Many With Insurance Still Bankrupted by Health Crises

Health insurance is supposed to offer protection — both medically and financially. But as it turns out, an estimated three-quarters of people who are pushed into personal bankruptcy by medical problems actually had insurance when they got sick or were injured.

And so, even as Washington tries to cover the tens of millions of Americans without medical insurance, many health policy experts say simply giving everyone an insurance card will not be enough to fix what is wrong with the system.

Too many other people already have coverage so meager that a medical crisis means financial calamity.

One of them is Lawrence Yurdin, a 64-year-old computer security specialist. Although the brochure on his Aetna policy seemed to indicate it covered up to $150,000 a year in hospital care, the fine print excluded nearly all of the treatment he received at an Austin, Tex., hospital.

He and his wife, Claire, filed for bankruptcy last December, as his unpaid medical bills approached $200,000.

In the House and Senate, lawmakers are grappling with the details of legislation that would set minimum standards for insurance coverage and place caps on out-of-pocket expenses. And fear of the high price tag could prompt lawmakers to settle for less than comprehensive coverage for some Americans.

But patient advocates argue it is crucial for the final legislation to guarantee a base level of coverage, if people like Mr. Yurdin are to be protected from financial ruin. They also call for a new layer of federal rules to correct the current state-by-state regulatory patchwork that allows some insurance companies to sell relatively worthless policies.

“Underinsurance is the great hidden risk of the American health care system,” said Elizabeth Warren, a Harvard law professor who has analyzed medical bankruptcies. “People do not realize they are one diagnosis away from financial collapse.”

3 Open Enrollment Tips

WITH ALL THAT'S going on in the market, it would be nice to think you could leave your health care on autopilot — but you'd be wrong. This October, as usual, 158 million American workers will have to make seemingly small but ultimately crucial decisions, as corporate America shifts more of its $537 billion health care burden onto workers. "People need to be more thoughtful about their choice than in the past several years," says Jay Savan, a principal with the professional-services firm Towers Perrin — especially if they don't want to get stuck with hefty bills. Some tips on being choosy:

Watch for hidden costs
Read the fine print: One trend Savan expects to see grow is surcharges — sometimes as high as $150 each month — for employees who opt to cover a spouse or child who could get benefits elsewhere. And the consultancy Mercer Health & Benefits estimates that 25 percent of large employers will offer prescription-drug plans that make employees pay a portion of drug costs instead of a simple copay. That'll sting if you're on, say, a $14,000 cancer drug.

Snag incentives
Being healthy can be good for a lot more than your waistline. In 2007 almost one in four large companies offered workers incentives for healthy behavior, a trend experts say will mushroom in 2009. Alexander Domaszewicz, a principal at Mercer, says he's seen perks such as lower deductibles and even a month of benefits for healthy decisions like losing weight. Don't lie, though: "That's like stealing from the company," Domaszewicz says, and can be a fireable offense.

Don't fear health-savings accounts
With caps on out-of-pocket costs and coverage for most preventive screenings, these plans can be a good deal, especially for the very sick or for very healthy consumers looking to sock away pretax funds. Balance the huge amount you'll save in premium costs against your exposure, Savan says. Many insurers' Web sites can help evaluate various plans.

Health care costs taking growing bite out of farm incomes

Too many farmers don't have enough -- if any -- health insurance simply because it costs too much. And, for those without adequate insurance, health care costs are taking a growing bite out of their wallets.

As a result, one group says it's Congress' job to "develop alternatives to a private market that is unwilling or unable to provide affordable protection to the self-employed and small business owners."

The Boston-based health care watchdog group The Access Project on Wednesday released a report entitled Who is Uninsured? that shows a growing number of farmers and ranchers are having trouble making ends meet while keeping adequate health insurance coverage. It's causing either excessive debt or delays in seeking care, which can exacerbate medical conditions.

Ten percent of farmers don't have health insurance, and on average, the uninsured are spending 10% of their income on health care costs. While the prior number is slightly lower than the percentage of those uninsured in the U.S. population in general, growing expenses are making it tougher for farmers to get by without insurance.

"Those most reliant on income derived from the family farm or ranch are least likely to be able to afford private health insurance" says Carol Pryor, lead author of the report and Policy Director at The Access Project. "This threatens both their health and their livelihoods."

The report that's based on a survey of farmers and ranchers in Iowa, Minnesota, Missouri, Montana, Nebraska, North Dakota and South Dakota, also found:

Farmers and ranchers delayed care more than twice as frequently as those with insurance;
40% of uninsured use savings or take out loans to pay for health care costs;
34% of the uninsured spend 10% or more of their income on health care;
32% say health care costs "contributed to financial problems;
32% accrued medical debt.

Because of the trend these numbers show, Center for Rural Affairs director of rural research and analysis at the Center for Rural Affairs in Lyons, Nebraska Jon Bailey says plans to reform the health care system nationally must take into account the needs of rural businesses and communities.

"Health reform that continues to rely solely on the private insurance market and attempts to strengthen employer-provided insurance, no matter how regulated or reformed, will be irrelevant to a large number of rural people," Bailey says in an Access Project report. "If you want farmers to continue growing the food for our families, and if you want rural communities to thrive, then availability of affordable and quality health insurance must be effectively addressed."

Partisan Ire Surfaces as Senators Start Work on Health Bill

WASHINGTON — Partisan anger flared Wednesday as senators began the public drafting of legislation to remake the health care system. By day’s end, lawmakers had settled in for a long, hard slog that may not fit with President Obama’s goal of signing a bill within four months.

“This is about as historic as it gets for all of us,” Senator Christopher J. Dodd, Democrat of Connecticut, said as he opened a day-long session of the Committee on Health, Education, Labor and Pensions.



Another Senate committee, dogged by questions about the cost and complexity of the legislation, postponed its session, scheduled for next Tuesday, until after July 4. Democrats said they needed the delay by the Finance Committee to work on reducing the cost of the bill, intended to provide insurance to millions of people with no coverage.

Mr. Dodd presided over the health committee in the absence of its chairman, Senator Edward M. Kennedy, Democrat of Massachusetts, who is battling brain cancer.

Senator Dodd said he hoped the committee would finish its work and approve a bill by June 26. But he told his colleagues, “My intent is not to jam anything, force anything on people.”

Within 15 minutes after the session started Wednesday, Republicans began to protest. Senator John McCain, Republican of Arizona, said it was ridiculous to take up such a large bill without a complete cost estimate.

He and other Republicans demanded more details of the legislation and more time to digest it.

Senator Orrin G. Hatch, Republican of Utah, said Democrats had made some grave errors.

“You advance legislation by focusing on areas of compromise, not strife,” Mr. Hatch said. “Now unfortunately we are beginning a partisan exercise on perhaps the most important legislation of our lives. I am personally somewhat, well, actually, very disappointed, because I wanted a thoughtful bipartisan compromise that could have become a lasting legacy for my dear friend, Ted Kennedy.”

President Obama is pressing Congress to speed work on the measures, which embody his top legislative priorities, reining in health costs and covering the uninsured. Mr. Obama wants to sign a bill by October, but senators of both parties said it was more important to get the policy right.

The bill before the health committee, drafted by Mr. Kennedy and Mr. Dodd, would require people to carry insurance, with federal subsidies for those who could not afford it, and would require most employers to help pay for coverage of their employees.

The bill would impose stringent new federal regulations on insurers and make far-reaching changes in the health care industry, which accounts for one-sixth of the economy.

Senator Michael B. Enzi of Wyoming, the senior Republican on the health committee, said the panel was moving “too fast to do an adequate job.”

Mr. Dodd said, “I appreciate the frustrations being expressed,” but plowed ahead. “We have a moral imperative to act,” he said.

Mr. Enzi said the bill had been drafted “with no input from Republicans,” and he asserted, “The bill costs too much, covers too few and will cause 10 million Americans to lose the insurance they currently enjoy.”

A preliminary estimate by the Congressional Budget Office said the bill would cost $1 trillion over 10 years but leave many uninsured. The office said an early version of the Finance Committee bill would cost $1.6 trillion.

Senate Democrats conceded that the unexpectedly high estimates had forced them to regroup, and acknowledged that they were still divided over how to pay for the legislation.

But Robert Gibbs, the White House press secretary, said he did not see any setback. “The president, I think, has laid out a timeline to get this done this year, and thinks that we’re on course to do it,” he said.

Senator Judd Gregg, Republican of New Hampshire, said he was on the committee when it considered President Bill Clinton’s plan for universal coverage in 1993-4. “It’s sort of déjà vu all over again for me,” he said.

Mr. Gregg said the Kennedy bill looked as if it had been written by Rube Goldberg, Karl Marx and Ira C. Magaziner, Mr. Clinton’s health care coordinator. Mr. Gregg criticized a provision that would establish a Medical Advisory Council to recommend minimum benefits for insurance policies.

“This is the elite of the elite deciding how everybody else will get health care,” Mr. Gregg said.

Senator Barbara A. Mikulski, Democrat of Maryland, fired back. “Our current system is a combination of Adam Smith, Darth Vader and the ‘Invasion of the Body Snatchers,’ ” she said. “So I like our plan the better.”

Ms. Mikulski said the Republicans’ complaints reminded her of objections to the creation of Medicare in 1965.

“The arguments against Medicare are the same arguments we are hearing now — government control, centralized bureaucracy,” she said. But, she noted, Medicare is hugely popular.

Senator Bernard Sanders, independent of Vermont, said, “The fight for comprehensive, universal health care is the civil rights struggle of the moment.”

And he issued this warning: “To all the lobbyists, all the big-money interests who give us campaign contributions and lobby so successfully with those 30-second ads on TV, I say your time has come and gone.”

Mr. Obama and many other Democrats have called for a new public health insurance plan, to compete with private insurers.

Senator Sherrod Brown, Democrat of Ohio, said such competition would “hold down premiums, discipline the market and keep the private insurances industry on its toes.”

But Mr. Hatch said, “Medicare and Medicaid are already on a path to fiscal insolvency; creating a brand-new government program makes no sense.”

Health insurance for men: what are the best options?

Should men be taking a closer look at health insurance, following news this week that they are more likely than women to get many common types of cancer?

More worrying still, this research showed that men are far more likely to die of certain cancers, compared to women with the same condition.

Although the report, from the National Cancer Intelligence Network, found "no biological reason" why this should be so, it is thought men's unhealthier lifestyles and their reluctance to get symptoms checked by a doctor at an early stage are largely to blame.

Of course, spending hundreds of pounds a year on health insurance won't stop you getting cancer – or any other disease for that matter. But it will ensure that you are in a better position to deal with the financial consequences of serious illness; and taking a more active interest in your health may mean that early signs are detected sooner.

The question remains though, what type of health insurance is best?

There are a number of different types of policy. The best known is probably private medical insurance (PMI), which basically pays for private consultations and treatments, allowing policyholders to bypass NHS queues. Some employers will offer this insurance to staff, and it can also be bought individually. The main drawback is that it can prove expensive for comprehensive cover – particularly as you get older.

Cheaper, and far more widely bought, is critical illness insurance, which is often sold to those taking out a mortgage along with basic life insurance. Rather than pay directly for private treatment, this insurance is designed to pay out a tax-free cash sum on the diagnosis of certain life-threatening diseases. The idea is that this money will enable policyholders to pay off the mortgage, reduce their working hours or take extended leave while they recuperate.

Most critical illness policies cover about 30 conditions, and all should cover cancer, heart disease and stroke. But within these broad definitions there are numerous exclusions. Certain types of breast, prostate and skin cancers, for example, which are not considered "life-threatening" are routinely excluded on most policies.

Another option is an income-protection policy. Rather than cover specific ailments, this pays out a regular income to those who are unable to work through ill health. Provided a doctor has signed you off sick, these policies should pay up, regardless of the nature or severity of the illness. As well as covering cancer and heart disease, these policies help those with back problems, stress or depression.

The final option is a "cash plan". These schemes are relatively cheap, but the benefits are more limited. However, those who contribute to one of these plans can claim a contribution to regular medical bills, such as dental charges, opticians fees, physiotherapy and so forth.

So what should you buy, given most of us don't have the inclination or the financial wherewithal to pay for them all?

Alan Lakey, a financial adviser specialising in protection policies, says: "Both men and women should ask themselves what would happen to their income if they had a long-term health problem or illness. Those who work for an employer like the police or the NHS may have more generous staff benefits that would pay long-term sick pay at a reasonable rate. But most people won't have this luxury to fall back on. If this is the case, then income protection should be your first port of call."

He said critical illness could be useful, but it does not offer the same flexibility. He added that some customers may want to opt for private medical treatment, but this in most cases is unlikely to be their main priority – particularly given the cost.

Matt Morris of Lifesearch, a firm of advisers, agrees: "Anyone with dependants or debts who relies on their salary to live should ensure that they have adequate income protection in place as a first priority. Ideally, everyone would have an income protection, critical illness and a basic life insurance policy – usually in that order of importance."

Further information on each of these main products is given in the linked stories below, so men and women can decide what policy would give them the protection they need.

Critical illness
Income protection
Private medical insurance