$1 million lifetime limit on insurance called too low

75 million in U.S. said to have inadequate or no health coverage


WASHINGTON -- Kate and Brian Stenz were devastated in 1996 to learn that their newborn son Zachary had hemophilia, which robs the body of its blood-clotting function.

They were confident that Brian's health insurance would cover at least the first 10 years of the expensive medical treatment he would need.

But in June, with insurance picking up as much as $35,000 a month for medication, the Stenzes learned they had "capped out" on the policy's $1 million lifetime limit.

Having spent $8,000 out of pocket and facing medical bills of $100,000 a year in a best-case scenario, the young Columbus, Ohio, couple found themselves staring into a financial abyss.

"We thought the cap was going to be increased, but that didn't happen, and the bills continued to mount," said Brian, a salesman of industrial products.

Although they found alternative insurance coverage, the Stenzes live under the shadow of abruptly losing it. "It's a ticking time bomb," he said.

The Stenzes are among an estimated 31 million people who are underinsured, people who risk spending more than 10 percent of their own annual income in the event of a catastrophic illness, according to Consumers Union, the nonprofit organization that publishes Consumer Reports.

"Many people have a false sense of security about their insurance," said Gail Shearer, the organization's director of health policy analysis. "A financial crisis situation can sneak up on people unexpectedly."

According to a 1998 Consumers Union report, the number of underinsured had risen 40 percent in the previous 15 years.

The 31 million people in that category comprise close to 16 percent of the 195 million Americans under age 65 with health insurance. About 44 million under 65 have no health insurance.

Pam Farley Short, who heads Pennsylvania State University's Center for Health Policy Research, said that to be safe, people should have insurance with a lifetime cap of $10 million or more for catastrophic illness.

The typical $1 million cap, which dates from the 1970s, might not be sufficient in an era where the cost of new treatments is skyrocketing, she said.

Pub Date: 11/25/99

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