Health insurance doesn’t cover enough, new report shows
What does it mean to be adequately insured? A growing body of research documents both health-related and financial problems that can arise when health insurance doesn’t cover enough. Rates of medical debt are growing, chiefly among the insured. One in five privately insured Americans with chronic conditions live in families with medical bill problems—an increase from 16 percent in 2003. When out-of-pocket spending for medical care exceeds just 2.5 percent of income—less for low-income persons—financial burdens on families become substantial. Studies show that the underinsured and uninsured face similar problems accessing medical care and managing financial burdens.
Knowing whether insurance provides adequate coverage can be a challenge. Health insurance policies are complex products, highly variable in their design, and key information about how coverage works is not always disclosed during marketing. Further, health insurance promises protection against future, unknown events. Consumers who are healthy today can find it difficult to anticipate future medical problems and costs and harder still to evaluate how insurance might cover those needs.
The protection health insurance offers today is highly dependent on the policy purchased. An insured person who becomes seriously ill might have to pay thousands, or tens of thousands, of dollars out-of-pocket for needed care. For many consumers that range represents the difference between health security and financial catastrophe. Consumers compare the prices of health insurance policies, but cannot always reliably tell if they are comparing like products. The affordability of health insurance premiums cannot be considered independently of the adequacy of coverage health insurance provides. At a minimum, the difference in protection health insurance offers should be readily available for all to see.
Health insurance should be transparent, so that consumers know what they are getting in a market filled with options that are not always equal. Many urge that consumers value this plan choice, and that choice is vital to efficient competition in health insurance markets. Yet, economists teach that well functioning markets require transparent information so that both buyers and sellers can understand and evaluate options. That’s why health insurance transparency and coverage adequacy go hand in hand.
This paper summarizes findings of two reports studying the adequacy and transparency of health insurance in Massachusetts and California. Those reports suggest a new method for developing benchmarks to illustrate types and costs of medical care under a variety of scenarios, and for evaluating insurance protection using these benchmarks. Using simulated claims scenarios for different types of patients we analyzed the content of coverage under a variety of health insurance policies sold to individuals and small employers in Massachusetts and California and estimated out-of-pocket costs for care that patients might face. We also reviewed the transparency and accessibility of information that consumers would need to understand how coverage works.
We recommend developing standardized health plan comparison tools—patterned on the U.S. Food and Drug Administration nutrition label, but for health insurance—that could help consumers appreciate the kinds of medical events for which health insurance may be needed and relative levels of protection provided under different policies.
May 19th, 2009 at 4:46 pm
[...] We’ve recently published several policy studies in partnership with the Robert Wood Johnson Foundation and the Center for American Progress, advocating for better consumer information labeling for health insurance policies. Learn more about the studies at the website as well: Coverage When It Counts: How Much Protection Does Health Insurance Offer and How Much Can You Know? [...]
May 20th, 2009 at 1:19 pm
Love the idea of standardized plan comparison tools! People with MS are often fearful of changing jobs/ health plans because they don’t want to ‘out themselves’ by asking potential employer questions about health benefits, especially what drugs are on the formulary, what the co-pay or co-insurance would be, etc.
May 21st, 2009 at 10:14 am
This sounds like a great start.
In addition,are you considering any action that would have a similar policy created around prescription drug pricing AT PHARMACIES?
I have gotten onto various pharmacies’ websites and checked the different lists for drugs that they price competitively. Since my insurance covers 50% of the drug cost, I thought that the prices would be half. But that is never the case.
I learned that the only way to find out how much the drug will actually cost is to have the script filled once at one pharmacy, and then go to another pharmacy for the refill, and then compare prices. Pharmacies will not quote the correct price (even for a simple calculation like 50%!) unless they go through the process of filling the script.
WalMart is generally the least expensive, although I have found that, depending on the drug, that is not always the case. I would really like to be able to “shop” for drugs by price and then make the decision as to whether or not I am willing to travel the distance (if that is the case) to get them less expensively. I can do that when I buy clothes or other consumer items.
This may not be something that you choose to address at this point; however, I thought I’d offer my opinion. Many thanks in advance for your feedback, if any.
Sincerely,
Monica Rudloff
May 21st, 2009 at 12:40 pm
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May 28th, 2009 at 10:06 am
Where may I find the original studies, not the summaries? Thank you.
May 28th, 2009 at 10:21 am
Hi, Steve, thanks for writing. The full report is available at Center for American Progress’s website — click on this link, and you’ll see the link to the full report and summary on the web page, as well as links to the detailed Massachusetts and California original studies.
August 2nd, 2009 at 2:34 pm
This topic has really taken off lately. I am happy to see that it is finally getting the attention it deserves. I work in a hospital and I see the problem it is for those without coverage. You have really ill people that need medical attention, but they avoid it because of the costs associated with receiving medical treatment.
I don’t really know the resolution to this problem, but it must be found soon. Read my blog on my experience with patients without healthcare insurance:
http://hendersoninsurance.blogspot.com/2009/06/what-is-vip-patient.html
August 4th, 2009 at 4:14 pm
Hi,
We hear of this far too often these days, it can be a minefield of small print and insufficient information.
I like Kim “love the idea of standardized plan comparison tools.”
Thank you
Regards
Dawn Pugh