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Making Sacrifices Due to Costly Iowa Health Insurance Coverage

To cope with rising health insurance costs, Iowans make sacrifices which increase their personal vulnerability.

Among Iowans who describe the amount they personally pay in health insurance premiums as increasing, 59% say the increase is causing them to make sacrifices in their household budgets. Seventy-nine percent (79%) of those in households earning less than $30,000 report having to make sacrifices, as do almost half (42%) of those in households with incomes above $70,000. Other changes in household spending patterns include:

86% say they have cut back on how much they can save;
83% say they have cut back on spending for entertainment, vacations, or leisure activities;
44% say they have cut back on normal household expenditures for items such as food and utilities;
38% say they have taken on more debt, such as credit card debt or other loans;
35% have downgraded the scope of their health insurance coverage to reduce their premium costs (includes changing to a different type of policy); and
29% have reduced or eliminated other kinds of insurance coverage, such as life, disability, auto, and homeowners insurance.

Interpretation

Embedded in these data is an unmistakable irony. As insured Iowans make sacrifices to pay for increasing health insurance costs, they are taking on greater risk and increasing their personal financial vulnerability by saving less, increasing their level of personal debt, reducing the scope of their health insurance protection, and reducing other forms of insurance coverage. However, each of these elements has potential negative consequences for the household and the larger society. Cutting back on savings makes families less prepared for unanticipated events such as a job loss, and expected expenses such as higher education and retirement. Reducing vacation and leisure leaves individuals and families with less time to alleviate stress in their lives. Taking on more debt leaves individuals and families without the resources to deal with emergencies of all kinds, as well as leaving them more vulnerable to downturns in the local and national economies, not to mention the economic crunch by introducing new spending on interest. Downgrading health insurance coverage by switching to plans with higher premiums and co-payments may not be too risky for healthy individuals in higher income brackets, but can be devastating to middle and lower income households who may suddenly find themselves with a significant medical debt due to unexpected hospital and provider co-payments. For those with chronic diseases, reducing coverage often means going without necessary medical care, leading to increased future costs and disease burden. Reducing other forms of insurance coverage, such as homeowners or automobile insurance, without addressing underlying risk levels leads the insured to assume great risk, and has the potential to increase the government's burden as liability costs will be pushed from the private (insurance) sector to the public sector.

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