Hidden from View:
The Quest for Affordable Health Care

This article was written by Gail Shearer, Health Policy Analysis Director,
Consumers Union Washington D.C. Office.

Consumers Union encourages reprints of all advocacy office op/eds. Please contact the Washington D.C. office for copyright release.

A complicated pregnancy nearly pushes a Kentucky family whose health insurance policy doesn't cover maternity care into bankruptcy. An unemployed mother in Georgia suspects her insurance company is trying to jettison her by increasing premiums until she can no longer pay. An Ohio couple spends over $100,000 a year to treat their toddler's hemophilia, knowing the lifetime cap will expire by the time the youngster is ten.

All over America, people who are struck by a serious illness are finding out health insurance often does not cover what it used to. The trauma of facing down disease is now coupled with a new trauma: facing a big pile of unwelcome medical bills. To their surprise, too many insured families are discovering crushing financial burdens that were hidden from view until someone needs a doctor.

A new examination of the financial burden of today's health care system prepared by Consumers Union exposes the true cost of getting sick. The heart of CU's findings is that 11 million non-elderly American families -- one out of every eight households -- spends more than 10 percent of their earnings on health care. Moreover, about 80 percent of these families, or nearly nine million families, are insured! The growing underinsured population has been on a quiet surge, rising by nearly 40 percent over the past 15 years.

For the underinsured, the twin calamities of health care crisis and financial crisis can bring personal ruin and cripple family budgets. For the sickest ten percent of the population, insurance company claims combine with out-of-pocket costs to bring annual health care bills to a staggering $21,000.

Certain groups where too many have no insurance at all are hit particularly hard by these expenses. Nearly 11 million children had no insurance, even though children are relatively inexpensive to insure. About 14 percent of the near elderly, people age 55 to 64, were uninsured. An incredible 26 percent of working age adults earning between $10,000 and 20,000 a year who were offered health benefits by their employer had no insurance, in part because many could not afford their part of the premium.

When shopping for health insurance, today's consumers face a confusing continuum of risk that leaves a large number of families coping with unreasonable financial strain. Today's marketplace simply leaves too many families uninsured and underinsured, a condition which is threatening to become a permanent fixture in America's health care system.

Here's what needs to be done to embrace the goal of making health insurance meaningful, effective and affordable:

• The most vulnerable populations should have access to affordable health insurance.
   
• Families who suffer health care costs of more than ten percent of their income on health care expenditures should get a tax credit. The existing tax deduction for health care expenses provides only limited relief, and many low and moderate income taxpayers never get to take advantage of it because they do not itemize their tax returns.
   
• To make certain policies cover the true costs of chronic or catastrophic illnesses, lifetime caps on insurance coverage should be elevated to $10 million, or better yet, ended altogether.
   
• A Medicare buy-in option for early retirees would also be a good first step in the long-term effort to reduce and eventually eliminate the high number of uninsured.

CU's research shows the financial needs of early retirees and the near-elderly is greater than ever: total health care costs for people who are 55 to 64 are about 60 percent greater than the average family. Designing this initiative carefully will be vital to make sure sick people do not find themselves being dumped by their insurance companies and to keep the new coverage affordable.

Four years ago efforts to reform the health care system ended in failure and Americans were told to put their faith, not in government, but in the marketplace.

While recent headlines have trumpeted massive corporate consolidation and an explosion in managed care, new financial burdens have quietly crept into the landscape for people of all ages and incomes. Large and often open-ended financial burdens are being foisted on insured families who are coping with major health care crises.

Congress began addressing targeted problems in 1996, but the systemic issues were left to fester. The number of Americans entering the ranks of the uninsured and underinsured is not diminishing -- it is swelling. There are now 41 million people with no insurance. As insurance companies continue to shift costs to the consumer, another dimension of the problem moves front and center: an additional nine million families who have health insurance are spending more than ten percent of their annual income on health care when catastrophic illness strikes.

Although everyone would benefit from a health care system that prevents financial hardship, the silence from those with the power to make health care more affordable has been deafening. To date, the disconnect between what consumers want and the unresponsive behavior of both the marketplace and elected officials has been stunning. The time is ripe for public intervention to make health care affordable.

Gail Shearer, the Health Policy Analysis Director for the Washington office of Consumers Union, is the author of a new study Hidden from View, the Growing Burden of Health Care Costs.

 Copies of the full report are available from the D.C. office of Consumers Union for $20.00 plus $5.00 shipping and handling.  Please make checks payable to "Consumers Union."