It’s getting harder for working people with health insurance from their employer to afford health care, new research shows.

“In the United States, if you are sick and earn a modest income, then you are probably underinsured - even if you have employer-based health coverage,” Dr. Jon R. Gabel of the National Opinion Research Center in Bethesda, Maryland, and his colleagues say.

Gabel and his team reviewed data on medical claims and health care benefits to compare individuals’ spending on out-of-pocket costs and health care premiums between 2004 and 2007. By every measure they looked at, Gabel told Reuters Health, paying for health care is getting tougher for working people.

He and his colleagues looked at underinsurance, affordability and total health care cost. They defined underinsurance as making 200 percent of the poverty level or greater-$41,300 for a family of four in 2007 - and having to spend 5 percent of one’s income on out-of-pocket health care costs like copays and deductibles, or making 400 percent of the poverty level ($82,600) and spending 10 percent of one’s income on these costs. For affordability, the same thresholds were used, except the researchers included spending for health insurance premiums as well as out-of-pocket costs.

Overall, people spent $729 a year on average in 2007 for out-of-pocket costs, compared with $545 in 2004, the investigators report in the journal Health Affairs. According to Gabel, just a small fraction of that increase was due to health care plans forcing employees to share more of their health care costs; the majority was due to increases in overall health care spending.

There were also dramatic variations in spending; the 50 percent of people who spent the least on out-of-pocket health care costs averaged $85 annually. The top 1 percent of spenders averaged $8,703, while the average for the top-spending 10 percent was $3,364.

Among people with incomes at 200 percent of the poverty level, 20.3 percent were spending more than 5 percent of their income on out-of-pocket costs, compared to 16.5 percent in 2004.

And while employers footed more of the bill for people who spent the most on health care - up to 90 percent, compared to an average of about 80 percent - for people with modest incomes, costs were still too high, Gabel said. Total medical costs for the top 1 percent of spenders were $100,000, including what employers covered, he added. “If you’re a high income person you can handle 10 percent, but if you’re making $20,000 a year…that’s more than you can handle.”

People with the highest health care spending may have been chronically ill, hospitalized, or taking expensive medications, the researcher noted.

For health care reform to be affordable, or even possible, Gabel said, it will be necessary to rein in health care costs. But he said he is hopeful that planned initiatives including provider payment reform, cost effective analysis and managed competition could make a difference.

“We’re already rationing,” Gabel said. “We’re rationing based on ability to pay

What we need to do is ration on need and effectiveness.”

SOURCE: Health Affairs, published online June 2, 2009.