November 1, 2007
Sara R. Collins
S. R. Collins, Widening Gaps in Health Insurance Coverage in the United States: The Need for Universal Coverage, Invited Testimony, Subcommittee on Income Security and Family Support, Committee on Ways and Means, U.S. House of Representatives, Hearing on "Impact of Gaps in Health Coverage on Income Security," November 14, 2007
Thank you, Mr. Chairman, for this invitation to testify on the impact of gaps in health coverage on income security. As rising health care costs and premiums are making it more difficult for many employers, particularly small firms, to provide affordable health insurance to their workers, increasing numbers of people under age 65 are finding themselves without access to employer-based coverage and ineligible for enrollment in public insurance programs. The number of uninsured people climbed to 47 million in 2006, and an estimated 16 million adults are inadequately insured. Health insurance coverage is the most important determinant of access to health care. People who lack coverage have fundamentally different life experiences than those who have it; many die prematurely, and many suffer lost productivity and earnings.
With so many people left outside the health care system, it is no wonder that the U.S. system performs poorly compared with systems in industrialized nations that have universal health insurance. It is critical on moral and economic grounds that the nation move affirmatively to guarantee affordable, comprehensive and continuous health insurance for everyone.
The Gap Between Employer-Based and Public Coverage Is Widening
- Employer-based coverage forms the backbone of the United States's voluntary, mixed privatepublic health insurance system; more than 160 million workers and their dependents, or 62 percent of the under-65 population, has job-based coverage.
- Medicaid and the State Childrens Health Insurance Program (SCHIP) play a critical supporting role, covering an additional 28 million adults and children, or 11 percent of the under-65 population. Medicare covers 39 million people, mostly those over age 65.
- The most gaping hole in the current system is evident when people under age 65 do not have access to employer coverage and are not eligible for Medicaid, SCHIP, or Medicare, as in the case of those too disabled to work.
- With their high premiums and underwriting, individual insurance planswhich cover just 6 percent of the under-65 populationhave proven to be an inadequate substitute for employer group coverage.
Who Is Most at Risk for Lacking Coverage?
- Low- and Moderate-Income Families
- More than two-thirds (67%) of adults under age 65 who do not have health insurance are in families where at least one member works full time.
- The likelihood of low- and moderate-income families having coverage through an employer has always been lower than that of higher-income families and has declined over the last six years.
- In 2005, 53 percent of people with incomes less than $20,000, and 41 percent of people in households with incomes between $20,000 and $40,000, reported a time when they were uninsured in the prior year.
- Small-Firm and Low-Wage Workers
- Workers who are employed in firms with fewer than 50 employees are less likely to have coverage through an employer than are those employed by larger companies.
- Lower-wage workers in small firms are at particularly high risk for not being offered health benefits, not being eligible for such benefits, or not having the financial means to "take up" coverage. Nearly two of five lower-wage workers in small firms are uninsuredmore than twice the rate of higher-wage workers in small firms.
- Nonstandard Workers
- An estimated 34 million workers are in nonstandard jobs, meaning they are either self-employed or in temporary, part-time, or contract positions.
- Just one of five nonstandard workers has health insurance through his or her employer, compared with three-quarters of regular, full-time employees.
- About one-quarter (24%) of nonstandard workers are uninsured, versus 12 percent of regular full-time workers.
- Young Adults
- More than 13 million young adults ages 19 to 29 are uninsured, the fastest growing age group among the uninsured population.
- Turning 19 is a critical milestone. Employer health plans often do not cover young adults as dependents after age 18 or 19 if they do not go on to college. Medicaid and SCHIP reclassify all teenagers as adults on their 19th birthday.
- The loss of employer coverage, Medicaid coverage, and SCHIP coverage shows up dramatically in uninsured rates of young adults, particularly those in low-income families. Among 19-to-29-year-olds in families with incomes below the poverty level, more than half are uninsured, compared with about one of five low-income children age 18 and under. About 42 percent of young adults in families with incomes between 100 percent and 199 percent of poverty are uninsured.,/li>
- Sixty-two percent of working-age Hispanics and 33 percent of African Americans were uninsured for some time during 2005, compared with 20 percent of whites in the same age group.
- Eighty percent of Hispanics in households with incomes under 200 percent of poverty experienced a time when they were uninsured over a four-year period, compared with 66 percent of African Americans and 63 percent of whites in that income group. This is in spite of the fact that Hispanics in lower-income households were more likely than either African-Americans or whites in the same income group to have been continuously employed full-time over that period.
- Despite the availability of COBRA coverage, over half of unemployed adults under age 65 are uninsured, more than three times the rate for employed adults.
- Just as they are less likely to be offered employer-based coverage in general, lower-wage workers are far less likely to be eligible for COBRA. Many who leave their jobs were uninsured while they were working.
- Even when lower-wage workers are eligible for COBRA benefits, the full cost of the premium is often unaffordable, particularly as a share of an unemployment benefit. COBRA-eligible low-income workers who leave their jobs are much more likely to be uninsured than higher-wage workers. They have fewer options than higher-wage workers have for coverage through a new job or through a spouse.
- People with Disabilities in Two-Year Waiting Period for Medicare
- There are an estimated 1.7 million disabled people in the waiting period for Medicare. Of those, about one-third have coverage through a former employer or though a spouse's employer, just over a third are covered by Medicaid, 9 percent purchase coverage through the individual insurance market, and 15 percent, or nearly 265,000 people, are without health insurance.
- More than two of five disabled Medicare beneficiaries ages 50 to 64 said that they had been uninsured just prior to entering Medicare
Consequences of Gaps in Health Insurance Coverage for the Health and Economic Security of Families
- Poor Access to Care
- People who spend any time without coverage report significantly higher rates of cost-related access problems, are significantly less likely to have a regular doctor or medical home, and less likely to say that they always or often receive the health care they need when they need it.
- Poor-quality health care is particularly devastating and can have long-term implications for uninsured adults with chronic health problems.
- Health and Economic Implications for Families and the Nation
- More than half of working-age adults who had been uninsured during 2005 reported problems paying medical bills during that time or were paying off accrued medical debt, compared with 26 percent of those who had been insured all year.
- Medical debt forces families to make stark tradeoffs. For example, 40 percent of uninsured adults with medical bill problems were unable to pay for basic necessities like food, heat, or rent, and nearly 50 percent had used all their savings to pay their bills.
- The Institute of Medicine estimates that 18,000 avoidable deaths occur each year in the U.S. as a direct result of individuals being uninsured
- The aggregate, annualized cost of uninsured people's lost capital and earnings from poor health and shorter lifespans falls between $65 billion and $130 billion for each year without coverage.
- Gaps in coverage for uninsured people with chronic health conditions may have long-run cost implications for the health system, and the Medicare program in particular.
Health Care Reform Is Necessary to Fill the Gaps
It is essential on both moral and economic grounds that the United States move forward to guarantee affordable, comprehensive, and continuous health insurance for everyone. Without universal coverage, our health system will not be able to provide more effective, higher-quality, and more efficiently delivered care, and it will not be able to ensure longer, healthier, and more productive lives. It is unacceptable that people without health insurance collectively lose between $65 billion and $130 billion a year in lost productivity and earnings, and are greater risk of dying prematurely. Several proposals for universal coverage have been put forthor implemented, as in the case of Massachusettsby governors, members of Congress, and the 2008 presidential candidates. This is a welcome development, and highly promising for reversing the inexorable climb in the uninsured population over the past several years.
In the absence of universal coverage, there are several policies that would help fill the gaps in the existing system by building on existing public and private group insurance and also create an essential foundation for universal coverage.
- Build on Public and Private Group Insurance to Extend Coverage to Vulnerable Age Groups and the Disabled
- Allow states to extend eligibility for Medicaid and SCHIP coverage beyond age 18. The Foster Care Independence Act of 1999, which allows states to extend Medicaid coverage to children in foster care beyond age 18, could be expanded to cover all children in Medicaid. Depending on the income eligibility levels, extending coverage up to age 25 would cover 3.3 million uninsured young adults 19 to 25 in families with incomes under 100 percent of poverty and 5.7 million with incomes under 200 percent of poverty.
- Seventeen states have already redefined the age at which a young adult is no longer a dependent for purposes of insurance, ranging from 24 to 30. Other states should follow their lead to ensure that young adults can remain on their parents' plans while they make the transition to college, graduate school, or work.
- Allow older adults ages 55 to 64 to "buy in" to Medicare.
- End Medicare's two-year waiting period for coverage of the disabled.
- Build on Public and Private Group Insurance to Extend Coverage to Low-Income Workers and Families
- Expand Medicaid to cover everyone under 150 percent of poverty; consider providing federal matching funds for sliding-scale premiums at higher income levels.
- Require employers to finance COBRA coverage for up to two months for employees who lose their jobs. The federal government could provide premium assistance for 70 percent of COBRA premiums for unemployed workers.
- Connect Public and Private Group Insurance to Realize Efficiencies from Pooling Large Groups of People
- Create a national health insurance "connector" based on the Federal Employees Health Benefits Program or Medicare, with sliding-scale premium subsidies, restrictions against risk selection on the part of carriers, and federal reinsurance.
We are at a crossroads. A majority of the public is asking its leaders to address our health insurance problem through comprehensive reform, even if it requires a substantial investment of public and private funds. States like Massachusetts are leading the nation in this effort, and national policy leaders are responding with well-thought-out proposals. We are a wealthy and innovative country, and we have the resources and the technology to move affirmatively toward universal coverage in a way that improves quality and controls costs. The time is upon us to resolve ideological differences over strategies and find consensus based on pragmatism and fact.