Having too little health insurance can be almost as hard on families as having no coverage at all.

Witnesses delivered that message at a recent House Energy and Commerce oversight subcommittee hearing on the plight of the underinsured.

Rep. Bart Stupak, D-Mich., chairman of the subcommittee, defined an “underinsured person” as one who has a health insurance policy that “does not adequately cover health care costs or high medical expenses.”

“Underinsured individuals traditionally have high out-of-pocket expenses because of high deductibles and co-pays,” Stupak said at the hearing, according to a written version of his remarks posted on the committee’s website.

“In some instances, people are underinsured because they can only afford to purchase a policy,” Stupak said. “In other instances, policyholders believe that they have adequate coverage only to find out that there are limits buried within the policy such as annual caps on the amount the insurance will cover or limits on the number of times the policy holder can receive certain services or treatments.”

No matter how the underinsured are defined, “the sad consequences of being underinsured can be devastating, leading to financial ruin, bankruptcy and making medical decisions based on costs rather than care,” Stupak said.

The committee heard from several people who had health insurance but suffered catastrophic financial consequences when the policies failed to cover their medical bills.

Sara Collins, a vice president at the Commonwealth Fund, New York, a health finance think tank, reported that, in 2007, about 25 million working-age adults appeared to be severely underinsured, up from 16 million in 2003.

Among U.S. residents with individual health coverage, the percentage who were underinsured increased to 30%, from 17%, Collins said.

About 38% of the “underinsured adults reported that their doctor had charged them a higher price than their insurance plan would pay and they had to pay the difference, compared to 25% of adequately insured adults,” Collins said, according to the written version of her testimony.

H.R. 3200, the House health reform bill, should have reduce the level of underinsurance, by revamping the individual health insurance market and setting standardized benefits tiers, Collins said.

Written versions of the hearing testimony are available here.