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With health insurance moving toward greater patient cost sharing, this study finds a sharp increase in the number of underinsured people. Based on indicators of cost exposure relative to income, as of 2007 an estimated twenty-five million insured people ages 19-64 were underinsured-a 60 percent increase since 2003. The rate of increase was steepest among those with incomes above 200 percent of poverty, where underinsurance rates nearly tripled. In total, 42 percent of U.S. adults were underinsured or uninsured. The underinsured report high levels of access problems and financial stress. The findings underscore the need for policy attention to benefit design, to assure care and affordability.

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To provide a baseline and assess the potential of changes brought about under the Affordable Care Act, this study estimates the number of US adults who were underinsured or uninsured in 2010. Beginning in 2014, the Affordable Care Act of 2010 will provide income-related premium assistance and cost-sharing provisions to increase health care access and provide financial protection for people with lower incomes. These provisions will reduce exposure to out-of-pocket expenses for covered benefits. The law will vary cost-sharing standards as well as premium credits by poverty level in order to limit a person's risk of incurring high out-of-pocket expenses and to make care more affordable. The reforms thus seek to expand coverage and to reduce the number of insured people who are "underinsured" based on exposure to medical care costs that are high relative to their incomes.To provide a baseline as of 2010 and to examine the potential of the reforms, we used findings from a recent survey to estimate the number of adults who were underinsured or uninsured in 2010. The analysis updates 2003 and 2007 surveys using the same methodology to identify those who are underinsured. 3 We found a significant increase in the percentage who were underinsured from 2007 to 2010, although the change was less than that observed from 2003 to 2007. This probably reflects the slowdown in health spending as people cut back because of the recession. Including for the first time responses from people reached on their cell phones, the 2010 estimate provides a new baseline and target as the Affordable Care Act reforms unfold. To assess the reforms' potential, the study examined the risk of being underinsured or uninsured by poverty groups who will receive cost-sharing and premium assistance.

Health insurance is in the midst of a design shift toward greater financial risk for patients. Where medical cost exposure is high relative to income, the shift will increase the numbers of underinsured people. This study estimates that nearly sixteen million people ages 19-64 were underinsured in 2003. Underinsured adults were more likely to forgo needed care than those with more adequate coverage and had rates of financial stress similar to those of the uninsured. Including adults uninsured during the year, 35 percent (sixtyone million) were under-or uninsured. These findings highlight the need for policy attention to insurance design that considers the adequacy of coverage.T h e r e le n t le s s r i s e i n h e a lt h c a r e c o s ts and insurance premiums has spurred a move away from more-comprehensive insurance benefits for the population under age sixty-five. Trends instead point toward plans with higher deductibles, patient cost sharing, and, in some instances, a more restricted scope of benefits. Faced with the fourth consecutive year of double-digit premium inflation and the demise of managed care options, employers have sought to moderate their premium costs by offering new insurance products that shift more financial risk to workers.1 Insurance plans sold to small businesses, in particular, have moved to sharply higher deductibles; however, increases are also spreading across larger firms. 2Recent federal policies have also pushed toward higher patient cost sharing through enactment of new tax-protected health savings accounts (HSAs) available only to people with insurance policies having deductibles of at least $1,000 per person. Some proposals would further encourage such high-deductible plans. 3Although the United States already stands out among industrialized countries for the high share of medical costs its citizens pay out of pocket, trends point to still greater patient and family exposure to medical care costs in the future, reversing T h e U n d e r i n s u r e d H E