Commonwealth Fund: Many enrolled in employer plans are underinsured

Close to a quarter of people who have health coverage are underinsured, meaning they're enrolled in plans that make it harder to afford care due to high out-of-pocket costs, according to a new study.

The Commonwealth Fund polled a national sample of adults aged 18 to 64 and found that 23% are underinsured. Most of these enrollees, about 66%, are covered in an employer-sponsored health plan, the study shows.

In addition, 14% were covered by individual or marketplace plans and 11% were enrolled in Medicaid, according to the report. Fifty-seven percent of those who were underinsured said they skipped care because of the cost, and 44% said they had medical debt.

Sarah Collins, one of the study's co-authors and vice president for healthcare coverage and access and tracking health system performance at The Commonwealth Fund, noted during a briefing with reporters that the team does not include premiums in its definition of "underinsurance," meaning it accounts more so for out-of-pocket costs.

"This distribution of underinsured adults reflects the predominance of employer coverage in the United States," Collins said. "It also reflects the growth of deductibles and cost sharing in commercial insurance plans over time, including employer plans, the individual market and the marketplaces where some people, depending on their income and plan choice, may face very high deductibles."

The study found that of the underinsured people who owe medical debt, 48% owe at least $2,000. One in 5 owes $5,000 or more. Fifty-one percent of those with debt said it was linked to care for a long-term medical condition, with hospital care accounting for 49% of debt.

People who skip care due to cost are seeing worse outcomes, too, according to the study. Forty-one percent of those who said they skipped or delayed needed services saw their medical conditions worsen. 

What can policymakers due to address these affordability challenges? The researchers offer several key focuses for reform, including a push to fully expand Medicaid and to address fragmentation across different health insurance programs.

The 10 states that have not chosen to expand their Medicaid programs under the Affordable Care Act (ACA) have 1.5 million low-income individuals who are uninsured. They would gain coverage under expansion, according to the study.

Plus, the eligibility criteria between different insurance programs varies significantly, which can make it difficult to maintain continuity of coverage. 

Tangible policy steps that could be taken, according to the researchers, include:

  • Make the enhanced premium tax credits for marketplace plans permanent.
  • Nix medical debt from credit reports as well as enhance enforcement to prevent hospitals from piling debt on to patients.
  • Lower deductibles and out-of-pocket expenses for ACA exchange plans.
  • Make adjustments in employer-sponsored plans to better account for workers' income.
  • Create a "federal fallback" option for people who are not able to enroll in Medicaid in nonexpansion states.
  • Make it easier for states to allow continuous Medicaid coverage for 12 months.

"The Biden Administration released a proposed rule earlier this year that would wipe most medical debt off of credit reports, which is a source of extreme financial stress for families," Collins said. "So this, I think this is an area that that we might see policy actionable at the state level and potentially at the federal level."