Study: Health Insurance Too Expensive for Many

John Commins, for HealthLeaders Media , May 11, 2009

Most families who aren't covered under an employer-based health plan can't afford to buy health insurance on their own, a new study by HHS' Agency for Healthcare Research and Quality shows.

The study, Wealth, Income, and The Affordability of Health Insurance, published in the May/June 2009 issue of Health Affairs, shows that measuring families' median net worth—the value of their savings, plus other assets, minus debt, rather than just income—provides more precise estimates of the percentage who could purchase policies if they chose to do so. Until now, most studies have used income alone to estimate how many more Americans could be covered by health insurance.

The study challenges the contention that the 23.8 million uninsured Americans under age 65 who don't have an employer-based health plan but have incomes above the federal poverty line can afford insurance but choose not to purchase it.

"This study has important implications for defining who can afford to pay for health insurance in the next wave of healthcare reform," says AHRQ Director Carolyn M. Clancy, MD. "We need accurate, evidence-based findings to ensure that we are providing policymakers with reliable information."

The survey found that the median net worth of families who purchased health insurance was $105,819—nearly 35 times greater than the median net worth of only $3,057 for families who were uninsured. Median net worth means that half the families had net worth above or below that amount. In contrast, the median income of families who purchased health insurance was $41,086—only 2.3 times greater than the median income of $17,690 for families who were uninsured.

Using 2002 and 2003 data from AHRQ's Medical Expenditure Panel Survey, the survey also found that 4.1% of families with access to employer-based health insurance were poor (family income below 100% of the federal poverty line) and 11.1% were low income (family income 100-199% of the federal poverty line). Among families without access to employer-based health insurance, 33.8% were poor and 28.4% were low income.

Didem Bernard, an AHRQ economist, says the model based on income alone works for estimating who will enroll in employer-based health insurance. It does not work well for who will purchase non-group coverage, however, because it overestimates health insurance enrollment for people with low net worth and underestimates for people with high net worth.

John Commins is a senior editor with HealthLeaders Media.

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