42 MILLION UNINSURED: DOES IT MATTER

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42 MILLION UNINSUREDDOES IT MATTER?

• Closing the Gap
• Governors Business Summit
• Charleston, West Virginia
• June 4, 2003

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Inadequate Health CareDoes It Matter?

• The real cost of our present inadequate
  medical care is not measured merely by doctors
  bills and hospital bills. The real cost to
  society is in unnecessary human suffering and the
  yearly loss of hundreds of millions of productive
  working days. To the individual, the real costs
  are the shattering of family budgets, the
  disruption of family life, the suffering and
  disabilities, the permanent physical impairments
  left by crippling diseases, and the deaths each
  year of tens of thousands of persons who might
  have lived. This is the price we are now paying
  for inadequate health care.

3
Inadequate Health CareDoes It Matter?

• The real cost of our present inadequate
  medical care is not measured merely by doctors
  bills and hospital bills. The real cost to
  society is in unnecessary human suffering and the
  yearly loss of hundreds of millions of productive
  working days. To the individual, the real costs
  are the shattering of family budgets, the
  disruption of family life, the suffering and
  disabilities, the permanent physical impairments
  left by crippling diseases, and the deaths each
  year of tens of thousands of persons who might
  have lived. This is the price we are now paying
  for inadequate health care.
• President Harry S. Truman -- 1945

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Whats so important about having health insurance
anyway?

• Greater chance of getting care on a timely basis
• Increased likelihood of advice about and coverage
  of preventive services
  
• Greater likelihood of continuity of service
  especially for chronic conditions
  
• Less likelihood that seeking care will be
  delayed
  
• Greater likelihood that vital but costly services
  will be provided
  
• Financial security in event of illness
• Pooling of risk allows cost to be shared among
  currently well and currently sick

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Who are the Uninsured?You may be surprised!

• More than 80 of uninsured families
  
• Two-thirds of uninsured families are below (200
  of FPL) where premiums can exceed 10 of AGI
  
• Who is usually left out?
• 40 of dependents in families below 150 of FPL
• Unemployed and low income single adults
• Laid off workers unable to afford COBRA
• Younger spouses of Medicare eligibles and widows
• Ill or disabled without employer-based group
  coverage
  
• Non-workers seeking insurance as individuals
  often find them prohibitively expensive

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Who are the Poor and Uninsured?Summary of Income
Eligibility Levels for Medicaid and SCHIP by
Eligibility Group in 2002
200
150
133
100
76
50
Aged and
Pregnant
Children

Children
Children
Parents
Childless
Ineligible
Disabled
Women and
Age 1-5
Age 6-13
Age 14-18
Adults
Aliens
Infants
Covered by Medicaid
Covered by SCHIP
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Do those without insurance really have poorer
health?

• Uninsured adults
• more often miss cancer screening, resulting in
  more advanced tumors and higher mortality rates
  
• with chronic conditions like hypertension and
  AIDS lack access to needed medications
  
• with diabetes miss critical checkups that could
  prevent blindness, amputation, and heart disease
  
• Uninsured women and their newborn are likely to
  have poorer health outcomes
  
• Uninsured children have half the chance of a
  regular visit and thus more untreated childhood
  diseases and fewer immunizations
  

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Impact on providers of care can be significant

• Large numbers of uninsured result in
• Higher premiums for the insured
• Lower margins
• Pressures to avoid uninsured patients (move to
  suburbs, close ERs)
  
• Reduce unprofitable services
• Promotes no margin, no mission like thinking
• Medicare and, especially Medicaid aggravate the
  problem of the cost shift a hidden tax.
  

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Hydraulic Cost Shift Model
Breakeven if AB CDE
1.30
1.3
1.20
1.10
D
E
A
B
C
1.15
Average Cost
1.00
.90
.80
Payment to Cost Ratio
Medicaid HMO
0.85
.70
.60
0.75
HMOs and PPOs
Commercial Insurance
Medicare
.50
Self Pay 2
.40
0.5
.30
.20
.10
21
38
28
8 5
10
80
90
70
60
50
40
30
20
0
100
Percentage of Market Share by Net Revenue
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The Uninsured Impact Taxpayers

• Safety net services and their administration are
  usually supported by county or municipal taxes
  
• Medicaid is a state expense shared by the federal
  government, but is still among the fastest
  growing demands on state budgets
  
• Impaired health and productivity results in lower
  tax revenues, which, in turn,
  
• Reduces funding for other vital services

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The Uninsured Affect Employers Who Offer Insurance

• Because of the hydraulic effect of the cost
  shift, hospitals and physicians must charge more
  to cover revenue foregone by taking care of the
  uninsured these costs are passed on to employers
  via higher insurance premiums.
• Employers providing insurance are thus
  subsidizing those employers that do not offer
  insurance their employees can afford
  
• In states with low Medicaid eligibility
  thresholds, it is more cost effective for the
  employers to support expanding the States
  Medicaid program than to continuing to pay via
  the cost shift.

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Employers Who Do Not Offer Insurance

• Are less able to compete for and retain skilled
  workers, especially in a tight labor market
  
• But for many of these employers who are small and
  have a transient workforce, offering insurance
  may not really solve the problem

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Why is it so hard to insure everyone?

• There are those who choose not to accept
  insurance, even when its free
  
• the self-perceived immortals
• the individual free riders
• Many individuals cannot afford it even with
  subsidies
  
• Some companies believe they can retain workers
  without insurance and other benefits
  
• Some companies (especially smaller ones) cannot
  afford small-group insurance or any at all
  
• For some companies, health insurance is too much
  of a hassle, even if they could afford it
  
• Change in employment and family status is
  confusing
  

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In SummaryFour Key Points

• Not having insurance is a major influence on
  health and economic productivity for individuals
  and families
  
• Large numbers of uninsured have a negative impact
  on taxpayers and employers, as well as
  individuals
  
• There are many reasons for the numbers of
  uninsured, some are relatively easy to address,
  but it all comes down to financing
  
• In addressing this issue we must preserve the
  capacity to pool risk

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But, despite the difficultiesThere are some
solutions,andthe debate is heating up
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What Does It Matter to Individuals?

• "The people who are most at risk today are those
  who have no health insurance at all.
  
• They're at risk of not getting regular care when
  they need it.
  
• They're at risk of not catching real problems
  before they get serious enough not to be
  treatable.
  
• They're at risk of not getting the best treatment
  when they actually do get sick.
  
• And they're at tremendous financial risk.
• They could lose everything that they've saved in
  their lives because of some even fairly minor
  health problem."
  
• IOM Report A Shared Destiny