Will targeted policies work for the uninsured?
The U.S. Economy And Changes In Health Insurance Coverage, 2000-2006
Americans continued to lose their health insurance even as the economy improved.
by John Holahan and Allison Cook
Health Affairs
February 20, 2008
The number of uninsured Americans increased by 3.4 million between 2004 and 2006, despite improving economic conditions. In the first four years of the decade, during a period of economic recession, the number increased by 6.0 million. The dominant factor in both periods was a decline in employer-sponsored insurance coverage. Although the recent decline was less than that experienced from 2000 to 2004, growth in public coverage was small, and the number of uninsured people increased by 1.0 million children and 2.4 million adults. Employer coverage declined most for self-employed or small-firm workers, in the South, and among noncitizens.
The decline was much greater in the first period, reflecting poor economic conditions. But the rate of employer coverage continued to decline even when the economy improved.
For children, the decline in employer coverage was offset by large growth in Medicaid and SCHIP in the first four years of the decade. As states experienced deteriorating fiscal conditions, they adopted policies that restricted growth in these programs. As a result, the number of uninsured children increased by 1.0 million between 2004 and 2006, after having fallen by 400,000 between 2000 and 2004.
Between 2004 and 2006, employer coverage fell by 6.2 percent for those below 200 percent of the poverty level and by 0.6 percent for those at or above 400 percent of poverty. Thus, the data show that employer coverage is clearly declining at all income levels, but primarily among those with the lowest incomes.
The decline in employer coverage can be traced to greater increases in health insurance premiums than in wages. As health insurance becomes more and more expensive, it adds more to the cost of a worker’s total compensation package. To the extent that firms cannot shift this back to workers in the form of lower wages, they become less likely to offer coverage.
It is striking that the rate of employer coverage declined and the number of uninsured people increased even after the U.S economy rebounded from the recent recession. This erosion will likely continue, particularly for low-income workers, because the basic factors underlying it seem unlikely to change.
http://content.healthaffairs.org/cgi/content/full/hlthaff.27.2.w135/DC1
Comment:
By Don McCanne, MD
The fact that the number of uninsured continues to increase is certainly not news. But there are a couple of points in this article that should alarm us.
A rebounding economy was unable to stop the decline in coverage. In spite of favorable economic trends, employers found their health benefit programs to be less affordable, and more dropped their employees from coverage. Clearly we will not be able to rely on improvements in the economy alone to expand coverage to more individuals.
This report demonstrates that the decline in coverage is impacting all sectors of our society, though some more than others. This indicates that targeted programs cannot eliminate the problem since some sectors inevitably will be left out. Also alarming is the fact that incremental reforms more narrowly targeting selected populations is not working either.
As an example, the greatest “success” in recent years has been insuring more children through the SCHIP and Medicaid programs. Yet the gain of 400,000 insured children during 2000-2004 was more than offset by a loss of 1.0 million during 2004-2006 (years of economic recovery). That certainly cannot be classified as a health policy success, yet that is the best we can show for all of our incremental efforts.
When you look at the leading comprehensive proposals, policies are included to target the more vulnerable populations. Yet they are very weak on policies that will help the largest vulnerable group of all: middle-income individuals and families.
Relying on improvements in the economy for most of us, with safety-net welfare programs for the poor, will never get us to a program that guarantees reasonably comprehensive care for all of us. It will require the adoption of a health care financing system that automatically includes all of us, for our entire lives.