Health Insurance is a Family Matter (2002) / Chapter Skim
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4 Financial Characteristics and Behavior of Uninsured Families
4 Financial Characteristics and Behavior of Uninsured Families
Pages 64-89
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From page 64... ...
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From page 65... ...
INCOME, ASSETS, AND BORROWING POWER OF UNINSURED FAMILIES Finding: Families with at least one uninsured member are predominantly lower income.
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From page 66... ...
Finding: Families with uninsured members tend to have fewer assets than do fully insured families and are unlikely to have the capacity to borrow to cover major unexpected health care costs. Not only do families with uninsured members have lower incomes than fully insured families, they also have extremely limited financial resources such as savings and lines of credit with which to pay medical expenses.
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From page 67... ...
Families with older members in which no one has health insurance have only marginally greater financial assets than younger uninsured families (Starr-McCluer, 1996~. Among uninsured families headed by 55 to 64-year-olds in 1989, median financial assets were $200.
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From page 68... ...
Because they do not have significant assets, they cannot offer such assets as security to a lender. Families who own their own homes have their home equity as a resource for meeting health care expenses, but uninsured families are less likely to be homeowners.
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From page 69... ...
One reason that uninsured families have lower health spending than insured families is because they use fewer health services on average. An examination of family spending patterns of those with and without health insurance provides an indication of how the uninsured family might accommodate health bills and the costs of purchasing insurance.
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From page 70... ...
Average health care expenditures of uninsured families are lower than those of insured families because there are disproportionately more uninsured families with no or very limited use of services. However, uninsured families with health problems requiring care are more likely to find themselves at the other end of the spending spectrum with out-of-pocket costs that can be very large.
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From page 71... ...
~~c ~~c~cs ~~ a~ of ~~ Its 71 1~ 4.1 Cbildrcn Age ~ 17 Using No Hc~tb Care Schick 1996 P~e~s Hoff Uo~ Inpadent Oust Hoagie Emerge DO Dents Preschphon As visits any p~vatc 97.6 92.2 87.5 23.8 49.9 38.6 PubUc onto 94.6 92.7 84.5 33.2 71.4 44.0 ~ at.
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From page 72... ...
Lack of insurance affects the health care costs of uninsured families in another way. Insurance plans serve a less obvious purpose of negotiating competitive prices with providers of services.
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From page 73... ...
Finding: Most uninsured families would not have sufficient funds in their budget to purchase health insurance without a substantial prem~um subsidy. The primary reason that uninsured families spend a smaller share of their family budget on health is that they do not pay for health insurance (Acs and Sabelhaus, 1995~.
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From page 74... ...
In contrast to the "privation" standard of the poverty threshold, assessments based on family budgets have tried to estimate the amount of income that provides for a modest standard of living, one that is more generous than that provided by the poverty threshold and that reflects the variety 5 ,7
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From page 75... ...
Uncovered out-of-pocket health expenses for such a family would be an additional expense. FINANCIAL BURDEN OF HEALTH CARE COSTS FOR UNINSURED FAIUILIES AND HOW THESE FAMILIES COPE The average levels of health care expenditures faced by uninsured families cited above mask a high variation in such costs.
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From page 76... ...
Table 4.3 provides a finer breakdown of out-of-pocket expenses among uninsured families of different types and shows that those who are uninsured for the full year are more likely to have no expenses during the year than are those families insured for part of the year. That is true whether the uninsured families are single- or twoparent or a single person or couple with no children at home.
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From page 77... ...
-.~ A recent national survey of working-age Americans reports that 55 percent of those who were currency or recently uninsured had problems paying medical bills and about three in ten of those uninsured report needing to change their way of life in order to pay medical bills (see Box 4.4 for a description of procedures used for collecting medical bills)
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From page 78... ...
Borrowing or using available savings might be feasible if high costs are a one-time event, but if high costs are ongoing they must be offset by reducing other spending. No currently available survey provides the data to determine what share of uninsured families face high out-of-pocket expenses year after year.
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From page 79... ...
How Uninsured Families Cope with the Financial Burden of Medical Expenses Borrowing The Committee has noted earlier in this chapter that uninsured families typically have low borrowing power. Still, some do manage to borrow.
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From page 80... ...
~ Medical reasons checked on the survey included substantial medical debt, medical bills not covered by insurance in excess of $1,000 in the past two years, birth of baby, or death in family, among 16 reasons listed.
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From page 81... ...
For example, while the average percentage paid out of pocket by uninsured families for a hospital stay is almost 7 percent (Figure 4.5) , very few uninsured people under age 65 experience a hospitalization.
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From page 82... ...
SOURCE: Data Tom Medical Expenditure Panel Survey in Agency for Healthcare Research and Quality, 2001b. Prescription medicines and medical supplies receive the least external support, and the family s share of those expenses is greater than for other services.
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From page 83... ...
The average amount paid by families was $244 (see Figure 4.8~. Outside Supports, Tradeoffs, Fairness, and Accountability Because uninsured people do not bear all the costs of their care, the existence of outside financial support and the availability of services rendered at no or reduced charge enters the calculus for uninsured families when they weigh the value of insurance against competing demands on the family budget.
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From page 84... ...
The financial support that uninsured families receive, most notably from hospitals, cannot be described by a set of rules and regulations to ensure that similarly situated persons are treated equally regardless of the institution where they are served. Likewise, physicians provision of free or reduced-cost care to uninsured 5
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From page 85... ...
Eighty percent of the cost of free care went to individuals from families with incomes below the poverty threshold; another ten percent went to individuals with family incomes between the poverty threshold and twice the threshold.
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From page 86... ...
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From page 87... ...
Such families could face difficulties with even routine medical bills; a major hospitalization or chronic condition requiring frequent medical services might easily destabilize them. The evidence shows that uninsured families do not use the health system to the same extent that insured families do.
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From page 88... ...
Chapter 6 details the consequences for children and pregnant women of delaying care and not maintaining contact with a routine source of care. Even though uninsured families are more likely than their insured counterparts to have no medical expenses, those at the other end of the spending spectrum who cannot avoid using services, are also more likely to have burdensome medical expenses of more than 5 percent of family income.
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