Fraying of the Employer Health Care Safety Net

Health Affairs published an excellent article on-line earlier this month demonstrating that most Americans of modest income (200-400% of poverty level) are at high risk of spending more than 5 or even 10% of their income on out-of-pocket health care costs. [Abstract] [Full Text] [Harvard Link] The researchers (some from the consultancy Watson Wyatt) used national data on benefit design (Kaiser Family Foundation/ HRET) coupled with national data on health care claims (from Thomson Reuters) – and showed that well over half those at 200% of the federal poverty level with expenses in the top quartile would spend more than 10% of their income on out of pocket health care costs. The paper is important because unlike other published works, this does not rely on people’s recall of their medical expenses. Considering that even physicians don’t know what things cost, and bills can take months to arrive, using a national claims database is a better approach.

The researchers used 2006 utilization data and 2007 benefit design data – and the results showed more underinsurance than when they did a similar study in 2004. Deductibles were highly associated with an increase in underinsurance, as were high deductible health plans which did not include an employer health savings account deposit. As the authors point out in their discussion, the 2004-2007 period was marked by job growth and economic expansion – things would likely look substantially more dire if we were looking at 2008-2009 data.

The Boston Globe led today’s front page with an article describing patients who were delaying necessary medical care, and the American Medical Association’s weekly paper this week notes that physicians are seeing increased cancellations and decreased office volume.

Clearly, health care reform will only be successful to the extent that cost increases are moderated (or even reversed). Given the degree of individual financial risk in the current system, it’s not surprising to see wide public support for a government health plan. Reining in employer health care premium costs by shifting more risk to employees is likely to leave even more Americans with a feeling (and the reality) of health care insecurity.