Medicaid cutbacks lead to growing ranks of the permanently uninsured
Medicaid cutbacks lead to growing ranks of the permanently uninsured
What happens to people who have health care coverage through public programs such as Medicaid and SCHIP and then lose it, for instance, through state budget cutbacks?
Until now, little has been known about the implications of losing coverage on the insurance status of those no longer eligible for public coverage. It has been an open question as to how many will obtain private coverage and how many will become uninsured when public coverage no longer is available.
A January Kaiser Commission on Medicaid and the Uninsured study found that the vast majority of current enrollees affected by cutbacks in eligibility for public programs, particularly those with the lowest incomes, are likely to remain uninsured.
Urban Institute policy researchers Sharon Long and John Graves, who conducted the study for Kaiser, said only 8% of the low-income working-age adults currently covered by public programs would have the possibility of obtaining employer-sponsored insurance, and less than 1% would likely find nongroup premiums costing less than 5% of their family's income.
"Altogether we estimate that no more than 9% of these low-income adults would have access to an alternative source of insurance in the absence of public coverage," Ms. Long and Mr. Graves wrote. "It is only when income is above 150% of the federal poverty level that other coverage options become available for more than a handful of adults who currently have public coverage. And even then, only one in four of the parents and fewer than two in five childless adults would have an alternate insurance option."
The policy brief is based on the 2002 National Survey of America's Families, which provides detailed economic, health, and social characteristics for a representative sample of some 45,000 families.
With few exceptions, the authors say, public insurance only is available to low-income U.S. citizens who are pregnant women; children and, at lower income levels, their parents or caregivers; and aged, blind, and disabled individuals. Only a few states have extended eligibility beyond these populations to cover low-income childless adults more generally.
Thus, the researchers didn't find it surprising given those eligibility criteria that low-income, working-age adults with public coverage tend to be women (66%), in families with children (51%), and U.S. citizens (85%). More than 40% say they are in fair or poor health, while 50% report a physical or mental health problem limiting their ability to work. Although annual family income is quite low (averaging $10,669), 38% of the adults either work themselves or are in a family with a worker.
Childless adults are much more likely to report that they are in fair or poor health (53% vs. 33%) or that they have a physical or mental health condition limiting their ability to work (7% vs. 31%). Further, only 23% of the childless adults have a worker in their family, compared to more than half of the parents with public coverage.
In the absence of public coverage, an individual's coverage options narrow to obtaining employer-sponsored coverage through their own employer or a spouse's employer or, for some young adults, a parent's employer. The researchers reiterate that only 8% of low-income working-age adults had the possibility of obtaining employer-sponsored coverage, and less than 1% would likely face nongroup premiums that were less than 5% of their family income.
"When we look at the potential coverage options for parents and childless adults," according to Ms. Long and Mr. Graves, "we find that 12% of parents have access to employer-sponsored coverage, compared to only about 4% of childless adults."
The authors say this finding is not surprising given that nearly all working-age childless adults with public coverage qualify for that coverage because of a disability that limits their ability to work.
While the extent to which low-income adults have potential insurance options beyond public coverage increases with income, Ms. Long and Mr. Graves say, it is rare for any adults with income below 100% of the federal poverty level to have access to employer-based coverage or to affordable nongroup coverage in the absence of public coverage. When income increases above 100% of poverty, the share of adults with access to employer coverage or to affordable nongroup coverage rises, particularly for parents. However, even for these adults, only 20% of parents and 10% of childless adults would have access to employer coverage. And this is despite the fact that more than two-thirds of parents and nearly 40% of childless adults with income between 100% and 200% of the federal poverty level have at least one worker in the family.
Ms. Long and Mr. Graves say that in the face of cutbacks in public program eligibility, the vast majority of the low-income adults currently enrolled in the programs would have few options for insurance coverage. Employer-sponsored insurance offer rates are low for this population, they say, and have been falling over time, particularly among the smaller firms that are more likely to employ low-income workers. Also, as premiums for employer sponsored coverage have continued to climb, such insurance has become less affordable for low-income workers.
The average annual employee contribution in 2005 was $2,713 for family coverage. With average family income for low-income adults with public coverage projected to be below $12,000 in 2005, that employer-sponsored premium would account for nearly 25% of the family's income. Nongroup coverage, the other potential coverage option, also is unlikely to be affordable for most low-income adults, with many facing premiums in excess of 25% of their family's income.
The authors say that while premium assistance programs or tax credits could help make the nongroup coverage option more affordable, the premium subsidies would have to be substantial to bring the cost down to levels likely to generate much enrollment. And premium subsidies or tax credits address only one of the costs of nongroup coverage. Unlike Medicaid, which has no deductibles and minimal copay requirements, nongroup coverage often requires both high deductibles and high copayments when using care, making the coverage even less affordable for low-income families.
Ms. Long and Mr. Graves say there are policy implications for the fact that cutbacks in public programs will increase the ranks of the uninsured because there is ample evidence that the uninsured have higher rates of morbidity and mortality than insured persons, as they are less likely to obtain screening and prevention services, are more likely to delay seeking care when sick, and, even when seriously ill or suffering from identified chronic conditions, receive less care.
"While it is clear that the poorer health of the uninsured has a significant impact on individuals and their families," they say, "it also has a significant economic impact on their communities. As the share of the community that is uninsured and, thus, in poorer health increases, local businesses face higher absenteeism and lost productivity, and there are increased demands on the local health care system to meet the demands of those who lack insurance.
Ms. Long tells State Health Watch there has not been a strong response to the study and its findings.
"It's probably hard for people to deal with the consequences," she says. "They believe there are other options, such as employers and safety net providers. But it's not clear what using other options would cost or what the benefits package would look like.
Ms. Long says it's important to either provide a public support system or boost the private sector.
"Leaving people on their own is not a solution," she declares. "People don't think through the implications. It's easier to think about cutting people off."
Meanwhile, a Texas public opinion survey demonstrates the fear that people have of becoming uninsured. The survey, sponsored by the Texas Hospital Association, found that 86% of the state's residents favor making health insurance more accessible and affordable because of a fear of losing their own health benefits.
"The lack of accessible and affordable health care insurance worries Texans, and for good reason," commented Texas Hospital Association CEO Richard Bettis. "More than 5 million Texans lack even basic health benefits, a higher percentage of the population than in any other state. Employer-sponsored health coverage in Texas is lower than the national average. And there are more children uninsured in Texas than in other states. This is a serious problem that affects not only uninsured Texans, but also the health care and pocketbook of every other resident in the state."
The survey results were released as part of the Cover the Uninsured Week, held May 1-7, which was sponsored nationally by the Robert Wood Johnson Foundation to highlight the need for broad coverage.
Another Cover the Uninsured Week report revealed that an increasing number of employees are declining their employer's offer of health insurance, as the cost of individual premiums increased dramatically over the last five years. Some 3 million fewer workers who are eligible for employer-sponsored health insurance enrolled in it in 2003, compared to 1998.
"This report should be as alarming to Congress as it is to the American people," said Robert Wood Johnson Foundation CEO Risa Lavizzo-Mourey, "because employer-sponsored health insurance is the backbone of America's health care system. As costs go up, fewer individuals and families have insurance and fewer businesses can afford to provide coverage for their employees, which means that the number of uninsured Americans will continue to increase. It is way past time for our national leaders to take action."
The report's findings included:
- Individual insurance premiums are rising, showing a 42% increase from $2,454 in 1998 dollars adjusted for inflation to $3,481 in 2003.
- More workers are declining employer offers of health insurance, down from 85.3% in 1998 to 80.3% in 2003.
- Employers still pay the great majority of the insurance premium, as they did five years ago, but the cost burden has increased substantially for both employers and employees.
Contact Ms. Long at (202) 261-5656. Download the Kaiser issue brief from www.kff.org/medicaid/7449.cfm. The Texas report is available on-line at www.thaonline.org/issues1/Uninsured. More information on that report is available from Amanda Engler at (512) 465-1050. The Robert Wood Johnson report is available on-line at www.covertheuninsured.org.
Until now, little has been known about the implications of losing coverage on the insurance status of those no longer eligible for public coverage.Subscribe Now for Access
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