey Findings
Estimated 41 Million Adults Are Underinsured
As of July 2016 through November 2016, 28 percent of U.S. adults ages 19 to 64 who were insured all year, or an estimated 41 million people, were underinsured (Exhibit 1, Table 1). This is more than double the rate in 2003 when the measure was first introduced in the survey, and is up significantly from 23 percent, or 31 million people, in 2014.6
Underinsured rates by source of coverage. The underinsured population is predominantly composed of people in employer plans: 56 percent of underinsured adults had coverage through employers at the time of the survey (Table 2).7 This reflects the fact that the majority of insured adults have employer coverage. However, people with coverage through the individual market, including the ACA marketplaces, and Medicare beneficiaries who are disabled adults under age 65, are disproportionately represented among the underinsured.
Higher Deductibles Are Increasingly a Factor in the Underinsured Rate
Between 2003 and 2016, deductibles were increasingly a factor in underinsurance: more people than ever before have plans with deductibles and more have deductibles that are high relative to income.
The share of privately insured adults who had health plans without deductibles has fallen by nearly half over the past 13 years, from 40 percent in 2003 to 22 percent in 2016 (Exhibit 4, Table 4). At the same time, deductibles have grown in size. By 2016, more than one of 10 (13%) adults enrolled in a private plan had a deductible of $3,000 or more, up from just 1 percent in 2003.11
Underinsured Adults Have High Rates of Medical Bill Problems
Greater cost exposure is leaving Americans burdened with medical debt. Half (52%) of underinsured adults reported problems paying their medical bills or said they were paying off medical debt (Exhibit 7, Table 5). This is about the same rate as adults who were uninsured for some time during the year and more than twice the rate reported by insured adults who were not underinsured (25%). The two states with the highest share of underinsured adults (Florida and Texas) also had the highest shares of insured adults who reported problems paying their medical bills (Table 3).
Underinsured Adults Report Not Getting Needed Care Because of Cost
Underinsured adults are more likely to skip needed health care because of cost than are adults with more cost-protective insurance. More than two of five (45%) underinsured adults reported not getting needed care because of cost in the past year, including not going to the doctor when sick, not filling a prescription, skipping a test or treatment recommended by a doctor, or not seeing a specialist (Exhibit 10, Table 6). This is twice the rate of continuously insured adults who were not underinsured (22%). It is also close to the rate reported by adults who were uninsured (52%). The two states with the highest share of underinsured adults (Florida and Texas) also had the highest shares of insured adults who reported cost-related problems getting needed health care (Table 3).
Addressing the Key Driver of Insurance Costs: Health Care Cost Growth
Health care costs are the single largest factor in the growth of private insurance premiums in the United States. Insurers and employers have tried to manage premium growth by making consumers increasingly responsible through higher deductibles and other cost-sharing vehicles. Advocates of this approach argue that with more skin in the game, consumers will help to slow cost growth by choosing more-efficient providers and being more selective in the services they use. But years of experience with high-deductible health plans in the U.S. has yielded scant evidence that such a strategy is effective. Instead, as the survey findings indicate, many consumers have responded to higher deductibles by avoiding needed health care and skipping their medications.
Innovations under way in the delivery system, some of which stem from the ACA, have helped slow the rate of growth in health care costs in the past few years. But moving the nation closer to the performance of other countries on both cost and health outcomes will require considerably more work.23 While targeted consumer cost-sharing may help to reduce use of low-value health services, this approach is unlikely to be successful unless consumers are better informed on prices and the value of alternative approaches to their health care problems. Such information is largely unavailable. Evidence suggests that consumers cannot do the heavy lifting required to reduce the rate of growth in medical costs in the United States.