A new Consumer Reports study identifies the "underinsured"--accounting for 24% of the U.S. population--living with skeletal health insurance that barely covers their medical needs and leaves them unprepared to pay for major medical expenses.

Forty-nine percent of people overall, and 43 percent of people with insurance said they were "somewhat" to "completely" unprepared to cope with a costly medical emergency over the coming year. Some 16 percent of the people surveyed had no health plan at all, including many working respondents whose jobs didn't offer insurance or who couldn't afford the premiums of deductibles of the available plan.

When added to the population of "uninsured"--approximately 16% of the population--a total of 40% of Americans ages 18-64 have, at best, inadequate access to health care. The report, published in the September issue, also finds that most employers are struggling to keep up while the insurance behemoths prosper from the misery.

In the first of a series of reports on America's health care crisis, Consumer Reports paints a profile of the "underinsured," explains what it means to be insured but not adequately covered, and tells of the costs and consequences for everyone, including people who are currently "well insured." The report is based on a survey conducted by the Consumer Reports National Research Center in May 2007, which sampled 2,905 Americans between ages 18 and 64. The survey found evidence of increasing frailty in the U.S. system of health insurance on almost all fronts.
The September issue of Consumer Reports also includes ratings of the best HMOs and PPOs, based on the experiences of 37,000 readers.

Defining "Underinsured": Insured But Not Covered

People falling into the "underinsured" category have two or more of the following complaints about their health plans: It does not adequately cover costs of prescription drugs; doctor visits; medical tests; surgery or other medical procedures; catastrophic medical conditions; or the deductible is too high.

CR notes that the new emerging class of "underinsured" could be you or your neighbor. In the CR survey, the median household income of respondents who were "underinsured" was $58,950, well above the U.S. median. Twenty-two percent live in households making more than $100,000. Still, many of the "underinsured" don't have the resources to keep up with the rising costs of deductibles and co-pays, so much so that 43% reported that they postponed going to the doctor because they couldn't afford it.

Twenty-eight percent told Consumer Reports they put off filling prescriptions. In addition to digging deep into their savings, raiding their retirement accounts and running up credit card balances, 27% of the "underinsured" said they were still in debt to doctors and hospitals. Three percent said medical bills had forced them to declare bankruptcy.

Costs And Consequences

When compared to individuals deemed "well insured," CR uncovered a huge disparity:

Employers Struggle To Keep Up While Insurers Prosper

Because of the way health insurance works, insurers haven't been paying much of a penalty for failing to contain costs. Insurers typically keep around 15 and 25 percent of the premiums they collect. As noted in the Consumer Reports investigation, the nation's six biggest private health insurers collectively earned nearly $11 billion in profits in 2006.

Employers are struggling to keep up: in the past five years, insurance premiums have risen three times as fast as inflation. While employers by and large have not asked employees to pay a bigger share of the overall premium, employees are still paying rising premiums.
In 2000, the average employee contribution for a family health plan was $135 per month and in 2006 it was $248. People who work for small companies bear the biggest brunt because those companies have fewer employees over which to spread medical risk. And lower paid workers also get hit hard because premiums and co-pays typically cost the same for everyone, regardless of income.

Rating the Health Plans

In advance of the annual open-enrollment period--when millions of people who obtain health care insurance through their employer or through Medicare have the opportunity to switch plans--Consumer Reports National Research Center studied the experiences of 37,000 CR subscribers enrolled in HMO and PPO health plans.

CR found that one out of every five respondents was sufficiently disappointed with their plans that they wanted to switch. The survey found that among readers who were not seriously ill, complaints about gaining access to care typically hovered in the single digits. But the complaints were nearly three times greater for those with a serious illness.

Only 67% of CR's readers were completely or very satisfied with their HMO or PPO. Twenty one percent complained about billing errors, while 25% said they had a problem with their primary care provider and 36% said they had problems when they contacted their insurance company. Fourteen percent of respondents in HMOs complained they had to wait a long time to get appointments, versus 8 percent in PPOs.

CR also found that people who weren't in the top rated HMOs had a much tougher time getting needed care, especially for the seriously ill. PPOs have their limitations as well. Members of PPOs not only have to pay for their coverage, they also report more difficulty receiving the reimbursements they're owed. Among those who contacted their health plan, 62% in the PPOs said it was due to a problem with their bill or claim, compared to only 30% of HMO members. The health plan ratings are available online along with tips for choosing the right HMO or PPO.

Among the higher rated HMOs was Tufts Health Plan (MA, NH, RI), which has made noted progress in the past two years, since CR's last survey in 2004. Kaiser Permanente Northwest (OR, WA), Independent Health (Western NY), Kaiser Permanente Northern California and Capital District Physicians' Health Plan (NY, VT) were also among the top rated.

Of the PPOs, which tend to provide a greater range of doctor choices, Anthem Blue Cross Blue Shield of Connecticut, CareFirst Blue Cross Blue Shield (DC, MD, VA), Blue Cross Blue Shield of Alabama, Blue Cross Blue Shield of Illinois, and Mutual of Omaha, which is leaving the PPO industry, were among the top rated.

Can Health Insurance Be Fixed?

Some promising approaches have already gained traction at the state level. Maine, Massachusetts, and Vermont have already passed laws aimed at providing health insurance to everyone, with help for people who don't receive a health plan through their jobs and can't afford to buy on their own. Many other states are considering similar laws, and presidential candidates have put forth a variety of proposals to broaden coverage. Consumers Union, the nonprofit publisher of Consumer Reports (http://www.ConsumerReports.org) has advocated for universal health care for most of its 70-year history. CU is working in California on reform that promotes high-quality, affordable care for all.