Even Moderate Medical Costs Mean Hardship

Copays, deductibles, and uncovered expenses are pinching already strapped families.

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Copayments are forever. The debate over healthcare affordability often focuses on monthly premiums, but it's the relentless, never-ending drain from copayments and other expenses not covered by health insurance that often gets people into trouble. And these days, people are financially stretched to the point where it doesn't take much to cause hardship: Expenses exceeding just 2.5 percent of family income can do it, according to a study released today by the Center for Studying Health System Change. At that level, a third of families reported having problems covering their medical bills, more than twice as many as had trouble when their bills were below 2.5 percent of family income.

We're not talking about huge sums of money. According to the survey of 14,500 people under age 65, out-of-pocket medical expenses of just $500 or less were enough to cause 40 percent difficulties, while nearly two thirds of those who said they struggled had less than $1,000 in expenses. "As healthcare costs continue to rise rapidly amid a sharp economic downturn, out-of-pocket medical expenses are straining family budgets, leaving even insured families with little cushion to weather unexpected illnesses or injuries," Peter Cunningham, an HSC senior fellow, said in a release announcing the study, which he coauthored.

This is hardly the first report to examine the strain that rising healthcare costs place on families. A Commonwealth Fund study found that in 2007, nearly two thirds of adults either struggled to pay their medical bills, were under- or uninsured, or went without needed care because they couldn't afford it. Between 2001 and 2007, the number of people who said high healthcare costs prevented them from getting the care they needed grew from 29 percent to 45 percent.

Meanwhile, as I reported last fall, even though premiums went up a relatively moderate 5 percent last year, that still left the typical family on the hook for $3,354, according to the Kaiser Family Foundation annual employer survey. More troubling, 18 percent of people said they had a healthcare deductible of $1,000 or more, significantly up from 12 percent the year before. As this new HSC study shows, $1,000 is more than many people could pay without running into financial trouble.

Sure, there are steps you can take to save on your medical bills, as I've written before. But those are Band-Aids, not cures. As the economy continues to falter, with more people expected to lose their jobs and health insurance in the coming year, these affordability problems are only going to become more acute. Health reform can't happen too soon.