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The New Healthcare Crisis: When Having Health Insurance Isn't Enough

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Health Insurance Is Not a Safety Net

As it turns out, simply having health insurance is not the safety net you think it is. Most plans, even the ones many Americans get through their employer, are limiting their policies to offset the ever-rising cost of medical procedures. Approximately one in seven American adults with insurance was "underinsured" in 2007, according to a survey by the Commonwealth Fund, an independent health-research organization. Translation: Twenty-five million people spent 5 percent to 10 percent of their income on out-of-pocket health costs, up from 16 million in 2003. The consequences are staggering: Since 2000, five million families have filed for bankruptcy after incurring medical debt, according to Elizabeth Warren, a Harvard Law School professor. And 76 percent of them had health insurance.

It's no surprise, then, that the underinsured are becoming increasingly unhealthy. More than half report skipping doctor's visits because they can't afford them or because they must spend the money on food, gas, rent, and mortgages. That means missing annual ob-gyn exams, mammograms, and general checkups -- the kinds of preventive care that help you catch a serious ailment before it becomes untreatable. Once sick, the underinsured often fall into a gap: They have too much coverage to qualify for Medicaid or free drug programs run by pharmaceutical companies but too little to cover the expense of treatment. Some women would actually be better off if they let themselves go broke. "To qualify for Medicaid, you can't have assets of more than $2,000," says Nancy Davenport-Ennis of the National Patient Advocate Foundation. "There is no safety net if you are diagnosed with a serious illness and have inadequate insurance."

Even the healthy are at risk. Last year the percentage of workers with annual deductibles greater than $1,000 (for single coverage) rose from 12 percent to 18 percent, a trend that experts anticipate will continue as employers try to cut costs. That means an unexpected injury, such as a broken foot or sprained ankle, could cause you to rack up significant medical debt before your coverage kicks in. The average cost to set a broken arm is $6,700 (according to a government survey of U.S. hospitals); even with insurance, a woman could be on the hook for $1,000, plus co-pays of $35 for follow-up visits. And that doesn't include treatments that some policies don't cover at all, like physical therapy.

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