25 Million Americans Are 'Underinsured'

Among the underinsured, 45 percent reported having difficulty paying bills, being contacted by collection agencies for unpaid bills, and curtailing their way of life to pay their medical bills, compared with 21 percent of people with adequate health insurance.

Also, underinsured people were more likely to have insurance plans that limit payments. They were also more likely to have high deductibles. For example, one quarter of underinsured people had deductibles of $1,000 or more, the report found.

However, premiums for the underinsured were similar to or higher than those paid by people with adequate insurance, the researchers found.

"Today in the United States you can have health insurance all year long but still go into medical debt or face bankruptcy when you get sick," Schoen said. "This erosion of insurance protection is putting patients, families and the nation's health and economic security at risk."

Kim Bailey, a senior policy analyst at Families USA, a health-care advocacy group, said she thinks the trend toward greater out-of-pocket costs for health care is likely to continue.

"It is clear that American families are facing a growing burden of out-of-pocket costs, and this is consistent with a decay in the comprehensiveness of health benefits being offered," she said.

Bailey noted that between 2000 and 2007, the average family premium for employer-sponsored insurance rose more than 90 percent. "We are getting to a place were a number of people are feeling the squeeze," she said. "This report highlights the thinning of benefits on higher income people and that is new. That indicates to me that a call for change is likely to be strengthened."

Another expert said the new report probably underestimates the problem of underinsurance.

"There are a whole lot of ways to be underinsured that the report does not capture," said Dr. Steffie Woolhandler, an associate professor of medicine at Harvard Medical School and co-founder of Physicians for a National Health Program.

The deductible is only a fraction of the total amount one has to pay out-of-pocket, Woolhandler said. "In addition to the deductible, there are issues such as co-insurance and the issue of uncovered services, which are not part of the deductible," she said.

Woolhandler also noted that many people lose their job and their health insurance when they become disabled. "At least 25 percent of employers terminate employment the day you become disabled," she said.

More information

For more on health insurance, visit The Commonwealth Fund.

SOURCES: Kim Bailey, senior policy analyst, Families USA, Washington, D.C.; Steffie Woolhandler, M.D., associate professor, medicine, Harvard Medical School, Boston, and co-founder, Physicians for a National Health Program; June 9, 2008, teleconference with Karen Davis, president, and Cathy Schoen, senior vice president, The Commonwealth Fund, New York City; June 10, 2008,Health Affairs