Health insurance falling short

A spike in the number of 'underinsured' adults since 2003 startles healthcare experts.

The economic downturn is speeding up the unraveling of America's healthcare system.

In what experts call a "startling" development, the number of people who have health insurance but not enough to pay their medical costs has spiked from 16 million in 2003 to 25 million in 2007, according to a new analysis.

They're called the underinsured – working Americans whose employers don't provide health insurance so they have to buy it on their own, or who have jobs that offer only catastrophic plans with high copayments and deductibles in the thousands of dollars. An increasing number are solidly middle-class.

The study by nonprofit, nonpartisan Commonwealth Fund also found that underinsured Americans are now acting more like the nation's 47 million uninsured: They're more likely to forgo recommended medical care for fear they won't be able to pay for it. Such preventive intervention is key to keeping healthcare costs down, medical experts say.

A total of 75 million working adults were either uninsured or underinsured in 2007, the study found. That's 42 percent of the US population ages 19 through 64, up sharply from one-third in 2003.

"This erosion in insurance protection is putting patients, families, and the nation's health and economic security at risk," says Cathy Schoen, senior vice president of the Commonwealth Fund and one of the study's coauthors. "As a nation we are losing ground. We need to move in new directions."

With the faltering economy and the war in Iraq dominating the presidential election, healthcare reform ranks third in Americans' top concerns, according to recent polls by the Los Angeles Times and Bloomberg News. With the increase in the uninsured and underinsured populations, and with premiums and deductibles rising, many healthcare experts expect that Congress will face greater pressure to act on health reform.

"If a $3,000 deductible were a tax, it would be a very high one," says Patricia Schoeni, executive director of the National Coalition on Health Care. "People are going to figure this out, and when they do they're going to demand [that] Congress do something about the healthcare system."

While Sen. Hillary Rodham Clinton made universal access to quality health insurance a cornerstone of her presidential campaign, the two presumed nominees, Democratic Sen. Barack Obama and Republican Sen. John McCain, propose less ambitious plans.

Both favor subsidies of a kind to help low-income Americans get access to healthcare, but otherwise their plans are ideological opposites. Senator Obama favors creating a national health plan similar to the one currently offered to members of Congress. It would be comprehensive, with a choice of plans, and individuals and small businesses could buy into it at affordable rates. No one could be denied coverage, even if their doctors had previously diagnosed a medical condition. Senator McCain favors instituting a federal tax credit to encourage individuals to buy their own insurance. Low-income individuals who don't pay much in taxes would get a subsidy. McCain's plan would not prevent companies from denying coverage or charging higher premiums to people with preexisting healthcare needs, as they do now.

The plans have something else in common: They will cost money.

"No matter who wins it's not going to be easy," says Ms. Schoeni. "There's no getting around that to institute any kind of healthcare reform you've got to put some money into the pot up front. People have got to recognize that and deal with that."

That upfront money would help cover America's 47 million uninsured, and that's where the political fight is expected to center. It will also most probably pit big businesses, most of which already provide health insurance, against small businesses, many of which don't because of the high cost.

"The debate really will be about who is going to pay to subsidize the cost of insurance for 47 million people," says Robert Blendon, a healthcare expert at the Harvard School of Public Health "There's not a lot of willingness among the [small-business community] to have plans where they would be required by law to contribute."

Many experts say the likelihood of significant reform is much better now than it was in 1993 and '94, when the Clinton administration tried to overhaul the healthcare system. Among the reasons: The proposals now on the table are more modest, the number of people going without medical care is up, and many who had opposed healthcare reform – such as corporations and parts of the medical community – now favor change.

"Virtually all of the major stakeholders, including those who opposed health reform in the past, are now saying we need to find an accommodation," says Ron Pollack, executive director of Families USA, a healthcare reform advocacy organization in Washington. "Groups that used to say, 'It's my way or the highway' are saying, 'We've got to make a virtue of finding a second favorite choice, a compromise that's achievable.' There's much greater pragmatism that exists today."