HEALTH INSURANCE is a bit like a hospital gown. From the front it appears to shield the essentials. Closer inspection, however, reveals a lot uncovered behind - and only a tenuous thread prevents full exposure.
Most Americans think they're covered, except the 45 million who are uninsured ("going bare," in insurance industry parlance). But few of us are really shielded from the financial ravages of illness.
Each year, 1 million people are bankrupted by illness or medical bills, according to the Harvard Consumer Bankruptcy Project, the first in-depth study of medical bankruptcy.
Indeed, we found that about half of the families filing for bankruptcy do so in the aftermath of a serious medical problem.
Most of those filing medical bankruptcies were solidly middle-class - they had gone to college, owned homes and had good jobs. And more than three-quarters had health insurance when they first fell ill. But the coverage often had gaping holes - co-payments, deductibles and exclusions, such as physical therapy. For others, job-based coverage slipped away when a breadwinner got too sick to work.
The credit card industry, which successfully pushed Congress to make bankruptcy laws more punitive, has portrayed bankruptcy as an easy way out for profligate spenders. Yet medical bankruptcy was anything but easy. The debtors we interviewed arrived at the bankruptcy court emotionally and financially exhausted. Twenty-two percent had gone without food; 30 percent had had a utility shut off; 50 percent had failed to fill a doctor's prescription; and 61 percent went without needed medical care - all because they couldn't pay their bills.
With the bankruptcy bill now law, American families are in for a one-two punch - less access to the bankruptcy courts and more risk that their medical bills will crush them.
While the credit card industry seeks to close the bankruptcy courts to desperate families, employers and politicians are pushing health policy reforms that will further shrink the financial protection for American families.
From 1981 to 2001, medical bankruptcies increased 23-fold, driven by rising medical costs and declining coverage. Now come health policy experts and employee benefit managers whose prescription for change is "consumer-driven" health care, fancy language for higher co-payments, bigger deductibles and skimpier coverage - the very things responsible for past increases in medical bankruptcy.
The new secretary of health and human services, Michael O. Leavitt, pioneered "nano-insurance" - coverage so shrunken you need a microscope to see it. His Utah Medicaid program offered insurance that paid for neither specialist visits nor hospital care, a plan he wants to encourage other states to emulate by offering regulatory waivers.
To theorists of nano-coverage, patients are insatiable consumers of medical care who must be reined in by saddling them with a bigger share of the costs. But most people - aside from true hypochondriacs - want only the medical care they need.
In addition, patients have little choice when it comes to the expensive care that accounts for the vast majority of costs. How many can comparison shop emergency rooms in the midst of a heart attack, or knowledgeably appraise the cost-benefit calculations of chemotherapies when they have leukemia?
In the real world, holes in coverage don't save money, they merely shift costs away from employers and government and let them fall on the backs of patients. Indeed, Americans already pay the highest co-payments and deductibles in the world, yet our per capita health spending is twice the average of other wealthy nations - by far the highest on Earth.
While most Americans are undercovered - or go entirely bare - the rest of the developed world enjoys full protection because of national health insurance. Elsewhere, medical bankruptcies are rare, and the only wardrobe malfunction most patients worry about involves their hospital gowns.
Elizabeth Warren is the Leo Gottlieb professor of law at Harvard Law School. David Himmelstein and Steffie Woolhandler are medical doctors and associate professors of medicine at Harvard Medical School.