Underinsurance: Why Millions Are Covered but Not Protected

In America, having health insurance does not actually mean you are protected if a health crisis arises. Millions have an insurance card that fails them when they try to use it. This is called underinsurance. It is a growing issue where many people technically have coverage, but it is practically unusable due to deductibles and out-of-pocket costs. Not to mention denied care. 

Underinsurance Is Widespread and Growing 

Nearly one in four working-age adults in the U.S. are underinsured. They have coverage, but still face high medical costs and therefore avoid care. 

The Commonwealth Fund defines underinsurance using clear thresholds:

• Out‑of‑pocket costs equal 10% or more of household income

• Or 5% or more for lower‑income households

• Or a deductible that alone equals 5% or more of income

High Deductibles Are the Biggest Driver 

High‑deductible health plans (HDHPs) have grown rapidly across the country. Between 42% and 58% of Americans under 65 are enrolled in one. The average deductible for workers in 2024 was $2,750. That is almost three thousand dollars. For someone earning $40,000 a year, that deductible alone is 7% of their income.    

And on the ACA marketplace, deductibles have surged:

• Average marketplace deductible: $3,786 

• Bronze plan deductible: $7,476

• Silver plan deductible: $5,304

People are paying for plans they actually cannot afford to use. 

Underinsurance Causes People to Skip Care 

Underinsured people behave almost exactly like uninsured people. They delay and skip care because they can’t afford it. So being insured in America does not mean you are protected. Coverage without access isn’t coverage at all.