What is Underinsured?

In health and medicine, underinsured is a common term, and common state of being for many people in even wealthy countries like the US, and it has several definitions. Most commonly it means that people have some insurance but lack enough to truly cover medical costs, and as such, they either go without some necessary medical help or could end up in huge debt if they need significant medical care. Lack of insurance or being underinsured is one of the reasons why so many people fear financial ruin, simply due to perhaps a single surgery.

There are several ways to look at how inadequate insurance operates. People with lower incomes may have insurance, but these low incomes can still make them underinsured. If income means a person can’t afford copayments, deductibles or a percentage of the cost for procedures, hospitalization and surgeries, they may have to skip treatment unless it is a life or death situation. Thus, they pay for insurance, but may not be able to use it because the insurance doesn’t cover enough to make medical care truly accessible.

Those with larger incomes, especially above $200,000 US Dollars (USD) in the US are statistically less likely to be underinsured. They tend, even if their insurance doesn’t fully cover them, to be able to afford copayments, deductibles and share of cost. People who are very wealthy may be able to get by with things like catastrophic insurance, which only kicks in to cover medical costs if they exceed a certain amount.

On the other hand, when wealthy people or those of comfortable incomes don’t carry insurance, or don’t carry enough, they can still have less insurance than they need. Emergency medical costs could cause them to lose their possessions and assets in order to pay medical bills, especially if they exceed policy maximums. A long-term hospitalization might quickly exceed a low policy maximum and make a person liable for all costs above the maximum that the insurance company will pay. Thus those with good incomes can be underinsured if they don’t purchase insurance with generous enough terms.

One problem with underinsurance is that people may not have much choice in the insurance policies they are offered by employers, and it is usually much more expensive to try to purchase insurance privately. Generally an employee has to take what an employer offers, if that employer offers anything. This means they have little negotiating power as individuals with an insurance company. They can’t, for instance, pay a little more to lower deductibles or copayments, but they may be desperate to keep what coverage they can in case of true emergency. This means paying an insurance company for fear of financial ruin without really getting appropriate medical care in return.

It’s certainly the case that the number of underinsured has increased, and it's commonly thought that people have seen an increase in insurance premiums at the same time that coverage has decreased. There are many potential solutions posed for this, including government sponsored health care or conversion to a single payer program, more regulation of the medical insurance industry, or a combination of government subsidy for those of certain incomes and many other price-cutting measures. Many believe that the high prices of health insurance and health care are one of the reasons so many people are struggling economically, and without addressing this, it may be difficult to improve the economic status of the underinsured.