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Will Your Health Plan Be There When You Really Need It?

Insurance: A consumer advocate group finds that more and more Americans have inadequate coverage, especially when catastrophic illness strikes.


Is your health insurance coverage really coverage?

A new report from Consumers Union finds a growing number of insured American families still face financial burdens when they get sick or injured. "Hidden From View: The Growing Burden of Health Care Costs" spotlights a new category of consumers: the underinsured.

The report found that nearly 9 million families (one out of 10 households with people younger than age 65) who have health insurance for every member of the family are nevertheless spending more than 10% of their annual income on health insurance premiums, plus co-pays and deductibles for medical bills.

"They have discovered that their insurance was woefully inadequate in the face of a serious illness," said Gail Shearer, author of the new report. And millions more are at risk for such a medical burden said Shearer, director of health policy for Consumers Union.

"The number of Americans who can be called 'underinsured' has increased nearly 40% since 1981," she said, in discussing the study at a Washington teleconference last Thursday.

Consumers Union, publishers of Consumer Reports magazine and longtime advocates for consumer protection legislation, hopes to refocus the public policy debate on the affordability of health care, she said. "The trauma of facing down disease is now coupled with the new and troubling trauma of facing down unwelcome and unexpected medical bills. Policymakers have not even begun to wrestle with this."

Consumers Union contracted with the Lewin Group, a health research firm, to study what consumers, employers and the government actually pay for health care. The resulting 100-page report includes breakdowns on various segments of the population, policy recommendations and guidelines for consumers buying insurance.

The report found that of the working poor (earning $10,000 to $20,000 a year), about one out of four is uninsured and that the biggest coverage gap is among children, with 11 million children uninsured. Another hard-hit group consists of potential early retirees, people ages 55 to 64. About 14% of this age bracket lacked insurance in 1994. Despite the private market's recent success in holding down health care premiums, said Shearer, the report shows that the market has been unable to deal with many consumer expenses. "One reason that people are underinsured is that HMOs will not cover certain procedures so consumers are going out of the plan for treatment they think they need."

In addition to suggestions for legislative remedies, such as medical tax credits and early Medicare buy-ins, the report also presents a five-question test for consumers to evaluate their own insurance policies:

* Does your plan limit out-of-pocket costs (for covered charges) after you have paid a fixed amount?

* Does your policy provide comprehensive benefits including not only doctor and hospital care, but also prescription drugs?

* Is the insurance company's schedule of "allowable charges" realistic?

* Does your policy put costly limits on mental health coverage?

* Does your policy limit lifetime benefits, meaning your coverage would run out if you suffered a truly catastrophic accident or illness?

Consumers shopping for insurance should carefully read the policy, advised Shearer. "They are hard to read, but that doesn't mean you shouldn't try. And if you don't have any choice, read the fine print and understand the risks you may face."

Copies of the full report are available to the public for $20 plus $5 for shipping and handling. Checks should be payable to Consumers Union and sent to: Consumers Union, 1666 Connecticut Ave. NW, Suite 3, Washington, D.C. 20009.

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