Covering the uninsured: the debate returns - Health Policy Update

Physician Executive, May-June, 2003 by Georges C. Benjamin

In September 2002, the U.S. Census Bureau reported that there were 41 million Americans without health insurance at any one moment in time. The situation is even more disconcerting with the recent discovery that almost one out of every three Americans (30.1 percent) under the age of 65 was uninsured at some point over a two-year period. (1)

This new study documents the magnitude of the problem more fully. It also adds to the concerns about the continued growth in the uninsured despite recent efforts to incrementally increase coverage.

The debate over the number of uninsured is compounded by the knowledge that:

* From 9 to 21 percent of individuals lose health care coverage in any given year

* Another 30 million are under-insured

* There is no prescription drug benefit for those in the Medicare program

Impact of being uninsured

A recent series of reports from the Institute of Medicine of the National Academy of Sciences (IOM) included several important facts about the uninsured. (2)

* Those without insurance either can't afford it or no insurance coverage is available. This means that being uninsured is not a choice for the majority of people.

* Health insurance is an independent contributor to improved health outcomes. This correlates to the fact that the uninsured are three times more likely to report poor health and four times more likely to report the need for care, but are unable to access it. In addition, the absence of insurance results in delayed, more costly care rather than preventive and primary care. It is estimated that if the uninsured were covered there would be a reduction in their mortality rates by 10-15 percent. (3)

* Lack of insurance has a negative effect on the family, even if others in the household are insured. When an uninsured member of a family has health care costs, the family often helps pay the bill.

* The fiscal burden of the uninsured on the community negatively impacts the service delivery and capacity of other medical providers. Uncompensated care drives up costs. As a result, providers and insurers shift costs to insured patients by raising charges and premiums.

The fiscal implications to the family were described in a report titled "Paying for Health Care When You're Uninsured: How Much Support Does the Safety Net Offer?" (4)

The authors noted that among individuals who used "safety net providers," 60 percent needed help paying their medical bills and as many as 46 percent reported that they had unpaid bills or were in debt to their provider. To compound this, as many as 50 percent of all personal bankruptcies are related to health care bills. (5)

In contrast, a study by the Kaiser Commission on Medicaid and the Uninsured found that "Better Health would improve annual earnings by about 10-30 percent and would increase educational attainment." (3)

The debate

There is a growing sense of the need to move toward universal coverage in many quarters. A national coalition of employers, health care associations, advocacy groups, consumers and providers held a weeklong advocacy event to highlight the need to cover the uninsured. Covering the Uninsured Week resulted in numerous town meetings, press conferences and legislative briefings on this important health policy issue.

The debate that will occur over the next several months will discuss three basic questions:

1. How much coverage should be provided?

2. How much will it cost?

3. Who will pay for it?

Determining the amount of coverage is elusive, with intense debate over programs that offer extensive coverage like Medicaid to basic benefit and outpatient only proposals. Clearly the debate should start with the expected outcomes, define what services are needed to get there and then define the cost. Historically, costs and the payer enter the debate very early and the discussion quickly comes to an impasse.

The most recent successful attempt to expand coverage was the State Children's Health Insurance Program (SCHIP), that was initiated in 1997 and brought over five million new people, mostly children, onto the ranks of the insured.

Compromise over benefits was achieved by giving states the option of using Medicaid as a vehicle for coverage and setting floors for coverage for all non-Medicaid options. The recent turn in the economy at the state level threatens to reduce these gains as states retrench on previous expansions.

Congress continues to debate reforming the Medicare program to include adding a prescription drug benefit. Many doubt, however, that this will occur this year because of continued philosophical differences between the various factions and the lack of adequate funding to support a meaningful benefit.

Like most funding debates, it comes down to who pays the bill, The uninsured cost about $41 billion annually. About three fourths of this is paid by federal, state or local governments through a variety of indigent care payments.(disproportionate share and other safety net programs.) The rest is born directly by the private sector.

Interestingly, the economic development aspects of providing coverage rarely enter the debate. A new study by Families USA that documents the fiscal benefits of the Medicaid program by state offers a fresh look into the issue.