HIGHLAND PARK – The number of Americans paying more for health insurance policies that cover less has increased 60 percent since 2003, a troubling trend that is exacerbated by and contributing to the economic crisis according to a Community Catalyst report released last week in collaboration with NJ Citizen Action. When Coverage Fails: Causes and Remedies for Inadequate Health Insurance outlines the implications of a growing “underinsurance” problem and urges government leaders to act to ensure families who purchase insurance get the coverage they need.
“Underinsurance is coverage on quicksand, and it’s putting the financial and physical well being of American families at risk and threatening our already weakened economy,” said Susan Sherry, deputy director of Community Catalyst, a national non-profit advocacy organization dedicated to quality affordable health care for all. “As our federal and state government leaders work to expand health care coverage, we urge them to put in place common sense protections that limit families’ financial risk and guarantee essential benefits are included in all insurance products.”
Approximately 25 million Americans—one in five insured adults—are underinsured, a problem that is intensified in the down economy due to the direct link between underinsurance and medical debt. Job loss and other financial strains make it hard to pay out-of-pocket costs that many plans require, leaving many underinsured individuals more likely to incur medical debt or forgo necessary treatments. Medical debt is also a drag on the economy – it is a factor in about half of all bankruptcies and was also an underlying cause of 15 percent of delinquent mortgage payments to Freddie Mac in the first half of 2008.
The report identifies two primary factors that put people at risk of becoming underinsured and are most likely to cause medical debt: large payments when enrollees need care (deductibles, co-insurance or co-payments) and lack of coverage for necessary services. Premiums, which have risen faster than average wages over the past decade, often add to the financial burden.
Kia Moore of Sicklerville knows the hardship of underinsurance all too well. Moore is a single parent to Xavier Hilton, age 20 months old, who was born with double kidney failure. Since Xavier’s birth, Kia has encountered problems with her insurance coverage and benefit coordination. While Kia’s son has double private insurance – through her job and his father’s job – the insurance companies refused to cover the kidney transplant Xavier needed, insisting that Xavier change hospitals, select an entirely new medical team, and work with the new doctors for a minimum of six months before the life-saving transplant could be approved.
“Here I had a child in critical need for a transplant who was finally big enough to get an adult kidney and they wanted me to go to another hospital where they could get the best deal!” explains Moore.
Due to his medical condition, Xavier could not have a transplant requiring steroids; only three hospitals in the country performed steroid-free transplants. “In all three appeals, Aetna continually denied the procedure Xavier needed based on ‘continuity of care’ and offered to let us go somewhere else. They never said anything about Xavier’s care being managed by the same team since he was a newborn and they never addressed the need for a steroid proof transplant. If my policy says I’m entitled to it, I should have it and have it without hassle,” Moore continued.
Cost-sharing requirements have had a devastating impact on Maryann and David Jandris of Leehigh Acres, Florida and their family. They have private health insurance, and they earned a combined income of $120,000 a year before Maryann quit her job to care for their daughter Kery, who has ulcerative colitis. In 2007, Kery required ten hospitalizations and four surgeries – treatments totaling over $1.3 million dollars. Although the insurance covered a significant portion of those costs, the $30-$50 co-payments for prescription drugs and 20 percent co-insurance left the Jandris family swimming in debt. As a result of their plan’s cost-sharing requirements, this once-solidly middle-class family has recently lost its home to foreclosure and drained its retirement plan.
To prevent stories like Kia Moore and her son Xavier, the Jandris,’ and so many others, the report calls on government leaders to:
• Guarantee minimum standards for health insurance. Set limits on families’ financial liability and guarantee that basic services, such as hospital, physician, and emergency care, and prescription drugs, are covered.
• Eliminate or restrict limited-benefit plans. A number of states promote limited benefit plans with the good intent of expanding coverage and offering lower premiums, but they should be a last resort. States where these plans are offered should strengthen consumer protections by setting maximum out-of-pocket limits and improving coverage requirements.
• Work to eliminate waste in our health care system. Controlling health care costs is critical to reducing underinsurance. Government leaders should support paying hospitals and doctors for improvements in health, not quantity of services delivered; ban pharmaceutical and medical device industry gifts to prescribers to curb aggressive marketing that distorts prescribing and drives up drug costs; and require the coordination of care to ensure the sickest individuals are getting the right care at the right time to prevent further complications.
“When Coverage Fails: Causes and Remedies for Inadequate Health Insurance” can also be found at www.communitycatalyst.org.