Incremental Steps Helpful but Not Enough to End Underinsurance Issue, Panelists Say

In America, one can conceivably have health coverage, yet be unable to afford care or treatment.

Three policy experts gave an update on the underinsurance crisis in the United States, where the proliferation and the growth in size of health insurance deductibles relative to income leaves many exposed to medical debt, as well as delayed or averted care.

The Commonwealth Fund defines one measure of “underinsured” as having a deductible equivalent to 5% or more of income; for 2020, the most recent year available, 28% of Americans with health insurance were underinsured, up from 19% a decade earlier, Sara Collins, PhD, vice president for health care coverage and access, told moderator Clifford Goodman, PhD, senior vice president, Comparative Effectiveness Research, The Lewin Group.

Collins was joined by Amy Niles, MBA, executive vice president of the Patient Access Network (PAN) Foundation, and Katy Spangler, co-director of the Smarter Health Care Coalition, for a virtual session called, “The Problem of Underinsurance and Potential Solutions” during the 2022 V-BID Summit, hosted by the Center for Value-Based Insurance Design (V-BID) at the University of Michigan.

Niles outlined a few characteristics of the underinsured who call PAN for financial assistance:

• Most have commercial insurance or federal insurance
• Most are Medicare beneficiaries
• Income ranges between 150% and 400% of the federal poverty level, but most at the lower end of that range
• Most multiple chronic conditions
• Most have limited income

The demand for help is outstripping the abilities of nonprofits like hers to assist, Niles said, and is creating barriers to continuity of care.

There has been a little bit of positive news in terms of deductibles, said Spangler, citing data from Mercer showing that deductibles for some employer-sponsored plans have dipped a bit, likely because of the 2019 repeal of the proposed 40% Cadillac tax on health insurance premiums above a certain amount. When that tax was included as part of the Affordable Care Act in 2010—although it was never implemented as Congress kept delaying it—it drove employers to shift to high deductible health plans (HDHPs).

Goodman asked how underinsurance affects individual health care decision making or even decision making about non-health care decisions. Those who are underinsured delay or avoid health care because of costs at twice the rate of people who are insured but not underinsured, said Collins.

Niles agreed, describing polling that shows individuals “having to choose between paying for that medication at the pharmacy counter or putting food on their table.” Patients also skip doses or decide which of their conditions they will treat, especially if they are older adults with multiple chronic conditions.

Patients also have problems coping with emergencies—one PAN poll found that one-third of adults have less than $100 on hand—and others may not have transportation to access care.

More attention is being paid to the mounting medical debt being amassed by Americans who are underinsured or uninsured; the week of the V-BID Summit, Collins noted, the 3 big credit reporting agencies—TransUnion, Equifax, and Experian—announced that they will stop including certain medical debts that were in collections before being paid. It will also take longer—a year, not 6 months—before a medical debt in collections is reflected on a person’s credit report.

Some 43 million Americans have an estimated $88 billion in medical debt on their credit files, according to a Consumer Financial Protection Bureau report.

“There's been a growing attention to really how outrageous this is, that people's credit reports are affected by bills that they often don't even have much don't have much control over,” Collins said.

In addition, bills under $500, which make up 75% of the medical bills reported to collection agencies, won’t be reported, she said.

Turning to another cost issue, Goodman asked Niles to provide an overview of potential Medicare Part D reform; a proposal for a $2000 cap on prescription drug out-of-pocket costs for Medicare Part D enrollees who do not qualify for cost-sharing protections was included in President Joe Biden’s Build Back Better Act, which is stalled in the Senate.

The person who is “is faced with paying for an expensive medication, they are catapulted pretty quickly into the catastrophic phase of the benefits cycle where they're paying 5% of the drug costs and I always say, you know, 5% does not sound like a whole lot but 5% of expensive medication is a big number,” said Niles.

“Patients have waited far too long for reform,” she said, saying she was still hopeful that bipartisan support will remove the unlimited liability for these costs.

One change that has taken place recently is guidance around preventative care than can be paid for on a pre-deductible basis in health savings account (HSAs) or HDHPs. When these were created as part of the 2003 Medicare Modernization Act, the statute included a safe harbor that allowed for the payment of preventative care, but in 2004, the IRS took a very limited view on what counted as preventative care, Spangler said.

Both the Smarter Health Care Coalition and the V-BID Center advocated for a change in that guidance, and in 2019, the Department of the Treasury released a notice that allows HSAs and HDHPs the flexibility to cover specified medications and services used to treat chronic diseases prior to meeting the plan deductible.

Employers and health plans have responded positively to this guidance, Spangler said, citing surveys that show between 75% and 80% of employers are offering more chronic disease prevention on this basis.

Specific types of care that are considered high value but low cost now allowed under this new guidance include insulin, glucose monitoring, asthma drugs, statins, and blood pressure monitors—about 14 items and services in all—and the impact on premiums has been negligible, she said.

With that success in hand, the Smarter Health Care Coalition and the V-BID Center is now asking the IRS to say that the list is meant to be used as an illustration of low-cost, high-value care, and not a finite one, so that the plan or the employer has even more flexibility about what can be offered on pre-deductible basis.

In the end, the panel agreed that while incremental fixes alone won't be enough to solve the entire problem of underinsurance, it is the only solution available at the moment.

“I think ideally, we all owe it to ourselves to work toward a system where we are thinking about the total cost of care but also integrating the concepts around social determinants of health and health equity. It's vitally important, but we we have no choice but to move toward incremental fixes,” said Niles.