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Hidden insurance crisis: Coverage worse than statistics indicate
Going without insurance not just a problem for the poor
The nation’s insurance coverage crisis is even worse than many policy analysts have feared, with nearly 38% of Americans younger than age 65 going without insurance at some point over a four-year period from 1996-1999, according to a study sponsored by the Commonwealth Fund, a private, social research foundation based in New York City.1
"The shocking thing about this study is that we are used to thinking of this as a 15% to 17% problem — that roughly 15% to 17% of the population under age 65 is uninsured — and this is telling us that it is a 40% problem," says Karen Davis, PhD, the fund’s president and former chairman of the department of health policy and management at the Johns Hopkins School of Hygiene and Public Health in Baltimore. "In fact, it is a 70% problem among low-income people."
In August, the U.S. Census Bureau released statistics showing that 2.4 million people lost health care coverage in 2002 — a 6% increase from the previous year. In total, the bureau report indicated, 43.6 million Americans were without health insurance, representing about 15% of the population.
However, the Commonwealth Fund’s study of additional data collected by the bureau indicates that cyclical loss of coverage affects almost 40 million more Americans and similarly can have devastating affects on access to care, Davis says.
Researchers at the department of health policy at Pennsylvania State University analyzed data from a survey of 40,000 people conducted by the Census Bureau. The bureau collected monthly data on insurance coverage for these survey respondents between the years 1996 and 1999.
The data indicated that two out of every five people surveyed had been without coverage at some point during the four years. Extrapolating the data to the general population, it indicates that a total of 85 million Americans were uninsured at some point during that time, says Pamela Farley Short, PhD, professor in the department of health policy at Pennsylvania State University in University Park and the lead author of the study report, which was published in the November/December edition of the journal Health Affairs.
"The average American faced a 40% risk of being uninsured over those four years," Short says. "That’s in the same sense as a 40% chance of rain some time in the day."
The figures 85 million and 40% are double what most people usually hear in discussions about the growing numbers of uninsured, she notes.
"Something in the neighborhood of 40 million people are uninsured on any given day," she says. "But 85 million people are uninsured at some point over four years. The time frame matters because, as studies like ours show, there’s a lot of turnover and churning in health insurance. From our study, we estimate that about 2 million people drop out of coverage each month; but 2 million other people, people who had been uninsured, got into a private or public insurance plan."
The poor also are much more likely to go without insurance over a given period of time, the study indicates.
Almost 70% of families with incomes lower than 200% of the federal poverty level went without insurance at some point over the four years. And, when poorer people were uninsured, they were much more likely to get trapped in an on-again, off-again cycle of maintaining insurance.
And of those who lose insurance — even though they regain coverage — typically go without for significant periods of time. Their study also indicates that only about 20 million people were uninsured for four months or less, she says.
"There were 45 million people who were uninsured for more than 24 months out of the four years that we tracked," she adds. "That’s at least 24 months out of 48."
Many people cycle in and out of health coverage, what Short refers to as "having battery-powered health insurance" because they have it for awhile then it goes off, then it comes back on again.
"That’s in contrast to the situation that most of us would like to be in, where we plugged into a stable source of coverage," she says.
Impact on outcomes and cost
Such churning can have devastating outcomes for the intermittently insured as it does for the uninsured, explains Benjamin K. Chu, MD, MPH, president of the New York City Health and Hospitals Corp., the public hospital system for the state of New York.
"The most important thing about health care is continuity, especially when you are talking about illnesses that we can prevent or chronic diseases," Chu says. "It’s the worst thing in the world to start a series of treatments, try to get up a head of steam to manage someone, and then all of a sudden have them fall out, not be able to come, or not be able to access medications. You tear your hair out trying to figure out why somebody’s control of their chronic disease is so off the wall, and that’s when you realize that there are economic reasons for this."
And the burden of providing unreimbursed care to uninsured patients also is continuing to strain the resources of the safety nets designed to keep these patients from falling through the cracks, another Commonwealth Fund study indicates.
A national survey of primary care internists, also published in the same edition of Health Affairs as the coverage study, indicates that two-thirds of internists in private practice help uninsured patients by reducing or waiving fees for office visits. and more than two-thirds provide some sort of charity care each month.2
However, the same group of doctors indicated they felt they were unable to provide an appropriate level of care to these patients because of difficulties obtaining appropriate specialist referrals and medications.
Less than one-third of survey respondents indicated they could get reduced cost medications for the uninsured patients and just 9% indicated they could get reduced-cost lab tests or diagnostic procedures.
Nearly half of the respondents indicated their uninsured patients failed to follow advice or obtain follow-up tests or take prescribed medications because of cost concerns.
Churning also hurts the entire health care system because the administrative costs of enrolling persons into health plans — and for publicly funded plans, the costs of verifying continued eligibility — are so significant, Chu adds.
His hospital system has its own health plan for low-income residents, Natural Plus Health Plan, which has 190,000 enrollees, he says. The cost of enrolling each new person is approximately $280, and the plan has a one-year recertification process. So, at the end of the year, plan administrators must go through another process to determine whether the enrollees stay on. That costs about $80 per person.
"And those costs don’t include all of the inefficiencies that come from claims adjudication and other types of reconciliations that we go through on a monthly basis," he notes. "When you look at it, it is almost $400 per year to sign someone up and keep them on. And for a typical child, with annual premiums around $1,200, almost a third of that money in any given year is used for administrative costs."
Repeated cycling on and off plans just means that these administrative start-up costs get wasted when coverage is lost, and additional money is required to re-establish coverage once the person can, again, he says.
The only long-term solution to the problem, Davis says, is for the nation to have some type of comprehensive approach to ensure that all Americans can get and maintain affordable health coverage.
Short-term solutions could include changes in eligibility testing by state Medicaid agencies and improvements in the Consolidated Omnibus Budget Reconciliation Act (COBRA) legislation that allow workers to keep health coverage after leaving or changing jobs, she adds.
"More things can be done with employer-based coverage to provide financial assistance to make COBRA affordable," Davis says. "A lot of people are eligible to continue their employer coverage; but when they become unemployed, they simply cannot afford it, so providing premium assistance to pick up 70% to 75% of that premium can also be a way of helping people stay covered."
Studies funded by Commonwealth and other entities indicate that most people who fall off Medicaid rolls still are eligible but have not been able to keep up with repeated requests to verify eligibility and are dropped, she adds.
Involuntary disenrollment in New York Medicaid and Child Health Plus programs is 50%, yet their studies indicated that only 7% actually are ineligible at the time they come up for recertification, she says.
One way to boost re-enrollment or maintenance of coverage would be to require a full eligibility review every other year rather than every year, she notes.
"For example, [recertification] often requires an in-person interview. So, if you’ve got a low-wage job, you have to take off work to go down to the Medicaid enrollment office, and when you get there, you may find that they want a payroll stub documentation, or they want some other documentation that you don’t have with you," she explains.
"You would have to take another day off and go back. A lot of people simply can’t find the time to go through all of the hoops that are required."
Some states use passive enrollment in which they assume a person still is eligible unless they learn otherwise through employment tax records, etc., she says. But the majority of states do not. In fact, with rising unemployment rates having drastic effects on many states’ revenues, most programs are looking at ways to cut enrollment rather than encourage people to stay on, she says.
"Some states have hired more employees to screen out individuals, so we’re going in the opposite direction of making it even harder for people to hold on to their coverage."
Health care providers and the public need to be aware that this also is not just an issue affecting the indigent, she continues.
According to the study, while the most pressing coverage problems occurred among poor Americans, almost 34% of people earning between two and four times the federal poverty level (between $30,000 and $70,000 annually) were uninsured during that four-year period as well.
"It’s a problem that is particularly serious for low-income people and low-wage workers; but, increasingly, it is a problem for people who work for the big companies and people who think of themselves as middle class," she says. "The dynamics of the problem are changing."
(Editor’s note: More information on the studies mentioned in this report, including a detailed issue brief on the four-year census study of insurance coverage, can be found on the Commonwealth Fund’s web site at: www.cmwf.org.)
1. Short PF, Graefe DR. Battery-powered health insurance. Stability in the coverage of the uninsured. Health Affairs 2003; 22:244-255.
2. Fairbrother G, Gusmano MK, Park HL, et al. Care for the uninsured in general internists’ private offices. Health Affairs 2003; 22:217-224.