Testimony--Changing Course: Trends in Health Insurance Coverage, 2000-2008

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This morning, the U.S. Bureau of the Census released the alarming news that the number of uninsured Americans hit 46.3 million in 2008, up from 45.7 million in 2007. This increase of 0.6 million uninsured would have been much worse without a growth in government-provided health insurance that covered 4.4 million people, including an increase of 3.0 million covered under Medicaid. In contrast, employment-based coverage declined by about 1.1 million individuals, from 177.4 million in 2007 to 176.3 million in 2008.

Today’s data release shows the importance of the nation’s safety-net insurance system—Medicaid and the Children’s Health Insurance Program (CHIP). The major bright spot in these new data was the fact that the rate of uninsured children is at its lowest rate since 1987, at 9.9 percent. This improvement was a reflection of increased coverage for children under government health insurance programs, which rose from 31.0 percent in 2007 to 33.2 percent in 2008. Still, more than 7.3 million children remain uninsured, which highlights the importance of the reauthorization and expansion of the CHIP program earlier this year to cover 4 million more uninsured low-income children.

States have also played an important role in stepping up to the plate to address the issue of the uninsured. Massachusetts, which enacted health reform in April 2006, has moved into first place, with the lowest uninsured rate in the nation. In Massachusetts, 5.5 percent of the population was uninsured in 2008, compared with 25.1 percent in Texas, the state with the highest uninsured rate. Massachusetts leads the nation as a result of its 2006 comprehensive health reform.

The most alarming news in today's Census release is that the number of adults under age 65 without health insurance is high and rising: 20.3 percent of adults ages 18 to 64 were uninsured in 2008, up from 19.6 percent in 2007, representing an additional 1.5 million adults. About one million fewer people are covered by employment-based coverage, falling from 177.4 million in 2007 to 176.3 million in 2008, including a marked decline in coverage among part-time workers. But even these numbers may understate the effect of the severe and ongoing recession, because the Census numbers are based on counts of people without coverage at any point during the year. Those individuals who were insured early in 2008 who lost coverage later in the year are counted as insured for 2008.

The continued rise in unemployment rates in 2009 likely means many more are uninsured in 2009.

Since the start of this decade, when 38 million were uninsured, health insurance coverage has steadily eroded, with 20 percent jump in the number of uninsured over the decade. Even before this severe recession, the number of uninsured was projected to grow to 61 million by 2020. We simply cannot afford to continue on our current course.

The need for health reform is urgent and compelling:

  • The number of uninsured Americans has jumped over 20 percent between 200 and 2008.
  • In 2006, 75 million people were uninsured for all or part of the year, representing 27 percent of those under age 65.
  • Uninsured rates are particularly high among low-income individuals. Half of those with family income under $20,000 were uninsured at some point during 2007. But over the last decade, more and more middle-class families have joined the ranks of the uninsured. More than two of every five (41%) people in families with moderate incomes ($20,000 to $39,999) were uninsured at some point during 2007, up from 28 percent in 2001.
  • The rapid rise in unemployment endangers the health coverage of many more working Americans. A recent study found that for every percentage-point increase in the unemployment rate, the number of uninsured rises by approximately 1 million. If unemployment were to rise to 10 percent, 6 million more people would be uninsured than in 2007.
  • According to a Commonwealth Fund study released yesterday, only 25 percent of workers in firms employing fewer than 50 people had coverage from their own employer in 2007, down from 35 percent in 2003. By contrast, for employees of firms with 50 or more workers, coverage through one’s own employer increased from 70 percent to 74 percent over that period.
  • The number of underinsured—people with inadequate coverage that ensures neither access to care nor financial protection—jumped 60 percent between 2003 and 2007, from 16 million to 25 million.
  • The 2007 Commonwealth Fund Biennial Health Insurance Survey shows that 68 percent of the uninsured went without needed care because of the cost. Uninsured and underinsured people with chronic conditions, for example, are less likely than people who have health coverage to report managing their conditions, more likely to report not filling prescriptions or skipping doses of drugs, and more likely to use emergency rooms and be hospitalized.

The health insurance system in this country is fundamentally broken. It does not accomplish what insurance was created to accomplish: ensure access to needed care and protect against the financial hardship that medical bills can cause. The deterioration in health insurance coverage has reached the point where financial hardship is not the exception, but the rule.

  • Seventy-two million people report having problems paying medical bills or accumulated medical debt. In order to pay their bills, far too many people are forced to go without basic necessities, use up their savings, rack up credit card debt, or even take out home loans.
  • More than three-fifths (61%) of those with problems paying medical bills or accrued medical debt were insured at the time the debt was incurred.
  • A total of 116 million adults ages 19 to 64—65 percent of all nonelderly adults—are uninsured at some point during the year, are underinsured, or struggle to obtain needed care and pay their medical bills.

As a nation, we pay a price for being the only major country without health insurance for all. Workers miss work from preventable illness, die from conditions that are amenable to medical care, or retire early from preventable disability. Children miss school or drop out of high school without graduating because of preventable health problems. The Council of Economic Advisers estimates that covering the uninsured would result in a net increase in economic well-being totaling $100 billion a year. Coverage for all would increase the labor supply and level the playing field for large and small businesses.

Recognizing the seriousness of our flawed health system, Congress began to take action early this year to cover more people who are at high risk. Reauthorization of the Children’s Health Insurance Program (CHIP) will cover an estimated 4.1 million uninsured low-income children in addition to the 7 million covered in 2008. The CHIP program has been a major success: trends in the numbers of uninsured children, unlike those for uninsured adults, have improved over the last decade.

Provisions in the American Recovery and Reinvestment Act of 2009 (ARRA) have also helped prevent the loss of health insurance coverage resulting from the severe and sustained economic recession. The Act provided $86.6 billion over 27 months to help states maintain and expand Medicaid enrollment as more unemployed working families qualified for coverage. In addition, ARRA provided a 65 percent premium subsidy to help recently unemployed workers retain their employer-based coverage under COBRA for up to nine months.

Measures in health reform bills currently under consideration in Congress include:

  • The creation of health insurance exchanges that expand insurance choices and competition and set market rules to ensure that coverage is available to all on comparable terms.
  • Income-related premium assistance for individuals living at up to three or four times the federal poverty level.
  • The expansion of Medicaid for those at 133 to 150 percent of the poverty level.
  • The requirement that health plans include an essential benefit package and income-related assistance with cost-sharing for people at up to four times the poverty level.
  • Shared employer responsibility for financing coverage for workers, with assistance provided to small businesses.

The Congressional Budget Office estimates that if the House bill is enacted, the number of uninsured people would decline to 17 million by 2019, from a projected 54 million if no action were taken. Employer-sponsored plans would remain the primary source of insurance for most families, covering 60 percent of the population, or 166 million people. About 10 million people would newly enroll in Medicaid, with most of those individuals previously lacking any coverage.

Recognizing the plight of families facing an unraveling safety net of health insurance coverage, the President last night reiterated his call for bold change to address the crushing burden of rising health care costs for both businesses and families. Failure to act will lead to greater and greater numbers of Americans without adequate, affordable insurance—unable to obtain the care they need, with families struggling under the weight of rising health insurance premiums and out-of-pocket health care costs. Insurance premiums have risen from 11 percent of family incomes in 1999 to 18 percent today. If we continue on our current course, they will reach 24 percent of income by 2020.

Health reform could provide substantial relief to families by slowing the growth in health insurance premiums, and could make the responsibility for paying premiums a shared one among households, employers, states, and the federal government. Estimates prepared for The Commonwealth Fund suggest that the average family could save $2,300 in 2020 from comprehensive health reform that embraces competition and choice.

The comprehensive reforms proposed by the President will help spark economic recovery, put the nation back on a path to fiscal responsibility, and ensure that all families are able to get the care they need while protecting their financial security. The cost of inaction is high. The time has come to take bold steps to ensure the health and economic security of this and future generations. Health reform is an urgently needed investment in a better health system and a healthier and economically more productive America.

Publication Details

Publication Date:
September 11, 2009
Authors:
Karen Davis
Citation:
K. Davis, Changing Course: Trends in Health Insurance Coverage, 2000–2008, Hearing on "Income, Poverty, and Health Insurance Coverage: Assessing Key Consensus Indicators of Family Well-Being in 2008," Joint Economic Committee, U.S. House of Representatives, September 10, 2009.