Uninsured medical expenses vie with retirement as most pressing financial concern for Americans

American Institute of Certified Public AccountantsApr 29 2010

Six in 10 See Hike in Premiums over Past Year

Uninsured medical expenses vie with retirement as the most pressing financial concern for Americans, according to a survey conducted for the American Institute of Certified Public Accountants by Harris Interactive.

While retirement captures the top spot on a list of 15 financial concerns, cited by 12 percent of survey respondents, uninsured medical expenses follow closely with 11 percent of the respondents.  This is an increase from 6 percent in 2008 and 8 percent in 2009.

"If you don't have health insurance and can get it, do so even if all you can afford is catastrophic coverage," said Jordan Amin, chairman of the AICPA's National CPA Financial Literacy Commission.  "Far too many people, especially younger ones, decide to forego any health insurance because of the cost and then regret the decision when they finally need it."

The AICPA commissioned the survey in recognition of April as Financial Literacy Month. In 2007 the Institute began conducting an annual survey of Americans to determine their attitudes toward their finances.

Medical expenses account for nearly two-thirds of personal bankruptcies in the United States, studies show.

The National CPA Financial Literacy Commission offers the following advice:

• Consumers who are uninsured or otherwise concerned about the cost of a medical procedure can negotiate directly with the doctor or hospital for a reduction in the charges.  Medical facilities usually are willing to come to an agreement;
• Thirty-five states have high-risk insurance pools for residents who cannot get health insurance because of a pre-existing condition.  Consumers can check the website of the National Association of State Comprehensive Health Insurance Plans (www.naschip.org) to see if their state has a pool;
• Consumers can develop a "healthcare budget" of anticipated costs, including dental and vision.  The basis for the budget is costs already incurred, including monthly premiums, co-payments, prescription costs, over-the-counter medications and eyeglasses or contact lenses. After consumers have assessed these costs, they can estimate upcoming costs to the best of their ability.  A key step is reviewing the prior year's expenses to see how much spending the family has done.  Once they've evaluated all the costs, they can begin to look at options to pay for medical care, including employer-provided insurance, health-savings accounts, flexible-spending accounts and prescription discount clubs.

The vast majority of Americans, 86 percent, reported having some form of health insurance.  However, 58 percent of those with coverage have seen their premiums go up in the past year.  Just over half of the insured say their premiums have increased up to 10 percent, while a quarter said their premiums went up 11 percent to 20 percent.  A total of 17 percent said their premiums have increased more than 21 percent.

For the uninsured, it's not surprising the most common reason why they don't have health insurance is that they can't afford it (47 percent).  Much smaller percentages indicate their employer doesn't provide health insurance (17 percent) or that they are currently unemployed (16 percent).  When asked how the uninsured pay for medical costs, half go untreated and indicate they don't seek medical attention because they can't afford it.  However, if the uninsured need medical treatment, they use their credit card, tap into an emergency fund, or borrow from family or friends.

The National CPA Financial Literacy Commission oversees two programs to help Americans achieve financial well-being. The first, 360 Degrees of Financial Literacy (www.360financialliteracy.org), educates Americans on how financial issues affect them at 10 life stages, from childhood to retirement. The free web site, devoid of all marketing and advertising, includes resources on health insurance.

A second campaign, Feed the Pig (www.feedthepig.org), created with the Advertising Council, encourages Americans aged 25 to 34 to begin preparing for long-term financial security. Ad Council research has shown that individuals who have seen or heard a Feed the Pig public service announcement are more likely to change their financial behavior for the better.

Methodology

In an effort to understand how the economic crisis has affected behaviors and attitudes among the general public, the AICPA participated in the Harris Interactive March 2010 Harris Poll Quorum telephone omnibus study. The interviewing took place from March 17 to 21, 2010. The Harris Poll Quorum is a bi-monthly survey among 1,009 U.S. adults ages 18 and older.