Insured and in debt: Even with coverage Californians struggle to pay medical bills

More than 2.2 million California adults report having medical debt, and two-thirds of those incurred the debt while insured, according to the authors of "The State of Health Insurance in California (SHIC)," a comprehensive new report from the UCLA Center for Health Policy Research.

In total, nearly one in seven non-elderly adults in California (13 percent) have some kind of medical debt, and more than 800,000 Californians have medical debt greater than $2,000.

The state's Northern and Sierra counties are the most affected, with nearly 25 percent of the population having medical debt of some kind. Central Coast counties also had high percentages of debt.

Individuals with medical debt are twice as likely as those without debt to delay or forgo needed health care, the report found.

"That even insured people are forced to take on medical debt to pay for their health care is another glaring inadequacy in our current system of health insurance," said E. Richard Brown, director of the UCLA Center for Health Policy Research and lead author of the SHIC report. "Current policies either do not offer enough coverage or offer full-coverage at a cost that is too expensive for many people to bear.

"The result is that too many people have health insurance plans that leave them financially vulnerable and force them to delay the care they need."

The biennial SHIC report, produced by the UCLA Center for Health Policy Research with support from The California Endowment and The California Wellness Foundation, presents a representative view of the troubled state of health insurance coverage at a crucial moment, as members of Congress debate the merits of national health insurance reform.

The report, based on the latest data from the California Health Interview Survey (CHIS), the nation's largest state health survey, is the most comprehensive examination of health insurance coverage in the nation's most populous and diverse state.

"Heath coverage is supposed to protect Americans from the financial burden of health care costs," said Dr. Robert K. Ross, CEO and president of The California Endowment. "Americans should be outraged that the very system that they depend on for health care no longer offers that protection."

Specifically, the SHIC report found:

Medical debt results in delays in care
Californians with medical debt were much more likely than those without debt to delay getting the care they needed.

• Those with debt were twice as likely to report delays in care: 32.3 percent reported delays in getting needed care, compared with 16.1 percent of those without medical debt.
• Delays were higher as the amount of debt increased: Among those with more than $8,000 of medical debt, 43 percent reported delays in getting care.
• Debt can lead to loans and bankruptcy: Among those with medical debt, more than half (55.4 percent) reported financial consequences ranging from an inability to pay for basic necessities to credit card debt to a declaration of bankruptcy.
• High-deductible plans may contribute to medical debt: Nearly 40 percent of individuals with privately purchased insurance coverage chose plans with deductibles of $1,000 or more or, for a family plan, $2,000 or more.

Health insurance coverage is stagnating
In 2007, at the height of an economic expansion, 6.4 million Californians were uninsured for all or part of the year, a number that has changed little since 2001. Specifically:

• There has been little change in employment-based insurance: Job-based insurance covered 56.4 percent of the total non-elderly population in 2001; in 2007, coverage was at 55.6 percent.
• Employment-based children's coverage has declined: Slightly more than half (52.2 percent) of children in California were covered by their parent's employer's policy in 2007, a rate nearly three percentage points lower than in 2001 (55.1 percent).

Public coverage is flat: Coverage of children and non-elderly adults by Medi-Cal (California's Medicaid program) and Healthy Families (California's State Children's Health Insurance Program) remained flat between 2005 and 2007, at 15.3 percent.

"It raises questions about the effectiveness of the current market-based system of private health insurance," said Dr. Shana Alex Lavarreda, director of health insurance studies and a co-author of the report. "If, at the height of an economic expansion, California's health insurance coverage was still weaker than in the past, then what does that say? It suggests that our health insurance system is at its straining point and millions of people are falling through the cracks."

In 2007, at the peak of this decade's economic expansion, 6.4 million Californians, including 1.1 million children, lacked insurance all or part of the year. Since then, the recession, severe cuts to state programs that insure children and the doubling of the state's unemployment rate have pushed the number of uninsured even higher, the report's authors say.

"With more than 6 million Californians uninsured and more than 1 million who have health insurance in medical debt, the need for comprehensive health care reform is clear," said Gary L. Yates, president and CEO of The California Wellness Foundation. "However, no matter what the outcome of reform efforts, adequate funding for the health care safety net — community clinics, public and nonprofit hospitals — must be maintained to ensure access to care for the state's uninsured and underinsured."

Percent with Medical Debt by Region,
California, 2007, Ages 19 - 64

* CI = Confidence Interval. The 95% confidence interval is the range around the point estimate in which there is 95% certainty that the true estimate lies.
Source: 2007 California Health Interview Survey

Percent with Medical Debt by County,
California, 2007, Ages 19 - 64 

* CI = Confidence Interval. The 95% confidence interval is the range around the point estimate in which there is 95% certainty that the true estimate lies.
Source: 2007 California Health Interview Survey

The California Health Interview Survey (CHIS) is the nation's largest state health survey and one of the largest health surveys in the United States.