Insurance Coverage: Is a Reported Decline in the Number of Uninsured Good News?

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Current Figures

Recent reports by the Census Bureau show the number of uninsured Americans has decreased in the last year, from 47 million to 45.7 million.¹ While those without insurance did decrease by 1.3 million people, the decline apparently resulted from an increase of people covered by Medicaid in 2007.² The numbers seem to indicate that those without insurance are decreasing, but those people are transitioning to government sponsored programs, not private insurance. Despite encouraging figures that show less people are uninsured, rates continue to increase dramatically for those who are facing underinsurance, medical debt, and restricted access to care. Expanding health insurance coverage and access to care is a complex problem that will require multipronged solutions.

Measures of the rate of uninsured individuals vary depending on the data used, the definitions of uninsured, and the sample.³ In contrast to the new estimates from the Census Bureau, recent projections from both the Commonwealth Fund and the Kaiser Family Foundation place the number of uninsured in 2007 at nearly 47 million.⁴ In many instances, other studies use different survey questions and techniques that cause different interpretations of results. The trends in insurance coverage that result from these surveys shape the policy decisions that will be made in the future. The conflicting data from each organization presents an opportunity to both explore and question how these results came to fruition. Results from a HCFO grant by Kathleen Thiede Call, Ph.D., have also questioned and investigated the differences found in the Current Population Survey (CPS) and other data. Her work has compared several alternative surveys and found that CPS and other population-based surveys tend to undercount those enrolled in Medicaid and also might overestimate the number of individuals who have private health insurance.⁵ To view Kathleen Thiede Call's grant findings, please see http://www.hcfo.org/files/hcfo/HCFOfindings0908.pdf.

Current Types of Coverage

The majority of people who lack health insurance coverage, 8 in 10 of the uninsured, come from working families who do not have access to any type of employer-sponsored insurance program.⁶ Without the benefit of employer-sponsored care, many people must look to the individual insurance market to buy coverage. Many of these families have low incomes and cannot afford to purchase this coverage, but their incomes are too high to qualify for government subsidized programs. Those who do qualify for assistance often do not realize they are eligible. The Kaiser Family Foundation estimates that 25 percent of uninsured persons qualify either for the State Children's Health Insurance Program (SCHIP) or Medicaid, but do not realize it due to confusion over qualification requirements.⁷ Of the millions without coverage, 29 percent of them are young adults 19-29 years old.⁸ This age group is especially vulnerable as programs such as SCHIP and Medicaid usually do not cover them.

The rates of children under the age of 18 without insurance also declined in 2007. According to the Census survey, 8.1 million children lacked insurance, down from the 8.7 million in 2006.⁹ The Census Bureau reports that of all children, those who live in poverty are more likely to not have insurance coverage.¹⁰

The decrease in the number of uninsured is not reflected in increased enrollment in either employer-sponsored or individual private health insurance plans. Both types of coverage saw declines in their enrollment in 2007.¹¹ As health care costs continue to soar, many employers have cut back on their health care benefits creating difficulties for workers to purchase and maintain their coverage. More and more people are looking to the government for support and coverage as health care costs become unaffordable. In 2007, the number of people who were covered by government programs increased by 2.7 million.¹² Although uninsurance rates may be decreasing, it does not appear that health care is becoming more affordable for Americans; in contrast, it appears that fewer and fewer are able to afford their health care or health coverage costs. 
 
Effects of Inadequate Health Insurance Coverage

In addition to problems with coverage, a sizable majority of the population is underinsured. While these individuals have some type of insurance coverage, reflected in statistics measuring the uninsured versus the insured, it is not enough to cover their medical expenses. It is estimated that 25 million people suffer from underinsurance in a given year.¹³ Underinsurance is commonly defined by several indicators regarding one's income relative to their medical costs. A person is generally considered underinsured if their out-of-pocket medical expenses amount to 10 percent of their income or more. If low-income adults' expenses for medical needs amount to at least 5 percent of their total income or if 5 percent or more of total income was devoted to deductibles, these individuals are considered underinsured.¹⁴ The underinsurance rate, coupled with the uninsurance rate, means that nearly 75 million Americans go without needed heath insurance coverage each year.¹⁵ The numbers only account for adults ages 19-64 and do not take into consideration children or those 65 and older who are eligible for Medicare.
     
The figures for uninsurance and underinsurance are important due to the effects of inadequate coverage. New studies show that people who have inadequate insurance coverage face similar problems to those without coverage, including higher costs and more difficulty with access. Many of these unmet needs can be attributed to rising out-of-pockets costs, higher deductibles, and increasing coinsurance and copayments.¹⁶ As costs continue to increase, a significant portion of people have reacted to these increases by curbing their use of medical services. As many as one in five adults, or 20 percent of the population, reported that in 2007 they went without or delayed getting necessary medical care.¹⁷ Survey data has shown that access to care has declined the most for people with insurance, no doubt as a result of higher out-of-out pocket costs.¹⁸ By restricting or delaying needed medical services, a large number of people are gambling with their health by avoiding necessary treatment, preventive care, or follow-up care.

Finally, as a result of problems with cost and underinsurance, many people face mounting debt as they are unable to pay for their medical services or bills. A Commonwealth Fund report states that 72 million individuals have reported that problems paying their medical bills have forced them into debt.¹⁹ The financial implications affect both the uninsured and insured individuals. The underinsured reported similar rates of difficulty paying their medical bills to people who were uninsured during any part of 2007.²⁰ Medical debt extends beyond simply not being able to pay your medical bills; it can destroy an individual's entire financial stability. One study by the Commonwealth Fund found that 28 million people used their entire savings to pay medical bills; another 21 million generated substantial credit card debt; and 21 million claimed that they were unable to afford basic necessities because of their medical bills.²¹ Medical debt will continue to grow as more and more people with insurance coverage find that their coverage cannot cover their medical expenses.

Increased medical debt coupled with declining rates of employer-sponsored coverage signal challenges ahead. Everyday people with insurance have an increasingly difficult time affording their care. Underinsurance and its resulting negative effects will become more commonplace, especially as the economy continues to slow and the necessities of everyday living increase in cost. While declining levels of uninsurance are heartening, there are many significant policy questions remaining as many millions of people still continue to struggle with access, quality, and cost issues.

HCFO Sponsored Work on Insurance Coverage

As the topic of insurance coverage continues to play out in the policy arena, the HCFO program has several studies underway that will help to inform policymakers on effects of being uninsured in America.

Title: Defining Affordability for the Uninsured and People with Chronic Conditions
Institution: The Urban Institute  
Principal Investigator: Lisa Clemans-Cope, Ph.D./Cynthia D. Perry, Ph.D.
Grant Period: March 2008 - February 2009

The researchers will examine affordability of health insurance. In particular, they will study how different measures of affordability affect access to health insurance for: 1) those that are currently uninsured; and 2) those that have chronic health conditions requiring persistently high health care expenditures. The researchers will use alternative measures of affordability (health care spending falling below a given standard of spending as a percent of family income) to: 1) describe the availability of affordable health insurance among the currently insured and uninsured populations; and 2) explain why take-up of health insurance varies, given affordability. The objective of this project is to provide empirical evidence of various measures of affordability to inform policy choices for increasing coverage and ensuring equitable financial burdens for those who acquire coverage.

Title: Economic Impact of Adverse Health Events on the Uninsured Near Elderly
Institution: Northwestern University, Kellogg School of Management
Principal Investigator: David Dranove, Ph.D.
Grant Period: November 2007 - October 2008

The researchers will assess how insurance status affects personal wealth and earnings in the population nearing age 65 that have a heightened probability of adverse health but have not yet qualified for Medicare. Specifically, they will analyze: 1) the extent to which measurable dimensions of household wealth (e.g., total net worth, home equity, funds in retirement plans) fall after an adverse health event; 2) the extent to which individuals in the U.S. who lack health insurance suffer disproportionate losses in household wealth; 3) whether the probability of sentinel financial events, including loss of home and loss of estate, increases after an adverse health event; and 4) the extent to which the probability of a sentinel financial event is higher for individuals who lack health insurance. The objective of this study is to better understand the indirect effects of lack of insurance on individuals' overall financial well-being.

Title: Health Savings Accounts, High Deductible Policies, and the Uninsured: Simulating the Effects of HSA Tax Policy
Institution: Brigham Young University
Principal Investigator: James Cardon, Ph.D.
Grant Period: November 2007 - December 2008

The researchers will explore how Health Savings Accounts (HSA) and various tax-based health insurance proposals impact the uninsured population. They also will simulate how tax deduction and credit policies for non-group insurance affect the employment-based group market. Through an innovative approach, the model will consider employer choice and individual preferences in the face of the risk of uncertain medical expenditures. The behavior of three important consumer groups will be examined: 1) the currently uninsured who do not have access to group coverage; 2) the currently uninsured who have access to group coverage but choose to be uninsured; and 3) the currently insured group in group coverage. The researchers will model a variety of policy changes and assess the value to each consumer group and the likelihood of changing from the status quo. The objective of this project is to inform policymakers about the impact of HSAs and various tax-based health insurance proposals on the uninsured and group market.

Title: Study of the Effects of High-Deductible Health Plans on Families with Chronic Conditions
Institution: Harvard Pilgrim Health Care, Inc. 
Principal Investigator: Alison Galbraith, M.D.
Grant Period: February 2007 - July 2008

This project will analyze the impact of high-deductible health plans on families who do not have a choice in health plans. The researchers will examine the effect of high deductibles on family health care decision making strategies, unmet health care needs, and the financial burden for families relative to that of traditional plans. They will also explore whether one family member's health or resource use influences that of other family members, particularly when one member has a chronic condition. The objective of the project is to inform policymakers about the potential advantages and disadvantages of high-deductible plans for families dealing with chronic conditions, especially when they have no choice in health plans.

Title: The Medicaid Undercount: Real or Perceived Bias in Estimates of Coverage in General Population Surveys
Institution: University of Minnesota   
Principal Investigator: Kathleen Thiede Call, Ph.D. 
Grant Period: December 2003 - August 2006

Given that the general population surveys of health insurance coverage may undercount the number of individuals enrolled in Medicaid by 15 to 50 percent, depending on the estimate, does such an undercount lead to inflated estimates of the uninsured? A recent Minnesota study suggests that, for the most part, Medicaid enrollees know whether or not they have insurance, whether they have public or private coverage, but are less sure which public program they are enrolled in. This has implications for how the Medicaid undercount is used, especially for adjusting the estimates of uninsured. However, it is unclear how well the Minnesota findings generalize to other states. The proposed study will replicate the Minnesota study in three other states with different population characteristics, different state health insurance programs, and different survey designs to determine whether the currently used estimates for undercounts are appropriate or whether other methodological adjustments are necessary. The purpose of this study is to provide a better methodology for adjusting counts of Medicaid recipients and the uninsured in national surveys. Since survey estimates of the uninsured play a central role in setting policy and allocating resources, the results of this study would improve the confidence with which these survey results are used.

1 DeNavas-Walt, C. et al. "Income, Poverty, and Health Insurance Coverage in the United States : 2007," Current Population Reports, U.S. Census Bureau, August 2008, 60-235. See also www.census.gov/prod/2008pubs/p60-235.pdf.
2 Ibid.
3 "Comparing Federal Government Surveys that Count Uninsured People in America," Issue Brief, State Health Access Data Assistance Center, August 2008. Also see www.shadac.umn.edu/img/assets/30697/RWJF_CompareSurveysIB_Aug2008.pdf.
4 "Five Basic Facts on the Uninsured," Kaiser Commission on Medicaid and the Uninsured Key Facts, The Henry J. Kaiser Family Foundation, August 2008. Also see www.kff.org/uninsured/upload/7806.pdf ; Schoen, C. et al. "How Many Are Underinsured? Trends Among U.S. Adults, 2003 and 2007." Health Affairs, Web Exclusive, June 10, 2008, W289-309.
5 Kincheloe, J. et al. "Can We Trust Population Surveys To Count Medicaid Enrollees and the Uninsured?" Health Affairs, Vol. 24, No. 4, July/August 2006, pp. 1163-67.
6 "Five Basic Facts on the Uninsured," Kaiser Commission on Medicaid and the Uninsured Key Facts, The Henry J. Kaiser Family Foundation, August 2008. Also see http://www.kff.org/uninsured/upload/7806.pdf.
7 Ibid.
8 Ibid.
9 DeNavas-Walt, C. et al. "Income, Poverty, and Health Insurance Coverage in the United States : 2007," Current Population Reports, U.S. Census Bureau, August 2008, 60-235. See also http://www.census.gov/prod/2008pubs/p60-235.pdf.
10 Ibid.
11 Ibid.
12 Ibid.
13 Schoen, C. et al. "How Many Are Underinsured? Trends Among U.S. Adults, 2003 and 2007." Health Affairs, Web Exclusive, June 10, 2008, W289-309.
14 Ibid.
15 Ibid.
16 Cunningham, P. and L. Felland. "Falling Behind: Americans' Access to Medical Care Deteriorates, 2003-2007," Tracking Report, Center for Studying Health System Change, No. 19, June 2008. See also www.hschange.com/CONTENT/993/993.pdf.
17 Ibid.
18 Ibid.
19 Doty, M. et al. "Seeing Red: The Growing Burden of Medical Bills and Debt Faced by U.S. Families," Issue Brief, The Commonwealth Fund, August 2008. See also www.commonwealthfund.org/usr_doc/Doty_seeingred_1164_ib.pdf?section=4039.
20 Ibid.
21 Ibid.