Skip to main content
Informing Policy. Advancing Health.

When Insurance Is Not Enough

I have health insurance, so I should be financially safe when I need medical care, right?  The answer for me – and for most others with insurance - is “It depends.”

It depends on the type of insurance coverage that we have purchased or that our employer has purchased. And it depends on how much medical care we require.

Most insurance plans assess a certain amount of out-of-pocket costs when you use medical care.  These costs can take the form of co-pays, co-insurance, and prescription drug expenses, for example.  Under some insurance plans, these costs, excluding the cost of the insurance policy itself, can add up to a significant portion of your income.

This is how we define underinsurance: Families earning at least double the federal poverty level (FPL) who spend at least 10 percent of their annual income on out-of-pocket medical expenses and families earning below that threshold who spend at least five percent of annual income on out-of-pocket medical expenses.

A Colorado Health Institute brief –When Insurance Is Not Enough: How Underinsurance Impacts Health and Finances - released today explains underinsurance and why it matters for Coloradans. A person with inadequate insurance may pass up needed medical care because of cost, and a family’s financial security can be jeopardized by a big bill their insurance policy doesn’t cover.  The average annual out-of-pocket costs for the underinsured was more than $3,000 compared with  less than $400 for the adequately insured.   

We also track the underinsured to understand how policy changes may affect them.  New policies in the Affordable Care Act address the minimum amount of medical costs that a plan has to pay and provides tax subsidies to make buying insurance more affordable. Other provisions require insurance plans to pick up the full cost of a number of preventive medical services and provides out-of-pocket cost sharing for lower-income persons who buy a silver-rated insurance plan on the health insurance exchange.  

The 2013 Colorado Health Access Survey (CHAS) is Colorado’s tool for assessing underinsurance across the state.  This data is a baseline for looking at the impact of the policy interventions mentioned above.

CHAS tells us that about 14 percent of Coloradans were underinsured as of 2013, or 721,000 residents. This is nearly the same percentage and number of Coloradans that were uninsured. These numbers put Colorado in about the middle of all the states counts of the underinsured, ranging from a low of eight percent to a high of 17 percent.  We also know that the underinsured in Colorado tend to be older, aged 50 and above, and are more than twice as likely as the adequately insured to report fair or poor health status. 

Health insurance coverage and its cost is changing following implementation of the Affordable Care Act.  Underinsurance is one of a number of coverage issues that the Colorado Health Institute is monitoring with interest.