The High Cost of Having Insurance and the High Risk of Having None

A study published in The Journal of the American Medical Association reports that the costs for health insurance are taking more of a toll than ever on subscribers, absorbing a high percentage of annual incomes.  But even the high medical bills don’t necessarily translate into a clean bill of health.      

The recently released report, which measures data from 1996 to 2003, found that 48.8 million Americans younger than 65 lived in a household that spent more than 10 percent of the family income on healthcare—11.7 million more than in 1996. 

The report also states that the money being spent as out-of-pocket costs, such as copays and monthly premiums, does not result in an adequate return on investment (ROI).   There are millions of those under age 65 (the age when most people become eligible for Medicare) who are what is classified as “underinsured”; these individuals have health insurance but do not have “adequate financial protection from high out-of-pocket health care costs.”

“We define the underinsured as persons who live in families that spend more than 10 percent of tax-adjusted family income on out-of-pocket health care costs (excluding premiums),” said Jessica Banthin, Ph.D. as reported to WebMD, a provider of online health information services to consumers, physicians, healthcare professionals, and employers.   

Banthin, along with Didem Bernard, Ph.D., were the researchers on the study. Both work for the Agency for Healthcare Research and Quality (AHRQ), an organization that supports research designed to improve the quality of health care.  The AHRQ is part of the United States Department of Health and Human Services. 

The study determined that there is a large number of Americans—tens of millions—who spend ten or even twenty percent of their income on health insurance.  Many of these people are in poor health or considered high-risk by the health insurance companies, or are lower income families with very little to no disposable income. Because of these high costs, many Americans live dangerously without insurance, feeling the costs are simply unaffordable. 

Unfortunately, the very same out-of-pocket costs that prove to be such a burden for many Americans to pay could actually be very little compared to the medical costs for someone involved in a catastrophic injury or sickness who doesn’t have health insurance at all.