The Commonwealth Fund: The Problem of Underinsured, Rising Deductibles Make It Worse

A new report from The Commonwealth Fund was issued last week finding that 31 million people with health coverage in the United States were underinsured in 2014.

The share of working-age adults who had health insurance all year but were underinsured was statistically unchanged since 2010, after nearly doubling, from 12 percent to 22 percent, between 2003 and 2010. 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 study, The Problem of Underinsurance and How Rising Deductibles Will Make It Worse, is based on The Commonwealth Fund’s Biennial Health Insurance survey, which interviewed people 19-64 years old between July and December 2014. It could not separately assess the effects of the Affordable Care Act on underinsurance because people insured all year in the survey had coverage that began prior to the law’s major insurance expansions going into effect.

The rate of growth in medical costs and insurance premiums has slowed in recent years. However, millions of consumers continue to be saddled with high out-of-pocket health care costs. While the number of underinsured people in the United States held constant in 2014, the steady growth in the proliferation and size of deductibles threatens to increase underinsurance in the years ahead.

The Affordable Care Act’s coverage expansions and protections have greatly improved the quality of insurance coverage available to people who lack job-based health benefits. In addition, cost-sharing subsidies significantly reduce deductibles for people with low incomes who buy plans in the marketplaces. But those subsidies phase out quickly, leaving families with deductibles that may be high relative to their incomes. In addition, the law has only limited ability to improve the cost protection of employer plans, which is the source of most American’s health insurance. 

Reforms and new approaches are needed to improve the cost protection of health plans. These could include innovations in benefit design that slow growth in deductibles and emphasize incentives that encourage people to utilize, rather than delay, timely health care. In addition, policymakers should identify and address holes in health plans—like out-of-network physicians in in-network hospitals—which are surprising many families with unexpected costs. Finally, systemwide efforts to lower the underlying rate of medical cost growth and share those savings with consumers will be critical.y had coverage that began prior to the law’s major insurance expansions going into effect.