COVERAGE MATTERS: INSURANCE AND HEALTH CARE
Arthur L. Kellermann, M.D., M.P.H.
Co-Chair of the Consequences of Uninsurance Committee
Institute of Medicine/The National Academies
Chair, Department of Emergency Medicine, Emory University School of Medicine, Director, Center for
Injury Control, Rollins School of Public Health, Emory University
Subcommittee on Health
Committee on Energy and Commerce
U.S. House of Representatives
FEBRUARY 28, 2002
Good morning, Mr. Chairman and members of the Subcommittee. My name is Arthur Kellermann. I am Chair of the Department of Emergency Medicine, Emory University School of Medicine and Director of the Center for Injury Control, Rollins School of Public Health, Emory University. I serve as Co-Chair of the Committee on the Consequences of Uninsurance of the Institute of Medicine. The IOM is part of the National Academies, originally chartered as the National Academy of Sciences by Congress in 1863 to advise the government on matters of science and technology.
Two years ago the IOM Council identified the issue of the large and growing population of uninsured Americans as a priority for a major analytic initiative. The Robert Wood Johnson Foundation shared this interest and asked the IOM to conduct an extended study of significant consequences of uninsurance. The study will also identify strategies to address these consequences. I am here today to discuss our Committee’s initial findings. They are presented in our introductory report, Coverage Matters: Insurance and Health Care, which was released this past October. Our Committee will issue five more reports between May of this year and September 2003. They will explore the impact of a lack of health insurance, not only for individuals and their families, but for our local communities and American society in general.
The tragic events of last fall have refocused Americans’ attention on our shared personal concerns, our collective fate, and our well-being as a nation. Health insurance, the principal mechanism by which we finance health care in the United States, is critical to ensuring the financial security of American families as well as their access to needed health care. Once again our nation faces a growing population of uninsured Americans after a brief stabilization in the number of uninsured. These circumstances deserve our thoughtful consideration even—perhaps especially--in these exceptional times.
The past 25 years have seen a growing number of uninsured. This trend has held despite incremental reforms in the regulation of private health insurance such as COBRA and HIPAA that have increased opportunities for maintaining coverage (if one already has it). This trend has held despite substantial expansions in Medicaid eligibility, beginning in the late 1980s and continuing through the enactment of the Children’s Health Insurance Program in 1997. Although the number of Americans without health insurance dipped slightly in 1999 and again in 2000, after several years of an exceptionally vigorous economy in the mid-to-late 1990s, by the fall of last year (after Coverage Matters went to press) it was clear that the economy was softening. This economic downturn, coupled with rising health care costs and insurance premiums and stagnant or declining state tax revenues, has already established that the longer-term trend of growth in the numbers of uninsured Americans will continue.
What does this 25-year trend mean? The Committee’s report, Coverage Matters, documents
• the persistence of the problem of uninsurance, regardless of whether the economy is weak or strong,
• the inherent instability of insurance coverage for all but the elderly in the United States, stemming both from the structure of our employment-based health system and from the conditions of eligibility for coverage under programs like Medicaid and SCHIP, and
• the reduced access to health care of Americans who lack health insurance.
Each of these findings has important implications for the Congress, for state legislatures, and for others as they design public policies to address the issue of affordable health care for the uninsured.
While much of the information that the Committee has synthesized in Coverage Matters is known within health policy circles, it is not widely understood by the American public. In fact, much of what Americans think they know about the uninsured is wrong. Misunderstandings about the causes and consequences of uninsurance have impeded the formulation of effective public policies to solve the problem. Our Committee recognizes that one of its principal tasks must be to broaden and deepen the American public’s understanding of issues related to health insurance and the lack or loss of it.
Coverage Matters addresses some of the most persistent myths about the uninsured and the implications of lacking coverage. We have tried to answer the “Who, what, where, and why” of this issue in order to replace misinformation with good information. Consider the following examples, drawn from public opinion polls and focus group research:
Myth: “People without health insurance get the medical care they need.”
Reality: In any given year, the uninsured are much more likely to lack needed medical care. They are less likely to see a doctor, receive fewer preventive services such as blood pressure checks, mammograms and screening for colorectal cancer, and are less likely to have a regular source of medical care. As will be further documented in our next report, routine health care, particularly for those with chronic conditions such as diabetes and high blood pressure, can result in improved quality of life, prevent long-term disability and lead to longer life. Health insurance is a critical link in obtaining such care.
Myth: “Most people without health insurance are young, healthy adults who decline coverage offered in the workplace because they feel they don’t need it.”
Reality: Young adults are more likely than persons of other ages to be uninsured largely because they are ineligible for workplace health insurance – many are too new in their jobs, or they work for a business that does not provide health insurance coverage to its employees. Only 4 percent of all workers ages 18 – 44, or about 3 million people, are uninsured because they declined available workplace health insurance. Many of these do so because they can’t afford their share of the premium. Nearly four times as many workers in the same age group, approximately 11 million people, are uninsured because their employer does not offer health insurance, and they cannot afford to purchase insurance elsewhere. Purchasing coverage outside of work is not an option for many, because individually purchased insurance policies are frequently expensive, often exclude preexisting conditions, or are simply unavailable.
Myth: “Most of the uninsured don’t work, or live in families where no one works.”
Reality: More than eighty percent of uninsured children and adults under the age of 65 live in working families. While working improves the chances that both the worker and his or her family will be insured, it is not a guarantee. Even members of families with two full-time wage earners have almost a one-in-ten chance of being uninsured.
Myth: “Recent immigration has been a major source of the increase in the uninsured population.”
Reality: Between 1994 and 1998, over 80 percent of the growth in the size of the uninsured population consisted of U.S. citizens. Recent immigrants (those who have resided in the U.S. for fewer than 6 years) are about three times as likely as members of the general population to be uninsured, but they comprise only about 6 percent of the uninsured population.
In the remainder of my testimony, I would like to fill in the picture of Americans most vulnerable to being uninsured and expand on the factors that contribute to this. In the United States, health insurance is a voluntary matter, yet many people do not choose to be uninsured. There is no guarantee for most people under the age of 65 years that they are eligible for or able to afford health insurance.
Almost seven out of every ten Americans under age 65 are covered by employment-based health insurance, either through their job or through the job of a parent or their spouse. Three-fourths of U.S. workers are offered health insurance by their employers, and 83 percent of those who are offered health insurance accept the offer of coverage. About 18 million Americans live in families whose head works for a company –often a small one—that does not offer health insurance.
People who cannot get insurance through the workplace and who are under age 65, too young to qualify for Medicare, have two potential options to secure coverage --purchase an individual policy or attempt to qualify for public insurance, primarily Medicaid. These two options account for 21 percent of all coverage among persons under age 65.
Individual coverage is expensive and may be priced out of reach for many people, particularly those who are in poor health. The full premium for employment-based coverage for a family -- which is the cost faced by former employees who might avail themselves of COBRA coverage -- now averages more than $7,000 per year. Individual policies are either more expensive than these group plans, less extensive in their benefits, or both. As noted in our report, the median family income in 2000 was just under $41,000, and the incomes of most of those without health insurance was much lower than that – two-thirds of uninsured Americans live in families with incomes below 200 percent of the federal poverty level, about $34,000 for a family of four in 2000.
For individuals and families, the expense of insurance premiums and competing demands on their income are the main reasons why some workers decline employment-based insurance. Workers who accept an employer’s offer of subsidized health insurance typically pay between one-quarter and one-third of the total cost of the premium for family coverage. In addition, they may pay substantial deductibles, co-payments, and even pay out of pocket for the costs of health services that are not covered by their health plan. Among lower-income families, those earning less than 200 percent of the federal policy level, health-related expenses may easily consume 10 percent or more of their annual income.
It isn’t easy to foot the bill for health insurance, given its high cost. Employers’ willingness to subsidize coverage is strongly influenced by the scarcity or availability of workers, insurance underwriting practices, the cost of health care, and the patchwork of public policies that encourage (or discourage) firms to offer insurance as a benefit.
The kind of job a person holds, and where they live, are strongly related to their chances of having health insurance. Full-time, full-year employment offers families the best chances of having health insurance, as does an annual income above 200 percent of the federal poverty level. The employment mix and strength of the economy, along with eligibility and benefits for public programs like Medicaid and SCHIP, vary across states and geographic regions, with the result that opportunities for obtaining any kind of health insurance coverage and the risk of being uninsured also vary regionally. Roughly a quarter of the populations of Florida, Texas, Arizona, New Mexico and California are uninsured, while less than 12 percent of the populations of Rhode Island, Pennsylvania, Minnesota, Iowa, Nebraska and Hawaii lack coverage. These disparities in rates of insurance coverage reflect very different challenges facing individual states, employers, and the federal government in addressing the persistent problem of uninsurance across the nation.
Many find the opportunities for public coverage too limited. The combination of strict eligibility requirements and enrollment procedures makes public coverage difficult to obtain and even harder to keep. The median length of time that someone under the age of 65 keeps Medicaid coverage is about 5 months. At the end of any given year, about two-thirds of the people who were insured by Medicaid at the start of the year have lost their coverage for any number of reasons.
There are as many ways to lose health insurance as there are to gain it. These include an increase in insurance premiums or a change in terms, loss of a job or a drop in personal income, new terms of employment, a change in health or in marital status, reaching adulthood, or a change in public policy. For some, being uninsured is a long- term or recurrent state of affairs. The median amount of time without insurance is between 5 and 6 months. However, uninsured persons living in low-income families and those with less education on average experience longer periods without insurance.
Non-Hispanic whites make up about half of all uninsured persons. African Americans, however, are twice as likely as non-Hispanic whites to be uninsured, and Hispanics are three times as likely as non-Hispanic whites to be uninsured. Foreign-born U.S. residents are three times as likely to be uninsured as people born in this country. Among the foreign born, non-citizens are more than twice as likely to lack coverage as naturalized citizens.
The greater likelihood of being uninsured among racial and ethnic minorities and recent immigrants reflects, on average, their lower rates of employment-based coverage, which primarily reflects fewer offers of employment-based coverage, rather than lower take-up rates. Minority groups and recent immigrants also have, on average, lower family incomes than non-Hispanic whites and U.S.- born residents, which is associated both with employment that does not carry an offer of health insurance and a lesser ability to afford an employer’s offer of coverage.
In closing, I want to emphasize several points:
• Since the mid 1970s, the rising cost of health care, and therefore the cost of health insurance, has outpaced the purchasing power of many employers and consumers. Some of the most recent economic data released since Coverage Matters was completed shows a resumption of double-digit inflation in health care costs, contributing to a growing gap in affordability. This gap between costs and purchasing power, probably more than any other factor, has fueled the steady growth in the ranks of the uninsured. Unless health insurance becomes more affordable, this trend is expected to continue.
• While health insurance is a voluntary matter in the United States, many people are involuntarily excluded from the system. Among those excluded, the poor and members of certain minority groups are disproportionately represented. However, the uninsured include members of all racial and ethnic groups, persons who live in rural as well as urban settings, and wage earners from a wide variety of occupations. More than 80 percent of the uninsured are members of working families. They wait on tables, fix cars, serve as consultants to businesses, and start businesses of their own. They contribute in countless ways to the U.S. economy and our society’s well-being.
• Having health insurance is not a permanent state of affairs. Many life transitions can result in the gain or loss of health insurance. In any given year, millions of Americans move into (or out of) the ranks of the uninsured. As the job layoffs over the past 6 months have vividly demonstrated, few of us under the age of 65 can assume that we will always have health insurance, no matter what happens.
• Finally, people without health insurance go without needed care, including doctors’ visits and medications, far more often than do people with coverage.
Thank you for inviting me to present the work of the IOM and the Committee on the Consequences of Uninsurance. I would be happy to answer any questions that you may have about the Committee or our report.
Arthur L. Kellermann, M.D., M.P.H.
Arthur Kellermann is Professor and Director, Center for Injury Control, Rollins School of Public Health, Emory University, and Professor and Chairman, Department of Emergency Medicine, School of Medicine, Emory University. Dr. Kellermann has served as principal investigator or co-investigator on several research grants, including federally funded studies of handgun related violence and injury, emergency cardiac care, and the use of emergency room services. Among his many awards and distinctions, he is a Fellow of the American College of Emergency Physicians (1992), is the recipient of a meritorious service award from the Tennessee State Legislature (1993) the Hal Jayne Academic Excellence Award from the Society for Academic Emergency Medicine (1997), and was elected to membership of the Institute of Medicine (1999). In addition, Dr. Kellermann is a member of the Editorial Board of the journal Annals of Emergency Medicine, and has served as a reviewer for the New England Journal of Medicine, the Journal of the American Medical Association, and the American Journal of Public Health.