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Report Finds Fault With Health Insurance

High deductibles, co-payments could leave many in financial bind, authors say

THURSDAY, March 22, 2007 (HealthDay News) -- Having health insurance is no guarantee that an illness or injury won't leave you in dire financial straits, a new report contends.

"Our interviews found that health insurance did not fulfill its primary purpose," study author Carol Pryor, a senior policy analyst at the Boston-based Access Project, said during a teleconference. "When people got sick, insurance did not protect them from overwhelming financial losses or allow them to access needed care."

"The only thing worse than being uninsured is paying to be uninsured," Joseph Ditre, executive director of Consumers for Affordable Health Care, said during the teleconference. "And that's what high-deductible plans are doing."

The report, The Illusion of Coverage: How Health Insurance Fails People When They Get Sick, was issued Thursday by the Access Project and Brandeis University. Its findings were based on interviews with 45 insured Americans in seven states.

Among the report's key findings:

  • Shifting more costs of care onto patients through high deductibles, co-insurance, and less comprehensive coverage creates significant health access and financial consequences.
  • Confusing insurance company policies and procedures leave patients confused, in debt, reluctant to seek health care, and vulnerable to predatory scam products.
  • Affordability of health insurance must be judged on more than premiums -- it is necessary to consider the costs that people will face should they get sick.

Pryor placed blame for the problem on the insurance industry's doorstep. "The insurance industry is not being held accountable for the quality of its products and services," she said. "Without providing adequate support for consumers and holding insurers to higher standards, we risk trading the problems of lack of health insurance for the equally serious ones of inadequate insurance."

"The affordability of insurance coverage can't be measured solely in terms of the cost of the premiums," Pryor added. "For middle-income people, a combination of high deductibles and co-payments often resulted in unaffordable health insurance."

For low-income people, such policies created unmanageable financial burdens, Pryor said. And for people with high incomes, she added, "annual caps on coverage could leave them with enormous debts if they became seriously ill."

For most people interviewed, high-deductible plans were all they could afford, Pryor said. "These complex, cost-sharing arrangements have created an insurance system that is so complicated that it is almost impossible to understand," she said. "People often become vulnerable to deceptive marketing practices."

In addition, when people filed claims, they couldn't find out what was covered or why claims were denied, Pryor said. "Often claims were denied because of fine-print clauses or procedural requirements," she said.

Pryor's group suggests several changes to help correct these problems.

There should be standards that define comprehensive, affordable insurance. These standards should include the range of benefits covered and the out-of-pocket expenses for which consumers are liable.

Insurance companies should also provide consumers with clear information that allows them to make informed decisions. In addition, states should oversee requests by insurers for premium increases and have public hearings on these requests. Furthermore, public/private partnerships are needed to share the costs of insurance coverage.

The report is not without its critics, and they divide along political lines.

"This is kind of pie in the sky," said Devon Herrick, a senior fellow at the National Center for Policy Analysis, a conservative think tank. "It's like saying that everyone should have a Cadillac health plan, but at Chevrolet prices. The idea that insurance companies should have to insure everyone, even those with existing health problems, is unrealistic."

Herrick agreed that the central issue is whether people have a right to health care. "There are arguments about affordability and accessibility, but the underlying argument is how much right do I have to health care, and does that right guarantee me just a low level of access," he said.

Another critic of the new report thinks it does little to contribute to the overall debate about health insurance in the United States.

"It has no credibility," said Greg Scandlen, founder of Consumers for Health Care Choices, a group that supports private health insurance. "They found 45 unfortunates to interview, and that has no significance whatsoever for public policy. This tells you nothing about the 160 million people in the country who have private coverage."

But Gail Shearer, director of Health Policy Analysis at Consumers Union, said the report does contribute useful information to the debate over private health insurance's role in providing universal health care.

"The report points the way to some recommendations that make sense," Shearer said. "The report speaks to the need to fix the regulation of the private health insurance market before we turn to that market as part of the solution to the crisis in health care coverage.

"This report gets to the question of: 'Is this country ready to think about a system where everybody has a guarantee to health care?' " Shearer said. "That is the ultimate question."

A representative of the health insurance industry also took exception to the report.

"The industry recognizes that the costs of care continue to rise, and there needs to be more done to improve the availability of health care coverage in America," said Mohit M. Ghose, vice president of public Affairs at America's Health Insurance Plans, an industry lobbing group.

"Unfortunately, we have an attitude in this country that any problem that occurs in the health-care system can be put at the foot of health insurance companies or health insurance plans," Ghose said. "We need to get beyond that discussion."

There needs to be a discussion of solutions, whether that's the practice of evidence-based medicine, or dealing with the medical liability situation or the rising costs of other health-care services, Ghose said. "Those are the cost drivers that we need to be addressing immediately, rather than pointing out that people are unable to have the levels of coverage that they need," he said.

More information

For more information on access to care, visit the National Coalition on Health Care.

SOURCES: Greg Scandlen, founder, Consumers for Health Care Choices, Hagerstown, Md.; Gail Shearer, director, Health Policy Analysis, Consumers Union, Washington, D.C.; Devon Herrick, senior fellow, National Center for Policy Analysis, Washington, D.C.; Mohit M. Ghose, vice president of public Affairs America's Health Insurance Plans, Washington, D.C.; March 22, 2007, teleconference with Carol Pryor, senior policy analyst, The Access Project, Boston; Joseph Ditre, executive director, Consumers for Affordable Health Care Foundation, Augusta, Maine; The Illusion of Coverage: How Health Insurance Fails People When They Get Sick, March 22, 2007
Consumer News