For $48 billion more: Covering the uninsured could save money

An analysis of federal government data released during Cover the Uninsured Week in May indicates that at least 20 million working Americans don’t have health insurance coverage. States with the highest uninsurance rate among employed or self-employed adults include Texas (26.9%), Louisiana (23.2%), Mississippi (22.4%), and New Mexico (22.4%). States with the lowest uninsurance rates among those who are working are Minnesota (6.5%), Hawaii (7%), Mary-land (8.1%), and Iowa (8.7%).

The data were from the Centers for Disease Control and Prevention’s 2002 Behavioral Risk Factor Surveillance System Survey, a national telephone survey of preventive and health risk behaviors. They were analyzed by researchers at the State Health Data Access Assistance Center at the University of Minnesota, and were released by the Robert Wood Johnson Foundation at a media conference kicking off the foundation’s Cover the Uninsured Week, a nonpartisan campaign to focus attention on the need to secure health coverage for all Americans. The campaign was co-sponsored by a number of diverse organizations, including the U.S. Chamber of Commerce and the AFL-CIO, supported by nine former surgeons general and secretaries of Health and Human Services appointed by both Democrat and Republican presidents, and co-chaired by former Presidents Gerald Ford and Jimmy Carter.

Among the other findings:

• Uninsured adults are less likely to get the health care they need. Some 19% of uninsured adults report being unable to get needed medical care in the past 12 months, compared to 5% of adults with health coverage.

• Uninsured adults are less likely to have a personal doctor or health care provider. Nationally, 56% of adults without health insurance say they do not have a personal doctor or health care provider, compared with 16% of people with health insurance.

• Individuals who are uninsured are less likely to receive preventive services. Nearly half (46%) of all women who are the appropriate age for mammograms under Centers for Disease Control and Prevention guidelines say they do not have them in the recommended time frame, more than double the rate of insured women. About 70% of uninsured men who are the appropriate age for prostate cancer screenings report not having them in the recommended time frame, compared with 47% of insured men.

• Adults who are uninsured are twice as likely to report being in poor or fair health as adults who are insured. Nationally, more than one in five uninsured adults (21%) say their health is fair or poor, nearly double the rate of adults with health coverage (11%).

• Overall (see graph), for both the employed and unemployed, the number of uninsured varies from state to state. States with the highest adult uninsurance rates include Texas (31.2%), Louisiana (27%), Mississippi (26.3%), and Nevada (25.6%). States with the lowest adult uninsurance rates include Minnesota (7.8%), Hawaii (10.2%), Delaware (10.3%), and Massachusetts (10.7%).

• Census Bureau data indicate that nearly 44 million Americans lacked health care coverage of any kind for an entire year, including 8.5 million children. In 2002 alone, the number of people without coverage increased by 2 million, the largest one-year increase in a decade.

Special data releases during the campaign looked at the impact of not having health insurance particularly on African Americans and Hispanics. It was reported that 18% of African American adults with jobs are uninsured, compared to 11% of working but uninsured white adults. "African Americans are disproportionately affected by diabetes, cardiovascular disease, kidney disease, and other serious health problems, so regular medical care is especially important for our community," says Randall Maxey, president of the National Medical Association, the largest and oldest national organization representing African American physicians and their patients. "African Americans who don’t have insurance are forced to go without care. As a result, small health problems become major ones. That’s why we are demanding that everyone in America must be able to get affordable health insurance."

The report also finds that African Americans without health coverage suffer significant gaps in medical care when compared to African American adults who have health insurance. Uninsured African Americans are less likely to get the care they need, less likely to have a personal doctor or health care provider, less likely to receive preventive services, and more likely to report being in poor or fair health.

Likewise, some 35% of Hispanic adults with jobs are uninsured, compared to the 18% of African Americans and 11% of white working adults. "Across the nation, the number of uninsured Americans is on the rise, but Hispanic Americans are affected more than any other ethnic group by the lack of health insurance," says Risa Lavizzo-Mourey, Robert Wood Johnson Foundation CEO. "These are men and women who work hard to support their families, but either are not offered insurance by their employers or cannot afford the coverage that is offered. We must find a way to solve this problem and make health benefits affordable for all business owners and their employees."

The report also found uninsured Hispanics are forced to go without medical care when it’s needed. They are less likely to get the medical care they need, even less likely that uninsured non-Hispanic whites to have a personal doctor or health care provider, less likely to receive preventive services, and more likely to report being in poor or fair health.

Another specialized survey released during the campaign reported on interviews with emergency department (ED) physicians and concluded that the number of uninsured patients being seen in hospital EDs is increasing.

The opinion poll of nearly 2,000 emergency doctors found that 72% said the number of uninsured people they treated in the past year increased, and 79% thought the number was likely to increase again this year. There also was overwhelming agreement among the physicians that the uninsured patients they treat are more likely to delay care, suffer from illness, and put their physical and financial health in jeopardy than are patients with health coverage. Some 74% of the doctors said their uninsured patients are more likely to die prematurely. The issue has become so critical that 57% of emergency physicians ranked providing basic health coverage to all Ameri-cans as the No. 1 goal in improving the nation’s health care system.

"I’ve been an emergency physician for more than 20 years, and each year I see an increasing number of uninsured patients," says J. Brian Hancock, president of the American College of Emergency Physicians. "While we treat and stabilize them in the emergency department, after they are released, many are faced with the decision of whether to spend their money to fill a prescription, follow a recommendation to see a specialist for follow-up care, or buy groceries that week. That’s a choice no one should be forced to make."

The physicians surveyed rated securing specialist referrals, ensuring follow-up care, and filling prescriptions as the three most challenging tasks to coordinate for uninsured patients. Additional survey findings indicated the ED physicians believe that nearly 30% of their patients are without health coverage and nearly 25% of their uninsured patients are children younger than 18. Some 82% of the physicians say their hospital ED functions at or over capacity on a typical week day, and the share increases to 91% for a typical weekend. "Many uninsured patients end up in the emergency department because they did not receive the preventive care they needed earlier," says John Lumpkin, an emergency physician who directs the Robert Wood Johnson Foundation’s health care group. "Many uninsured patients don’t have a physician they can see regularly for check-ups. Conse-quently, they arrive in the ED as a last resort and frequently much sicker than they would have been if they had had access to primary and preventive care."

As its contribution to the campaign, the Kaiser Commission on Medicaid and the Uninsured released an issue update, "The Cost of Care for the Uninsured: What Do We Spend, Who Pays, and What Would Full Coverage Add to Medical Spending?" The paper contains findings from a new study examining the cost of medical care for the uninsured and how much care the uninsured receive compared to fully insured people.

Total medical care expenditures among all the uninsured in 2004, including those without coverage for all or part of the year, were nearly $125 billion. In the 1998 to 2000 survey years that were used to project current costs for the analysis, more than 60 million people were uninsured for either all or part of a year, with just a little more than half being uninsured for the full year.

About a quarter of the total medical costs are paid directly by the uninsured out of pocket, although people who are uninsured for the full year pay for more than a third of their care (35%), a considerably higher share than paid by either the full-year or part-year insured populations, who paid for just under 20% of their care out of pocket.

In 2004, uncompensated care is estimated to be $40.7 billion, 2.7% of the projected total personal health care spending for 2004 of $1.5 trillion. Most uncompensated care dollars are incurred by hospitals, where services are most costly. In 2001, hospitals accounted for more than 60% of uncompensated care dollars, with office-based physicians and direct-care programs/clinics each accounting for about 20%.

The primary funding source for uncompensated care is government dollars. The projected federal, state, and local spending available to pay for the care of the uninsured in 2004 is $34.6 billion, about 85% of the total uncompensated care bill.

The Kaiser report says the uninsured who are without coverage for the full year receive 55% of the medical care per person compared to those who have health coverage for the entire year, even after taking uncompensated care into account.

"Having health insurance increases medical care use," the report says, "and so an important question in the ongoing national debate over whether and how to extend insurance to people who are uninsured is — how much more will it cost, over and above what is currently being spent on the cost of their medical care?"

Extrapolating from the experience and behavior of people who are insured for a full year and have incomes in the low- and middle-income range (less than 400% of the poverty level), if the uninsured had full-year coverage, their per person spending would increase from $2,034 to $2,836, a 39% rise. Total spending for those who would gain coverage under a universal expansion would increase by $48 billion. Added to the current spending level of almost $125 billion, the new dollars would bring the total to $173 billion if coverage were similar to the average low- to middle-income person with health insurance. It reflects the potential increase in overall health spending directly attributable to the uninsured, but does not take into account the additional costs associated with major health care proposals.

Kaiser says that a benefit of a comprehensive approach to covering all of the uninsured, rather than an incremental approach, is that some of the public money already being used to pay for care received by the uninsured could be reallocated toward the cost of insurance. However, the report cautions, providers caring for the uninsured now, primarily hospitals that now receive the largest subsidies for uncompensated care, may be reluctant to relinquish their existing subsidies unless assured that all people will have health insurance.

Added cost relatively modest

To further the debate over how best to cover the uninsured, the Kaiser report says the additional $48 billion a year of medical spending needed to provide universal coverage beyond what is currently being spent can be viewed from several broader perspectives:

1. Relative to current government spending for public health insurance programs and the subsidization of private health insurance in 2004 (Medicare will cost $266.4 billion, Medicaid $280.7 billion, and tax subsidies to private insurance $188.5 billion), the additional spending to cover the uninsured is relatively small.

2. The new dollars would be less than 3% of total personal health care spending in this country.

3. The $48 billion would increase the share of gross domestic product going to health care by 0.4%.

A Duke University health policy researcher says one way to find the money to cover the uninsured would be to significantly reduce the cost of excess health service regulation. Testifying before the U.S. Senate Committee on Health, Education, Labor, and Pensions several months before Cover the Uninsured Week, Christopher Conover said his findings are based on more than two years of research on nearly 50 different kinds of federal and state health service regulations. "These various regulations covered the gamut from mandated health benefits to state certificate of need requirements for hospitals and nursing homes," Mr. Conover said. "We systematically tallied both the benefits and costs associated with such regulations and found that the expected costs of regulation in health care amounted to nearly $335 billion in 2002." The benefits of the health services regulations studied totaled about $207 billion, and he testified that the remaining $128 billion is attributable to excess regulation.

Mr. Conover cited three regulatory areas where savings could be realized: medical liability system, including litigation costs, court expenses, and defensive medicine; Food and Drug Administration (FDA) regulations; and health facility regulations. He said he is not suggesting that FDA be abolished or that nursing home patients be left on their own, but rather scaling back regulations when the cost exceeds the benefits. "Admittedly, our estimates are still preliminary, and we now are engaged in a process of careful review of them. But it seems unlikely that the adjustments yet to come would alter this central conclusion: The net burden of health services regulation likely exceeds the annual cost of covering the 44 million uninsured. So a legitimate policy question is whether the benefits of regulation outweigh the benefits of coverage for all Americans. For example, in the context of the Institute of Medicine finding that 18,000 uninsured die every year due to lack of coverage, is maintaining our current regime of health regulation worth letting that continue?"

(Download research papers, media releases, fact sheets, and other Covering the Uninsured Week materials from www.covertheuninsuredweek.org.)