Thirty-two million people under age 65 were underinsured in the U.S. in 2012, meaning they had health coverage that provided inadequate protection against high health care costs relative to their income, a Commonwealth Fund report revealed.

Before the major expansions of the Affordable Care Act began to be implemented this year, 79 million people under 65 were classified as either uninsured or underinsured, and at risk of facing large debts from medical bills.

The report found that at the state level the rate of underinsured ranged from a low of 8% in New Hampshire to highs of 16% in Mississippi and Tennessee and 17% in Idaho and Utah.

Nationally, nearly one of three (29%) people under age 65 were listed as either uninsured or underinsured, ranging from 14% in Massachusetts to 36% to 38% in Florida, Idaho, Nevada, New Mexico and Texas.

Nearly two-thirds (63%) of those with incomes below the federal poverty level in 2012 were either underinsured or uninsured. Among those with incomes between 100% and 199% of poverty, nearly half (47%) were underinsured or uninsured.
“The vast majority of people struggling to afford health care are low- and middle- income, and exactly the people the Affordable Care Act was designed to help,” said Commonwealth Fund Senior Vice President Cathy Schoen, lead author of the report. “This report demonstrates that the health reform law was accurately targeted toward the needs of the uninsured and underinsured. However, if all states don’t expand Medicaid, millions will still go without health insurance and health care.”

A decade or more of people losing health coverage and a steady erosion in the financial protection of insurance also has put middle-income families at risk, according to the report. In 2012, one of five people (20%) under age 65 with middle incomes (between 200% and 399% of poverty) - an estimated 15.6 million people - were either underinsured or had no health insurance. The share of middle-income people who were underinsured or uninsured reached highs of 28% to 31% in Texas, Alaska and Wyoming.

Historically, states with high uninsured rates have had lower rates of job-based insurance and more restrictive Medicaid eligibility and often high rates of poverty, making it more difficult to expand coverage from state resources alone. To overcome these barriers, insurance reforms provide for federal subsidies to reduce premium costs and out-of-pocket medical costs for eligible low- and middle-income families who buy plans through the new state-based insurance marketplaces. Federal resources also support expanding state Medicaid programs to citizens and legal residents with incomes near or below poverty.

The ACA's Medicaid expansion and health insurance reforms are targeted to Americans who are most likely to be unable to afford insurance or needed health care, according to the report. Based on their incomes alone, 20 million of the underinsured in 2012, as well as 24 million of the uninsured, would qualify for Medicaid under the ACA.

But millions who are poor will not have any new coverage options, according to the report. In states choosing not to expand Medicaid, more than 15 million underinsured and uninsured people have incomes below poverty - earning less than $23,550 a year for a family of four. Unless their states expand Medicaid, there will be no new coverage options - either Medicaid or premium assistance - available to them.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.