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Dems: Skimpy Insurance New Health Care Issue

A different health care issue has emerged for Democrats, in sync with the party's pitch to workers and middle-class voters ahead of next year's elections.

It's not the uninsured, but rather the problem of high out-of-pocket costs for people already covered.

Democrats call it "underinsurance."

After paying premiums, many low- and middle-income patients still face high costs when trying to use their coverage. There's growing concern that the value of a health insurance card is being eaten away by rising deductibles, the amount of actual medical costs that patients pay each year before coverage kicks in.

"I think it's going to be the next big problem," said Rep. Jim McDermott, D-Wash., a congressional leader on health care.

"We've got some 17 million more people covered ... but they can't access the care they seem to be entitled to," McDermott said. "It costs too much to use the care. That's the deceptive part about it."

Since virtually all U.S. residents are now required to have health insurance by President Barack Obama's health care law, McDermott said Democrats have a responsibility to make sure coverage translates to meaningful benefits.

Several liberal-leaning organizations have recently focused on the issue.

—A Commonwealth Fund study found that 31 million adults were underinsured last year. Half of them had problems with medical bills or medical debt. Seven million were underinsured due to high deductibles alone. "The steady growth in the proliferation and size of deductibles threatens to increase underinsurance in the years ahead," the study concluded.

—A study by the advocacy group Families USA found that one-quarter of the people with individual health insurance policies went without care in 2014 because they could not afford the out-of-pocket costs. The study singled out high deductibles.

—The Center for American Progress, a think tank often aligned with the White House, found that employers have been shifting a disproportionate burden of health care costs onto workers. As a result, the report said, employees and their families have not shared in the benefits of a prolonged lull in medical inflation. The group recommended several policy changes, including rebates for workers under certain conditions.

"Cost shifting is part of what makes people underinsured," said Topher Spiro, vice president for health policy at the center. "There's an effort to raise the issue generally, and there's general recognition that this is a problem that needs to be addressed."

The insurance industry says the focus on deductibles and cost sharing is misplaced. It says the real problem is that the United States pays too much for medical care. Deductibles can be a legitimate tool for employers and insurers to steer patients to doctors and hospitals providing high-quality care at a reasonable cost. Some plans set lower amounts for services provided within a network.

"It can't be looked at in isolation," said Karen Ignagni, outgoing head of America's Health Insurance Plans, the main industry trade group.

Some consumers may prefer a high-deductible plan in exchange for lower monthly premiums, she added. "They are making a conscious decision to make that trade-off."

A wide body of research shows that out-of-pocket costs discourage people from getting medical care, but there is no agreed-upon standard of what constitutes "underinsurance."

The Commonwealth Fund, a private foundation that aims to improve the health care system, defines underinsurance as out-of-pocket costs that add up to 10 percent or more of household income, in most cases, or a deductible that amounts to 5 percent of income or higher.

Obama's Affordable Care Act set annual limits on out-of-pocket costs for most insurance plans, currently $6,600 for an individual policy and $13,200 for a family plan. It's better than no limit, but a stretch for many families.

Annual deductibles for employer plans averaged about $1,200 for employee-only coverage last year, according to the Kaiser Family Foundation.

Deductibles can be much higher for plans sold through the health law's insurance exchanges, averaging about $2,500 for single coverage under a midrange silver plan. But more than half of exchange customers receive additional government subsidies to reduce their cost sharing.

Democrats need an election-year health care narrative about how to improve Obama's law, said Robert Blendon, a professor at the Harvard T.H. Chan School of Public Health.

"The issue that has come up repeatedly is the impact that high deductibles are having on moderate income people," he said.