CONSUMERS UNION: Out-of-Pocket Expenses Increase

      Almost nine million families with health insurance are paying more than 10% of their annual income on out-of-pocket health care costs, including premiums, copays and deductibles, according to a new report by Consumers Union. The study, conducted by The Lewin Group, found that the number of underinsured Americans -- those at risk of spending more than 10% of their out-of-pocket income on medical bills -- has increased nearly 40% since 1981. Consumers Union's Gail Shearer, who authored the report, said, "Although people figure their insurance is going to be there for them when they get sick, our research shows that too often it is not. Even when everyone in the family has health insurance, about nine million families are still faced with medical bills that eat up more than 10% of their income." She added, "Today's health care financing system has shifted what it means to have insurance. Instead of a clear-cut question -- 'Do you have insurance?' -- consumers instead face a confusing continuum of risk that leaves millions uninsured or underinsured."

The Details
      The study found that more than 20% of families headed by people 55 to 64 and more than half of the families headed by people over 65 pay more than 10% of their income on medical bills. The near-elderly were particularly hard hit by the lack of insurance, with their total health care costs about 60% higher than average. In order to close the gap, Consumers Union is urging Congress and the Clinton administration to use the tax code to better target relief for families in crisis due to health care costs. The group suggests that Congress create a new medical tax credit for the poor and middle class and ensure that early retirees and other adults have access to affordable comprehensive insurance coverage through a Medicare buy-in. The group is also urging the elimination of lifetime limits on health insurance and the capping of out-of-pocket expenses (Consumers Union release, 1/22).