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Commercial health insurance fails to protect people from financial ruin

Written by Diane Archer

People not yet eligible for Medicare are generally expected to “pick the commercial health insurance that is right for them.” The clear implication is that they could easily pick commercial health insurance that is wrong for them. Given that most people have poor health plan choices, it is likely that they often do pick coverage that does not meet their needs. Margot Sanger-Katz reports for the New York Times on a new survey of nearly 1,500 Americans with costly health care needs, revealing that commercial health insurance too often fails to protect people from financial ruin.

Commercial health insurance no longer offers financial security to most people needing costly health care. Even with insurance, it is easy to deplete one’s savings. More than one in three people surveyed who had costly health care needs spent the majority, if not all, of their savings on health care–deductibles, copays and uncovered services. To be clear, about 40 million Americans have complex conditions requiring significant amounts of health care.

The unfortunate reality is that this inadequate coverage costs too much, and health care costs keep escalating. A new Kaiser Family Foundation report shows that the typical employer is paying about $14,100 on family health care coverage for each worker. This money would otherwise be going to workers’ wages. In addition, workers are paying a greater amount for their coverage, $5,550, on average, up 65 percent from ten years ago.

Deductibles have increased as well. They are more than triple what they were in 2008. In 2008, they averaged $433, while today they average $1,350 a year.

People without health insurance face even more dire financial predicaments than people with insurance. But, insurance does not provide the protection from financial risk that you might assume, especially for people who need a lot of care. And, because commercial insurers do not have to provide you with information about what they will pay for, the amount they will pay, and what you are responsible for, people cannot budget for their care.

More than four in ten people surveyed faced large out-of-pocket costs for their hospital stays. And, more than one in four people reported that their insurer did not cover treatments their doctors recommended.

A majority of people needing costly care are forced to stop working or to work less. Their decreased income only aggravates their financial well-being. Family and close friends may also suffer financially. Nearly one in four people surveyed, 23 percent, reported that friends and family experienced financial challenges as a result of caring for someone in poor health.

In short, our health care system forces people to make choices no one should have to make–among health plans that are expensive and may not meet their needs and, when they get sick, between basic necessities, such as food and health care.

Medicare for All, federally administered health care, an improved and expanded traditional Medicare, is the only realistic way to bring down health care costs and the best way to guarantee everyone in America good, affordable cradle to grave coverage. If you support Medicare for All, please sign this petition to Congress.

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1 Comment

  • It’s unfortunate that Health Insurance is so misconstrued. Traditionally insurance is intended to protect against catastrophic financial loss. Somehow in the case of Health Insurance it has become the mechanism for delivery of health services and the insurance part has been lost. Policies put restrictions on who can provide services and which services and procedures are allowed. Generally speaking Health Insurance is for the under age 65 population since in most cases Medicare takes over at age 65. However even Medicare doesn’t protect individuals from catastrophic financial loss. There are too many gaps and even with the most comprehensive Medigap Insurance losses often occur for long term care. Of course there is also Long Term Care Insurance for this but few seniors have this coverage. There is also Disability Insurance to cover lost income but when added to the cost of regular Health Insurance the costs for all these programs are exorbitant. Even for the under age 65 population long term care needs can cause bankruptcy. Long Term Care after bankruptcy is paid for by Medicaid, the health insurance program for the indigent. That’s where far too many people end up.

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