Jeff Bingaman United States Senator from New Mexico

WASHINGTON – U.S. Senator Jeff Bingaman today chaired a hearing of the Senate Health, Education, Labor and Pensions Committee about the problem of underinsurance in the United States. As a way to prepare for the congressional debate of comprehensive health care reform, HELP Committee Chairman Kennedy tapped Bingaman to head a working group to study the issue of health care coverage.

Bingaman’s opening statement follows:

“Welcome, I thank everyone for coming today. As you know, Congress and the Obama administration have both signaled a strong interest in developing comprehensive health reform legislation this year. This legislation will focus on expanding health insurance coverage to all Americans, improving the quality of our health care system, and controlling the costs of our healthcare.   

“As part of the process of developing this legislation, Senator Kennedy has asked me to lead efforts in the HELP committee to develop coverage proposals. I am pleased to hold today’s hearing with Senator Enzi, which is the first in a series of hearings for the Committee around this issue. 

“Many are familiar with the very serious problem we face of uninsurance in America. 

“Approximately 45 million Americans are currently uninsured and this number is expected to grow as our economic difficulties worsen. Today’s hearing, however, is focused on an even more complex problem, that of “underinsurance.”

“Underinsurance is the term used to describe the problems that Americans with health insurance may face meeting their healthcare expenses. 

“Some experts define underinsurance as an insured individual whose family medical expenditures total 10 percent or more of their income or whose health plan includes deductibles greater than 5 percent of income.

“I have chosen to focus the first coverage hearing on underinsurance because it often goes ignored in health coverage discussions yet it impacts a very large segment of the American population. These are hard working Americans that pay every month for health insurance benefits. However, when they or their children become ill and rely on these befits, they discover that coverage is not comprehensive and they end up having very significant out of pocket costs.

“Underinsurance occurs because health insurance plans may have significant cost-sharing requirements. It also may occur because certain conditions or treatment may be excluded from coverage, often as “pre-existing conditions” – this is particularly problematic in the individual insurance market.

“And finally, plans may have overall limits on benefits that fall far short of enrollees’ needs -- such as a cap on the total number of days that enrollees may stay at a hospital or aggregate lifetime limits on the total payments that may be made for a service.  

“In the end, these insured individuals may be left with thousands upon thousands of dollars in healthcare expenses, which become unmanageable. 

“Of course extending a very rich benefit package to everyone may lead to overutilization of unnecessary health care which would then drive up costs.

“The question of the right balance between underinsurance which can lead to individual financial risk or avoidance of needed health care leading to poor health outcomes and overinsurance which can drive up health care costs is a difficult one, and one that must be addressed if we are to have meaningful health care reform.

“Evidence indicates that the problem of underinsurance is increasing at an alarming rate.  

“For example, according to a study done by the Commonwealth Fund the number of underinsured in 2007 is estimated to be 25 million people –representing a 60 percent increase since 2003.

“In fact, Commonwealth reports that if you combine the underinsured with uninsured, 41 percent of Americans report difficulty paying their medical bills. That’s a 20 percent increase in two years.  In addition, we will hear more today about underinsurance resulting in Americans forgoing critical care. According to Kaiser Family Foundation, families with private insurance and medical debt were 3 times more likely to skip tests as those with private insurance and no debt and 25 percent of these folks postponed care due to cost compared to 6 percent of privately insured without medical debt. 

“These effects are even greater on low-income individuals. For example, according to a RAND study, children in low-income families were significantly less likely to receive needed routine, preventive, and acute care if it included cost sharing compared to children in families with no cost-sharing requirements.

“At its worst, underinsurance results in Americans losing their financial security. Some experts believe that more than half of bankruptcies in the United States are due at least in part to medical debt. For example, Health Affairs reported that in 2001 1.5 million Americans filed for bankruptcy and half of those reported medical expenses as the cause. Even more startling, 75 percent of these individuals had medical insurance when they fell ill. These bankruptcies occurred in both low-income and middle-income families.

“Of course, as we face continued economic uncertainty and Americans have less financial resources to deal with their healthcare costs, this issue only grows in importance.  It is critical that as Congress considers health expansion proposals, we ensure that our efforts result in meaningful coverage that is affordable. We cannot consider our expansion efforts successful if insured Americans are left with continued economic instability. 

“The bottom line is that health insurance should function as insurance – meaning it should result in limiting the financial liability of Americans for their healthcare in a meaningful and predictable way. 

“We are very fortunate, today, to have such an esteemed group of panelists before us. I am looking forward to hearing from each of them.”