By Bethany Pray

The Colorado Health Institute’s Colorado Health Access Survey (CHAS) data released earlier this month shows encouraging evidence that health care policy changes are resulting in more Coloradans getting health insurance coverage. According to the report, the rate of Coloradans without insurance dropped to a historical low of 6.7 percent — or 353,000 people. Meanwhile, a mere 2.5 percent of children are going without coverage. Much of the coverage growth can be attributed to two changes brought by the Affordable Care Act: Medicaid expansion and the availability of subsidized coverage through Colorado’s health care exchange, Connect for Health Colorado.

Bethany Pray

Yet, despite improvements in coverage, many Coloradans are “underinsured” — meaning that they lack adequate protection against high health costs relative to their income. CHAS defined people as underinsured if they had spent a substantial share of their income on out-of-pocket medical expenses — with the share set at 5 percent or 10 percent depending on the level of income. For example, a family of four with an income of $50,000 would be underinsured if their out-of-pocket expenses exceeded $5,000. A young adult with an income of $22,000 would be underinsured with expenses of $1,110 or more. In 2015, CHAS categorized almost one-fourth of those covered through the individual market as underinsured and 16 percent of Coloradans overall. We would argue that the actual number of the underinsured is likely to be even larger than CHAS suggests, for reasons explained below.

Who is underinsured?
According to CHAS data, those most at risk of underinsurance have lower incomes, are young, have health problems or live in rural areas of Colorado. For those 19 to 29, more than 20 percent were underinsured. While data on African American and Latino populations is not yet available through CHAS, the lower median income for both groups makes it likely that underinsurance is higher for those groups as well.

Do the figures capture all those who are underinsured?
The numbers of underinsured may be significantly larger than CHAS data suggest. The CHAS data identify those people who actually spent over a certain amount for health care. The numbers failed to capture those who were either at risk of having to spend significant portions of their household income on health care, or those who had health care needs they could not afford to treat. Take the case of Holly Wilson, an employed Denver resident who declined to take blood pressure medication for three months because her $2,500 deductible made it unaffordable.

In an effort to capture that additional sector of the underinsured, studies from The Commonwealth Fund included a third group – people whose deductibles exceeded 5 percent of family income – in their definition of the underinsured. In 2014, half of those characterized as underinsured by The Commonwealth Fund fell into that category because of high deductibles alone. Use of this standard could mean that Colorado has twice as many underinsured as reported in CHAS, and that as many as half of low-income adults (under 200 percent of the federal poverty level [FPL]) are underinsured.

Deductibles tend to be higher in the West, and Colorado’s average is a formidable $3,476, according to a report from The Commonwealth Fund. Based on The Commonwealth Fund’s definition, a family with the average Colorado deductible would be underinsured if its annual earnings were less than $69,520. CHAS data on the percentage of people who skip care because of cost provides a window into this additional group of the underinsured. Although many Coloradans now have insurance, CHAS figures from 2015 regarding those who forgo care are close to 2013 levels: 9.8 percent failed to fill a prescription, 10.4 percent failed to see a doctor, 11 percent failed to see a specialist and 17.1 percent did not see a dentist.

Are large deductibles really so hard for people to afford?
What underinsurance points to may be a disconnect between financial realities for most Coloradans and the substantial deductibles that have increasingly become a component of most plans. A recent Kaiser Family Foundation study found that nationally, only 32 percent of lower-income households (defined as those between 100 and 250 percent of the FPL) had sufficient resources to pay a $1,200 individual deductible or $2,400 family deductible. Until he or she exhausts that deductible, an individual must pay full price for office visits, medical procedures and medications. With a higher deductible – such as Colorado’s average of $3,476 – even many of those with higher incomes will struggle to cover costs. Kaiser’s data indicate that only about 40 percent of households between 250 and 400 percent of the FPL could cover a deductible in the range of Colorado’s average. Among those who make more than 400 percent of the FPL, almost a third still lack sufficient on-hand resources.

Another Kaiser study quotes a Federal Reserve conclusion that “only 48 percent of Americans would be able to completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money.” Anyone who encounters a brief hospitalization or has a child newly diagnosed with asthma is likely to have to come up much more than that — even before cost-sharing begins.

What are the effects of underinsurance?
Those who are underinsured may risk bankruptcy and debt, may have to cut back on other essentials, and may lack access to care. Although historically one of the worst outcomes of underinsurance was medical bankruptcy, the ACA’s cap on out-of-pocket expenses appears to have made inroads on this issue. CHAS data indicate that medical bankruptcy has declined by more than 50 percent in Colorado since 2013.

However, people continue to incur debt or suffer other financial consequences. For the 15.2 percent in Colorado who continued to have difficulty paying medical bills, about two-thirds saved less or took funds out of savings, and almost half took on credit card debt. A comprehensive 2009 analysis by CCLP on the affordability of health care found that when health care consumes more than 5 percent of family income, families had to cut back on other essential expenses such as food, transportation, housing, clothing and child care to pay for it. Those whose income was 200 percent of the federal poverty level or less had essentially no funds to devote to health care costs, so any medical expense was unaffordable.

Lack of access to care may be the greatest concern, if it results in worse health outcomes and potentially greater hospital or emergency-room costs. Had Cathy Wilson’s failure to treat her high blood pressure led to a stroke, the financial and personal consequences could have been devastating.

Where do we go from here?
If Colorado’s goal is to have people not just insured, but able to get the care they need without incurring debt, more work must be done. Purchasers of insurance need to know how high or even moderate deductibles might affect their access to care and their household budgets, so that monthly premium costs are not considered in a vacuum. And policymakers might consider the causes of rising deductibles, look into why the West in particular has outpaced other regions in terms of average deductibles, and make changes so that “access” is more than just theoretical.
Bethany Pray is health care attorney for the Colorado Center on Law and Policy.