Saturday, May 23, 2015

Mysteries of underinsurance in the Commonwealth Fund survey

A Commonwealth Fund survey released this week found that among those American adults under age 65 who were insured throughout 2014, 23 percent were underinsured – that is, their deductibles and copays were high enough to cause severe financial strain. That top line is almost unchanged since 2010; the real damage on this front was done from 2005 to 2010, when employers started shifting costs en masse to employees.

I have several questions about the report, to which I'm seeking answers from the authors. If you have any insight, please let me know (email address is in profile to right).

In the questions below, please keep in mind Commonwealth's definition of underinsured: 1) total out-of-pocket costs exceed 10% of annual income, or 5% if the person's household income is under 200% of the Federal Poverty Level (FPL), or 2) the plan deductible exceeds 5% of the beneficiary's annual income.

1. While deductibles in employer-sponsored plans continue to rise, most notably among those with less than 100 employees, the underinsurance rate actually dropped among large employers from 2012 to 2014, from 16% to 14%.  In the same period, the percentage of large-firm employees whose deductible exceeded 5% of annual income rose from 6% to 8%.  What's offsetting that rise in the ranks of those whose deductibles alone classify them as underinsured? Do the free preventive services mandated by the ACA play a role? Or rather, since "the out-of-pocket cost component of the measure is only triggered if a person uses his or her plan," could reluctance to use (and pay for) any medical services be inhibiting the underinsured total?

2. More generally, , among all insured Americans under age 65, Commonwealth finds an increase of 7 million since 2010 in those whose deductibles qualify them as underinsured, but a net increase in underinsureds of only 2 million . Again, something seems to be offsetting the relentless rise in deductibles. Since 2010,

3. A lot of companies ease the sting of high deductibles by partly or fully funding employees' Health Reimbursement Arrangements (HRAs)  or Health Savings Accounts (HSAs).  Does the Commonwealth survey take these offsets into account?

4. According to Commonwealth underinsurance rates for Medicaid and disability Medicare have historically been very high --   At the same time, the underinsured rate for Medicaid has dropped dramatically since 2012, from 32% to 22%. How will the ACA affect underinsurance in Medicaid?* Perhaps it will worsen again, since several states have instituted "private options" that include small premiums and copays.

As to why underinsurance rates are so high for the two public programs, here is Commonwealth's explanation:
About one of five (22%) adults with Medicaid coverage were underinsured in 2014, down from 31 percent in 2012. Adults in this group are the poorest in the survey. Medicaid requires little cost-sharing, but because people eligible for the program have very low incomes, minor out-of-pocket costs can comprise a large share of income.

Underinsured rates were highest among adults under age 65 with Medicare. This is by far the sickest group of covered adults in the survey—91 percent are disabled or in fair or poor health—and the second-poorest after Medicaid enrollees (data not shown).10 Many have very high health expenditures and low incomes. Consequently, more than two of five (42%) adults in this group were underinsured in 2014.
I thought that copays in Medicaid were generally zero to minimal, so I'd like to know more about that. As to Medicare available to those on disability: is Medigap not available to them? Or not affordable, since disability payments are low? In this area, the chasm of my ignorance spreads wide before me.

Regarding underinsurance in the individual market in general and the ACA marketplaces in particular, I have a post up on

UPDATE: I received some responses to the ESI-related questions above from Sara Collins, Commonwealth's lead research in this survey. They're up here.

* Originally I asked whether the ACA Medicaid expansion had been a factor in the drop. That's unlikely, as the survey was conducted July-December 2014 and required respondents to have been insured for a full year. California did expand Medicaid early.

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