Hidden Costs, Values Lost
Uninsurance in America
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Support for this project was provided by The Robert Wood Johnson Foundation. The views presented in this report are those of the Institute of Medicine Committee on the Consequences of Uninsurance and are not necessarily those of the funding agencies.
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COMMITTEE ON THE CONSEQUENCES OF UNINSURANCE
MARY SUE COLEMAN(Co-chair), President,
University of Michigan, Ann Arbor
ARTHUR L. KELLERMANN(Co-chair), Professor and Chairman,
Department of Emergency Medicine,
Center for Injury Control, Emory University, Atlanta, Georgia
RONALD M. ANDERSEN, Wasserman Professor in Health Services, Chair,
Department of Health Services,
Professor of Sociology,
University of California, Los Angeles, School of Public Health
JOHN Z. AYANIAN, Associate Professor of Medicine and Health Care Policy,
Harvard Medical School, Brigham and Women’s Hospital, Boston, Massachusetts
ROBERT J. BLENDON,* Professor,
Health Policy and Political Analysis, Department of Health Policy and Management, Harvard School of Public Health and Kennedy School of Government, Boston, Massachusetts
SHEILA P. DAVIS, Associate Professor,
University of Mississippi Medical Center, School of Nursing, Jackson
GEORGE C. EADS,
Charles River Associates, Washington, DC
SANDRA R. HERNÁNDEZ, Chief Executive Officer,
San Francisco Foundation, California
WILLARD G. MANNING, Professor,
Department of Health Studies, University of Chicago, Illinois
JAMES J. MONGAN, President and CEO,
Partners HealthCare, Inc., Boston, Massachusetts
CHRISTOPHER QUERAM, Chief Executive Officer,
Employer Health Care Alliance Cooperative, Madison, Wisconsin
SHOSHANNA SOFAER, Robert P. Luciano Professor of Health Care Policy,
School of Public Affairs, Baruch College, New York
STEPHEN J. TREJO, Associate Professor of Economics,
Department of Economics, University of Texas at Austin
REED V. TUCKSON, Senior Vice President,
Consumer Health and Medical Care Advancement, UnitedHealth Group, Minnetonka, Minnesota
EDWARD H. WAGNER, Director,
MacColl Institute for Healthcare Innovation, Center for Health Studies, Group Health Cooperative, Seattle, Washington
LAWRENCE WALLACK, Director,
School of Community Health, College of Urban and Public Affairs, Portland State University, Oregon
Wilhelmine Miller, Project Co-director
Dianne Miller Wolman, Project Co-director
Lynne Page Snyder, Program Officer
Tracy McKay, Research Associate
Ryan Palugod, Senior Project Assistant
Hanns Kuttner, Senior Research Associate,
Economic Research Initiative on the Uninsured, University of Michigan
M. Eugene Moyer, Economist,
Elizabeth Richardson Vigdor, Assistant Professor of Public Policy Studies,
Terry Sanford Institute of Public Policy, Duke University
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the NRC’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report:
ARTHUR L. CAPLAN, Director, Center for Bioethics, University of Pennsylvania, Philadelphia
HAILE T. DEBAS, Dean, School of Medicine and Vice Chancellor, Medical Affairs, University of California, San Francisco
ALAN M. GARBER, Henry J. Kaiser, Jr., Professor and Professor of Medicine, Director, Center for Health Policy, Director, Center for Primary Care and Outcomes Research, Stanford University, Stanford, California
MARTHE R. GOLD, Logan Professor and Chair, Department of Community Health and Social Medicine, City University of New York Medical School
BRIGITTE MADRIAN, Associate Professor of Economics, Graduate School of Business, The University of Chicago, Illinois
JOHN McCONNELL, Assistant Professor, Emergency Medicine Research, Oregon Health & Science University, Portland
DOROTHY P. RICE, Professor Emeritus, Institute for Health and Aging, University of California, San Francisco
MURRAY N. ROSS, Director of Health Policy Research and Analysis, Kaiser Permanente Institute for Health Policy, Oakland, California
DALLAS L. SALISBURY, President, Employee Benefit Research Institute, Washington, DC
PAMELA FARLEY SHORT, Professor, Health Policy and Administration, Pennsylvania State University, University Park
Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations nor did they see the final draft of the report before its release. The review of this report was overseen by Hugh H. Tilson, Clinical Professor, School of Public Health, University of North Carolina, Chapel Hill, and Joseph P. Newhouse, John D. MacArthur Professor of Health Policy and Management, Harvard University. Appointed by the National Research Council and Institute of Medicine, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.
Hidden Costs, Value Lost: Uninsurance in America consolidates and builds on previous Committee work in order to develop estimates of the costs to our society of tolerating a large and shifting population who lack health insurance—more than 41 million in any single year. Nearly twice as many lack coverage at some point over a 2-year period. Lack of coverage among Americans under age 65 exacts a number of costs that are borne by uninsured people themselves, by their families, by communities and health care institutions, and by the nation at large; ultimately, we all bear these costs in one form or another.
This fifth report by the Committee on the Consequences of Uninsurance immediately precedes our sixth and final analysis, in which we will articulate principles that should guide policy reforms to pursue and ideally achieve universal coverage. In this final report, we will also assess prototypical strategies and gauge their impact in light of these principles. While previous reports have focused on health and social consequences of uninsurance, Hidden Costs, Value Lost considers the financial impact of this problem for the nation overall. In part, this is done by “cashing out” what the Committee has learned and reported in its first four studies (in dollar terms when feasible, qualitatively when not). In this report, the Committee considers not only the costs created by uninsurance but frames these costs in terms of the potential benefits that might be realized by providing health insurance to the entire population. These benefits are then evaluated in light of the projected costs of the additional health care services that the uninsured would use if they had coverage and could therefore afford these services.
Hidden Costs, Value Lost takes the broadest societal view of the economic and social costs that our nation incurs as a result of our current health care financing policies—approaches that leaves tens of millions without coverage at any point in
time and most adults under age 65 at risk over time of losing their coverage. As with its investigation of community-level effects of uninsurance in A Shared Destiny, the Committee again faces the limitations of research addressing many of the costs throughout society that accompany the lack of health insurance. The Committee contended with the problem of limited data by using analytic approaches such as estimating the economic value of healthier life years forgone due to uninsurance. This strategy can be compared with that of governmental agencies that assess the risks and benefits to health and longevity of a variety of safety, environmental and health care interventions. Viewed from the broadest perspective, the lack of health insurance is a health risk at the population level. Likewise, universal coverage, however achieved, can be considered a health intervention at the population level.
We encourage readers of this report to adopt a societal perspective as they consider the costs of uninsurance and to balance these costs against the potential benefits of various reform strategies. Historically, many have argued that we cannot afford to cover the uninsured. Perhaps, after reading this report, many will conclude that we can no longer afford not to cover the uninsured.
Mary Sue Coleman, Ph.D.
Arthur L. Kellermann, M.D., M.P.H.
Hidden Costs, Value Lost: Uninsurance in America reflects the contributions of many people. The Committee acknowledges and thanks those who participated in its development.
The Subcommittee on the Societal Costs of Uninsured Populations prepared the report for the Committee’s consensus review and issuance. James Mongan chaired the Subcommittee. Members included Norman Daniels, Sherry Glied, Jack Hadley, Ruby P. Hearn, Emmett Keeler, Willard G. Manning, Jack Needleman, Gordon R. Trapnell, and Stephen J. Trejo. The members of the drafting subcommittee, through a number of working groups, prepared and analyzed data on costs and health expenditures as well as directed and reviewed the work of consultants and staff. The Committee is indebted to their intensive efforts to bring this work to fruition.
As consultant to the Committee, economist Elizabeth Richardson Vigdor, Duke University, prepared an analysis of health capital losses among the U.S. population due to the lack of health insurance. (The complete study is included as Appendix B.) Elizabeth expertly and graciously conducted additional analysis and derived estimates at the requests of the Subcommittee and Committee. Eugene Moyer, senior economist with the Department of Health and Human Services (retired), and Hanns Kuttner, economist, University of Michigan, also served as Committee consultants, researching and drafting sections of the report and standardizing and updating expenditures and cost projections.
The Committee and Subcommittee benefited from presentations from a number of experts on topics addressed in Hidden Costs, Value Lost. Cathi Callahan, Actuarial Research Corporation; Jack Hadley, Urban Institute; Jack Needleman, Harvard University; and John Sheils, Lewin Group, discussed approaches to cost
estimation with the Committee at its October 2001 meeting in Woods Hole, Massachusetts. John Grgurina, Jr., Pacific Business Group on Health; Richard Kronick, University of California, San Diego; and Jill Yegian, California HealthCare Foundation, participated in a panel discussion on small business perspectives on health insurance at the February 2002 Committee meeting in San Francisco. Economists Robert Helms, American Enterprise Institute, and Ellen O’Brien, Georgetown University, shared their insight and research on health insurance and uninsurance at the Subcommittee’s initial meeting in July 2002. Jessica Banthin, Edward Miller, and John Moeller, economists at the Agency for Healthcare Research and Quality, presented their simulation model of health spending by uninsured and insured populations at the second meeting of the Subcommittee in January 2003. Susan Milner, Maryland State Department of Health, and Hugh Waters, Johns Hopkins University, shared their ongoing research on the costs of the uninsured population of Maryland with the Subcommittee. Timothy Westmoreland provided information to the Subcommittee on the conventions that the U.S. Congress uses to estimate the costs of legislative proposals. The Committee thanks these individuals and their organizations for sharing generously their time, expertise, and work. In particular, the Committee would like to acknowledge the support The Kaiser Commission on Medicaid and the Uninsured has provided to Jack Hadley and John Holahan of The Urban Institute for their research on the costs related to uninsurance, and thanks The Commission for making this work available to the Committee in its study and deliberations.
The Committee recognizes the work of Institute of Medicine (IOM) staff. Project co-director Wilhelmine Miller served as principal staff to the Subcommittee and coordinated the drafting of the report. Project co-director Dianne Wolman advised on and edited multiple drafts. Program officer Lynne Snyder assisted in drafting and editing, and research associate Tracy McKay conducted literature searches and prepared the figures and tables in the report. Senior project assistant Ryan Palugod maintained the project’s research database and helped prepare the manuscript for publication. The IOM Board on Health Care Services, directed by Janet Corrigan, sponsors and provides overall guidance to the Committee.
The Committee thanks The Robert Wood Johnson Foundation for its generous and continued support of the work on the consequences of uninsurance and especially acknowledges The Foundation’s president, Risa Lavisso-Mourey, and senior program officer Anne Weiss for their interest and assistance with this project.
THE COST OF THE ADDITIONAL CARE THAT THE UNINSURED WOULD USE IF THEY HAD INSURANCE COVERAGE
Coverage Does Matter: The Value of Health Forgone by the Uninsured,