Many will recognise the title of this column as the tagline for AllState Insurance. But are we really 'in good hands' with any insurance - particularly as it relates to health?

A recent report by the Commonwealth Fund was quite enlightening in this respect and suggested that almost a quarter of American adults (aged 19-64) were 'underinsured'. Underinsurance is defined in this survey as being the scenario in which out-of-pocket health care costs, excluding premiums, over the prior 12 months are equal to 10 per cent or more of household income; or out-of-pocket healthcare costs, excluding premiums, are equal to 5% or more of household income if income is basically very low; or if the insured's deductible is 5% or more of household income.

Medical bankruptcy in a country like the US is a real and tangible issue

So, either we have a very low threshold for establishing underinsurance (maybe it should be 12% or 15% of household income?) or maybe patients are over-treated (taking multiple medications which drive costs higher but don't improve outcomes) or we genuinely have some really sick people in the US who have multiple comorbid conditions that are slowly bankrupting them. It's probably a little bit of all three and probably some other factors that space limitations do not allow us to discuss at the moment.

The interesting twist about this survey is that the out-of-pocket components described above are only triggered (and therefore measured) if the individual uses his/her plan - which makes sense. The deductible component, however, is only an indicator of the financial protection the plan offers and the risk of incurring costs even before a person uses the plan. So, in other words, we're predicting who will be underinsured with the deductible component and not actually measuring individuals who have had to pay the deductible. The report underscores the fact that 'high deductibles' are contributing to the rise in underinsurance more than the 'out-of-pocket costs as a percentage of household income' factor.

What costs count?
As you all no doubt realise, the problem with reports like this is that they are arbitrary and have many assumptions embedded within them (like most of social policy). Some of those assumptions I've already challenged earlier in this column but the big one that everyone is probably asking themselves is: how do we define medical costs? Are we including family planning treatments like in vitro fertilisation or aesthetic treatments like derm fillers and wrinkle reducers? Are we including dentistry - where root canals and major dental work can be costly? Are we throwing expensive presbyopia-correcting intraocular lenses for cataract patients into this basket of goods? In order to truly quantify the degree of underinsurance we first must understand the definition of healthcare or medical costs. And then we must clarify whether these costs are at 'list' price or at the price that is reimbursed by, say, Medicare or Medicaid. Let's be honest, the same treatments cost different amounts depending on where you live, the type of insurance you have and which hospital you go to.

We know that medical bankruptcy in a country like the United States is a real and tangible issue as documented by Himmelstein et al in 2009 in JAMA. Nobody is arguing that financial protection is unimportant or that access to treatment for an illness should not lead to financial hardship. This much we can all agree upon I think. But let's be careful about how we interpret these numbers. One can only truly be underinsured if one has actually spent 10% of his/her household income on healthcare costs. Everything else is just a projection. 

In the end, we can encourage people to live healthier lives so that they don't get sick and then require medical intervention. We can try to raise salaries and income levels so that people fall below the magical 10% threshold and are no longer considered underinsured. We can change our definition of underinsured. We can mandate medical savings accounts (which have not always been shown to work) so that individuals are saving for the eventuality of high deductibles and treatments. All of these efforts and attempts may have a modest effect or mask the problem if we simply change the definitions to suit our discomfort with the real numbers.