In a Land of Plenty--Uninsured Without Health Care.
America's troubled health care system is nothing new. We have a long history of analyzing, worrying about and commenting on the health care crisis in America, and a comparatively short history of reforming the system. In 1917 the American Medical Association proposed national health insurance. Roosevelt's New Deal included serious discussions on compulsory national health insurance. Truman's years and discussions in the 1950s helped to pave the way for the creation of Medicare and Medicaid in 1965. In early 1970, President Nixon announced that "we face a massive health care crisis...unless action is taken ...we will have a breakdown in our medical system."
And we all can remember the Clinton Health Plan, the debate over universal coverage, and the impasse in the early 1990s. In 1997, Congress created a brand new program for children, the State Children's Health Insurance Plan (SCHIP). And now, President Bush proposes tax credits to reduce the number of uninsured.
We have seen swells and lulls of real interest in improving access to health care by our country's lawmakers while the number of people left out has grown. This country provides health insurance to the elderly and to children through Medicare and the State Children's Health Insurance Program. We provide Medicaid to the country's poorest citizens including pregnant women, children, the elderly and people with disabilities. But many people fall through the gaps--most apparent are the working poor.
The medically uninsured cover a wide range of family types, ages, employment, ethnicity and incomes. A significant number go without medical care when they are sick. They are uninsured for a variety of reasons but the most common is affordability, a problem through the decades.
PROSPERITY WITH LITTLE CHANGE
The United States has experienced a record-setting economic boom is past decade. As the wallets of Americans expanded, many indicators of social well-being improved--crime, poverty, unemployment, teen pregnancy, suicide, the stock market and wages for less-skilled workers, to name a few. And for the first time in more than a dozen years, U.S. Census Bureau figures show a dip in the number of uninsured Americans, from 44 million in 1998 to about 43 million in 1999 (15.5 percent of the population, or 17.5 percent of the population under 65). Experts attribute this reduction in the number of uninsured to the robust economy.
The tight labor market encouraged employers to offer health insurance to employees they traditionally leave out of their plans, like part-time and temporary workers, in an effort to get and keep workers, says Deborah Chollet, a senior fellow at Mathematica Policy Research. The relatively new SCHIP program also contributed to the decline by providing insurance to more than 3 million previously uninsured kids.
Should policymakers view this drop in the uninsured as the light at the end of the long health care reform tunnel? "They should be relieved by the dip, but not encouraged," advises Chollet. It provides some breathing room for lawmakers to "evaluate and address the problem of the uninsured."
Assemblyman Richard Gottfried, a 31-year veteran of the New York Legislature, dismisses the reduction as "nothing more than a wiggle in the grass." He isn't even relieved by the news. "There is no indication that this is a downward trend and even if the number isn't going up there are still far too many uninsured people in the U.S."
Len Nichols, principal research associate at the Urban Institute, adds, "Experts have been disappointed that this strong economy has not reduced the number of uninsured more." Economic good times result in small increases in the number of people with insurance, but when the economy sags we lose that growth.
According to Nichols, if the economy turns downward the uninsured rate will increase, because "most firms offer health insurance to compete for workers when they have to but don't offer benefits when they don't have to."
Chollet says that employers who were poised to "jump on the health insurance wagon most likely took a step back in 2000" and were "scared away by the double digit increases in employer health insurance premiums in 2001." Employers worry most about health care costs, says Paul Fronstin, senior research associate with the Employee Benefit Research Institute. "The number of uninsured is not one of their major concerns."
The United States is the only industrialized nation with a voluntary employer-based health insurance system. All the rest have some kind of national system. For more than 60 years, working Americans have been relying on employers to arrange and help pay for their health coverage. Prior to this, most people paid for medical services when they were needed or relied on a wide network of mission-oriented hospitals and clinics that provided services to the indigent. "We didn't have the array of treatments that we have today," says Fronstin. "There just wasn't as much health care to buy back then."
According to the census data, today about 63 percent of all Americans have coverage through employment-based health insurance. Close to 84 percent of full-time workers have insurance, compared with 78 percent of part-time workers and 74 percent of those not employed.
THE SMALL BUSINESS DILEMMA
Almost half of the working uninsured are employed by businesses with fewer than 25 employees. Many small employers simply can't afford to offer health benefits. Insurance premiums are based on the risk that the insurer bears. In larger firms, the risk is spread out over a larger number of people, lowering the risk per person and in turn lowering the premium. The small employers' risk pool does not offer this benefit, resulting in higher rates and more restrictive policies.
"We have been unsuccessful at fixing the small business health insurance market," says Texas Representative Garnet Coleman. But not for lack of trying. In the past seven years, myriad state and federal reforms tweaked the small group market in an attempt to increase access and reduce cost.
Under the federal Health Insurance Portability and Accountability Act (HIPAA) of 1996, health insurers may not refuse any small employer, and have limits on the restrictions they may place on coverage of any individual worker. The measure also guarantees continued access to insurance for those who change or lose their jobs. But the law does not regulate insurance prices, so the available coverage may be unaffordable..
According to Nichols, HIPAA may not have made a huge difference on access to health insurance, but it did "proclaim that there is bipartisan agreement that the small group and individual insurance markets need fixing." He explained that the act gave states the lead in this endeavor with the feds outlining the floor of market reforms for all citizens. This bipartisan interest in reforming the small group market actually originated in the states, where many of the federal provisions were already law before Congress took action. New ideas include experimenting with tax credits and trying to make purchasing pools more effective.
"Affordability is still the main issue for small businesses," says Coleman, who believes that it is the state's responsibility to help employers afford insurance for their employees. He adds that even with the reforms to date "we just haven't hit the price point" where small employers are buying into the market.
THE VIABILITY OF TAX SUBSIDIES
President Bush's election campaign focused the nation's attention on tax credits to improve access to health insurance. Since affordability is the No. 1 reason that people remain uninsured, a well-designed refundable tax credit may be one viable solution, according to Chollet. But experts agree that the amount of the credit would have to be significant, maybe 50 percent or more of the cost of premiums, to entice the uninsured to buy into their employer's plan or to purchase an individual policy. "That is going to cost the country some money," says Nichols, "but with our present surplus, maybe we will be smart enough to spend some of it on expanding coverage."
"The individual market is the weakest link in a successful tax credit program," explains Chollet. "It is anything but fixed." She points out that the states and the federal government will be forced to confront some thorny issues in reforming the individual insurance market, which has only about 7 percent of today's market.
Senator Maggie Tinsman of Iowa likes the idea of tax credits. "The more money that we put back in people's hands the more that they will have to spend on life's essentials--like health insurance." But Gottfried and Coleman disagree. Gottfried thinks a tax credit alone is "terrible policy" because the "vast bulk of the subsidy will go to employers or the self-employed who are already providing coverage for themselves or their employees." It is the money in hand that worries Coleman about relying on tax credits. "When you live in a world where you are struggling to make ends meet, you just don't have the money in your pocket to pay the premium now despite the fact that you may get a portion of it back later." He doesn't think tax credits would do anything for the poor.
Restructuring existing tax subsidies may be another option. The current tax-subsidized employer-based system leaves too many people uninsured, according to Stuart Butler, from the Heritage Foundation. Butler points to the tax-free benefit for employees of firms that offer health coverage, valued at more than $100 billion per year in federal taxes and more than $14 billion in state taxes.
"Why link those subsidies to the work place?" asks Butler, who notes that workers without an employer-sponsored plan don't qualify for tax assistance. "Why not enable everyone to get insurance through a large group, whether it be unions, churches, farm bureaus, or existing employer plans, and give them the same tax subsidy?" He says making the subsidy more accessible would make the system fairer and could be structured to assist low-paid workers more than higher-paid workers.
THE HEALTH COVERAGE CATCH 22
For people living at or below the poverty level, working actually reduces the chance of being insured. About 60 percent of the non-working poor are insured (through public programs), compared with 53 percent who have jobs. For those working in low-wage jobs without employer-sponsored insurance, their income may make them ineligible for publicly supported programs, like Medicaid and SCHIP, but they can't afford the cost of health insurance premiums.
"We have the greatest health care system in the world, but we have managed to make it wildly expensive per capita so that insured care is beyond the reach of many lower wage workers," says Nichols. He adds that our voluntary system based solely on the market will always leave them out.
Many states have expanded access to Medicaid to include more people and some such as New Jersey, Wisconsin and Rhode Island wish to expand SCHIP to include the parents of eligible children. A few states, including Massachusetts, Oregon, Mississippi and Iowa, are experimenting with subsidizing the employee contribution to the employer's health benefit plan. Nichols says this is the "cheapest way to expand coverage" with public dollars because the employer pays a portion of the premium. But these programs have their own problems.
A staggering number of people eligible for these programs are not receiving the benefits. Outreach and enrollment for Medicaid and SCHIP is a monumental challenge for states. "In New York we have about 3.5 million uninsured people," Gottfried explains, "and close to half of these adults and children are entitled to Medicaid or SCHIP." He adds that the number of uninsured in his state could be "dramatically cut without creating a new program or passing new laws" if they enrolled everyone who qualifies for the already existing programs.
Most states have taken steps to simplify the enrollment process. "Texas is looking at eliminating asset tests and the face-to-face interview and streamlining the process for both Medicaid and SCHIP," says Coleman. Other measures include joint applications for Medicaid and SCHIP, self-declaration of income, and 12-month intervals between renewals.
With new flexibility in the Medicaid program, opening eligibility to larger groups of people and the creation of the SCHIP, there may be more political consensus about using public programs to cover the uninsured. Gottfried believes "that more Americans, including politicians, are coming to understand that publicly funded health coverage can be enormously successful." This seems to be true for more and more states looking for answers to the problem of the uninsured. In 2000, 38 states allocated $3.5 billion of tobacco settlement funds to indigent care programs, coverage expansions and improvements to existing programs for the uninsured. A few examples include New Jersey's program to expand coverage to low-income uninsured parents, Indiana's new program to provide pharmaceutical assistance to seniors and New York's package to increase coverage to more low-income parents and poor adults without children.
Does this mean that universal health care has emerged from the shadows created by the debate of the Clinton Health Plan? Gottfried believes that it is really "the only way" to reduce the number of uninsured in this country. "It isn't going to happen tomorrow," he adds, "but it will happen," he says.
"I believe people now view health insurance coverage as a necessity, not a commodity," says Coleman, "and they are looking to law makers to make it happen." But Coleman doesn't think we are on the road toward government-sponsored universal coverage. He envisions a system where "programs, both public and private, as well as employer-based insurance, come together to provide a blanket of health insurance for different populations."
Nebraska Senator Jim Jensen cautions those who would place all of their hope on public insurance. "Government is a better servant of the people," he says, "when it crafts solutions that allow citizens to buy into the private market rather than expanding government-funded health insurance."
Are Americans and the politicians they elect poised for another national debate on health care coverage? Many legislators place the issue high on the priority list for their states. They admit that coming to a consensus with the business and medical communities and the local, state and federal governments will be the biggest challenge. Nichols, a long-time veteran of the national debate on the uninsured, doubts that we are even close to a revolution in thinking about insuring low-income adults anytime soon.
"It will be difficult to find a lawmaker who doesn't agree that something needs to be done about the number of uninsured Americans," concludes Coleman, "but what that something is will be the debate."
Laura Tobler is NCSL's expert on access to health care, the uninsured and Medicaid.
UNINSURED WORKERS, 1998
In 1998, 18 percent of all employees--or 25 million workers--had no health insurance. Over half (58 percent) were in positions working full-time for the full year. However, because as a group part-time and temporary employees are a smaller share of uninsured workers, they are more likely to be uninsured.
Full-ttime/full-year 58% Part-time/full-year 10% Full-time/part-year 21% Part-time/Part-year 11% Source: Urban Institute,1999 NOTE: Table made from pie chart
REASONS REPORTED BY UNINSURED ADULTS FOR NOT HAVING HEALTH INSURANCE, 2000
The high cost of health premiums is the main reason so many are uninsured. Three-quarters of uninsured adults report that a major reason they are not covered is because insurance is too expensive. Employment-related causes are reported as the primary reason for lack of coverage for 30 percent of uninsured adults (no health benefit offered, between jobs or unemployed).
It is too expensive 75% Your job doesn't offer coverage 48% You are between jobs or unemployed 36% Another family member has health 25% insurance but it does not cover you You can't get coverage 23% or were refused You don't think 19% you need it You don't think anyone 17% will sell you coverage You don't know how to get insurance 16% Source: The NewsHour with Jim Lehrer/ Kaiser Family Foundation National Survey on the Uninsured 2000 Note: Table made from bar graph
ENROLLMENT: AN ONGOING CHALLENGE FOR STATES
Since the enactment of the Balanced Budget Act of 1997, the federal law that created the State Children's Health Insurance Program, about 90 percent of uninsured, low-income children are eligible for health insurance through Medicaid or SCHIP. But getting them enrolled is difficult. The process families must go through is often long and confusing. Many families don't even know about the programs or their eligibility for them. On top of that, they may not know where to apply. The application forms can be time-consuming and perplexing, and the needed documentation, like past pay stubs, can be difficult to collect. This complicated system is even more confusing if there is a language barrier.
In an attempt to improve enrollment, most states have simplified the process for enrolling in SCHIP, which has been carried over to Medicaid because of a federal requirement to coordinate the two programs. For example, 28 states now use the same application for Medicaid and SCHIP, and 42 states have dropped the asset test in both programs. Face-to-face interviews are not required in 40 states, and 39 states review eligibility at 12-month intervals. For a more complete description of state activities to simplify enrollment in Medicaid and SCHIP, see "Medicaid for Children and CHIP Income Eligibility Guidelines and Enrollment Procedures: Findings from a 50-State Survey," October 2000 at http://www.kff.org/content/2000/2166/hjksmall.pdf.
A LITTLE HEALTH INSURANCE HISTORY
It all started after World War II when unions, unable to get pay raises for their members because of wage controls, negotiated for more benefits, including health insurance. By 1950, the federal government made health insurance available to its employees and by the early '60s health benefits were standard for most large companies.
Employer-sponsored coverage gradually increased, fueled by the favorable federal tax treatment of health benefits, until the 1970s. Higher health care costs and the subsequent increase in health insurance premiums led to a slow decline in employers offering health insurance until 1994. Workers who lost insurance were also less able to afford it on their own because of declining wages. Low-wage service jobs replaced high-paying manufacturing jobs. During this time, many states expanded eligibility for their Medicaid programs, offering public insurance to some of those who dropped off the employer-sponsored plans.
From 1994 to 1998, the number of Americans receiving employer-sponsored health insurance grew and fewer individuals enrolled in Medicaid. In 1996, Congress passed sweeping welfare reform, which severed the link between cash assistance and Medicaid. About 1.3 million fewer Americans were covered by Medicaid and families moving from welfare into low-paying jobs without health insurance were added to the rolls of the uninsured.
PREMIUM COSTS SOAR
Group premiums are less expensive than individual packages, but costs of health insurance have increased substantially over the past 20 years. In the 1990s, employers began passing a greater share of the premiums on to their employees. At the same time, real wages for many workers were actually declining. Among private sector non-supervisory employees, real wages decreased more than 10 percent between 1977 and 1998.
Average Annual Premium Cost Per Worker (In 1998 dollars) Employee Share 1997 $312 20% $1,584 1988 $528 20% 2,688 1998 $1,092 27% $4,092 Source: "Job-based health insurance, 1997-1998: The Accidental System Under Scrutiny," Health Affairs 1999. Note: Table made from bar graph
WHAT DO THE UNINSURED DO WHEN THEY GET SICK?
An uninsured adult who lacks the money to pay for medical care will often forgo treatment until he faces an unavoidable emergency. The uninsured are hospitalized 50 percent more often than the insured for conditions successfully treated as an outpatient with good ongoing care. They fail to fill prescriptions and skip needed medical screenings because of cost. As a result, conditions like asthma or diabetes, easily controlled with drugs, make them sicker, and death rates for some diseases, like cancer, are higher compared with people with insurance. When the uninsured do seek medical care, they turn to the nation's health care safety net--community health centers, local health departments, rural and specialty clinics, and public hospitals. These facilities, financed through a combination of federal, state, and local funds in addition to their own revenue, struggle to make ends meet in an increasingly price-driven health care market. Recent changes in federal funding and fundamental changes in state Medicaid p rograms have affected the future viability of the safety net.
To learn more about this topic, consult the Institute of Medicine's Report, "America's Health Care Safety Net: Intact but Endangered" at http://books.nap.edu/catalog/9612.html.
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|Date:||May 1, 2001|
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