What Health Care Reform Means for the Underinsured

By Olga Pierce and Sabrina Shankman

Using results from a questionnaire we did with American Public Media’s Public Insight Network, we’re looking at how the proposed health care reforms will actually affect people facing common health care coverage situations. See our previous posts on what health care reform means for the uninsured, small businesses, and those enrolled in Medicare programs.

Mary and Mack Kroner

Age: 53, 57

Location: Austin, Texas
Work Status: Employed
Health Care Status: Underinsured with a high deductible
Income: Combined $50,000 per year

Their story:

Mack is a self-employed cab driver and Mary is a self-employed writer; they both pay for their own health insurance. Though together they pay about $600 a month in premiums, they have what Mary Kroner calls “junk insurance.”

Rapidly rising premiums have forced them to increase their deductible every year, and now they have a policy with a $5,000 deductible per illness per year. That means that they’ve been paying essentially all their health care costs out of pocket. Mary pays $100 for her annual mammogram—a must because her sister had breast cancer—but she skips recommended pelvic exams. A recent colonoscopy recommended for Mack after he showed signs of bowel cancer cost them $1,376, roughly half their monthly income.

“We just bite the bullet and don’t attend to things because we can’t afford it,” Mary said.

What Health Care Reform Means for Them:

The Kroners would qualify to purchase insurance through a health care exchange because they are not part of a government program and do not have insurance through their employers. They could choose one from of an array of private plans, and one public plan, that conform to set levels of coverage.

The House plan would create a national exchange, the Senate plan state-based exchanges—and states would be able to opt out of the public option.

The plans in the exchange are likely to cost less for individuals like the Kroners because they pool risk, much the way that employer policies do. Setting levels of coverage also encourages plans to compete based on price.

Both the Senate and House plans would help the underinsured by requiring generous coverage for preventive care, like Mack’s colonoscopy and Mary’s mammograms. They would also cap out-of-pocket costs.

The Kroners would also qualify for government help in paying their premiums, but would fare slightly better with the Senate plan. Both plans offer subsidies on a sliding scale, which would ensure that people making less than 400 percent of the Federal Poverty Line would spend only a certain percentage of their salary on premiums. Mary and Mack make about 300 to 350 percent of the poverty line, which in 2009 is $14,570 for a family of two. Under the Senate plan, the Kroners’ premium would be capped at 9.8 percent ($4,900). That’s $2,300 less than they pay now. Under the House plan, their premium would be capped at 10 to 11 percent of their income ($5,000 to $5,500), which would save the Kroners between $2,200 and $1,700 from their current premium.

Under the Senate and House plans, the Kroners would also qualify for cost-sharing credits.

If the Kroners decided to keep buying private insurance outside the exchange, they would have to buy a policy that covered preventive services, pre-existing conditions, hospitalization and a series of other services (“essential benefits” in official jargon) or they would face a steep tax penalty under both proposals.

Under the House bill, that tax would equal 2.5 percent of their annual income, or $1,250. Under the Senate bill, which phases the penalty in over the next six years, by 2016 they would owe $750 a person, or $1,500.

Write to Olga Pierce at Olga.Pierce@propublica.org.