Coverage Matters Insurance and Health Care (2001) / Chapter Skim
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2. The Dynamics of Health Insurance Coverage
2. The Dynamics of Health Insurance Coverage
Pages 34-57
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From page 35... ...
In this chapter, the Committee considers the dynamic and unstable nature of health insurance coverage, which results in large numbers of uninsured Americans. It opens with a brief discussion of the sources of health insurance coverage and the role of health benefits as part of an employee's compensation package.
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From page 36... ...
Federal tax policy provides incentives but no mandate for employers to offer insurance coverage and for employees to purchase coverage through an employment-based plan. Eighty-four percent of all employers offered a health insurance plan to at least some of their employees, and 76 percent of all workers (excluding dependents)
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From page 37... ...
. Public insurance programs fill some but not all ofthe coverage gaps created by the employment-based approach to health insurance coverage.
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From page 38... ...
38 o o o CO N C' ~ In ~ C' O 53 Q In (a C' ~ 0 O · O O O O O O 10 0 10 N (suo!
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From page 39... ...
The annual total cost for an average health policy at work is $2,426 for individual and $6,351 for family coverage in 2000. This represents a cost of doing business that is influenced by federal tax policies, regional health services markets, and the underwriting practices and vitality of regional and local insurance markets.
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From page 41... ...
While 30 to 40 percent ofthese enrollees participate for less than a year, to fill coverage gaps created by a change in economic or other life circumstances, over half of those who purchase individual policies do so as a more permanent source of coverage (Chollet and Kirk, 1998~. Premiums for insurance purchased through a small group or the individual market are more expensive, on average, than employment-based coverage.3 A combination of adverse selection (the greater-than-average likelihood that individuals and families with health problems will purchase coverage rather than be uninsured)
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From page 42... ...
Some 29 states operate or regulate insurance programs that maintain high risk pools to cover limited numbers of uninsured residents whose poor health status puts them at higher-than-average risk for incurring large health care costs and for whom individually purchased coverage would otherwise be inaccessible (Wolman, 1992; GAO, 1996~. However, there are waiting lists or closed enroll
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From page 43... ...
Public Insurance Fills Part of the Coverage Gap In the 1960s, creation of the basic federal Medicare program for seniors and the shared federal and state Medicaid programs for specific categories of the poor brought health insurance coverage to many of those who had been excluded from the employment-based approach to financing health services delivery (Starr, 1982~. Individuals who are at least 65 years of age and have worked for at least 10 years in Medicare-covered employment (or whose spouse has)
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From page 44... ...
More recent estimates have been as low as 4 percent, with upper bounds between 17 percent and 23 percent, depending on how crowd-out is defined and measured (Alteras, 2001; Cutler and Gruber, 1997; Blumberg et al., 2000; Dubay, 1999; Thorpe and Florence, 1998; Yazici and Kaestner, 2000~. Evidence of the substitution or "crowd-out" of private insurance by public Insurance has informed public policy debates about the importance of balancing potentially negative outcomes of expanded eligibility for public insurance with positive outcomes including increased enrollment in insurance, particularly for children; decreased financial pressure on lower-income family budgets; and an improved level of covered benefits for working families (Alteras, 2001; Dubay and Kenney, 2001; Lutzsky and Hill, 2001; Swartz, 1996~.
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From page 45... ...
Recent federal tax legislative reforms now allow self-employed people to claim a deduction for a share of their health insurance premiums, and full deductibility of the premiums of self-employed workers is being phased in. For the year 2000, the exclusion of employer contributions from both federal income and Social Security taxes, together with smaller exemptions and deductions for health care spending from personal income taxes, resulted in a federal subsidy estimated at $125.6 billion (Shells et al., 1999~.
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From page 46... ...
HOW PEOPLE GAIN AND LOSE COVE12AGE Many conventional and economic transitions over the course of a lifetime can result in a loss of health insurance coverage for a person or family because income, health status, marital status, and terms of employment can influence eligibility for and participation in health insurance. An illness or accident serious enough to interrupt work and income, the loss of one's job, divorce from or death of a spouse whose employment provided family health benefits, or retirement from work before age 65 (when Medicare eligibility begins)
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From page 48... ...
Periods with No Coverage For some people, lack of insurance is a temporary or one-time interruption of coverage, while for others, being uninsured is a periodically recurring experience or a permanent state of affairs. Brief, temporary lapses of health insurance coverage are less likely than longer uninsured periods to have significant detrimental effects on access to health care (Ayanian et al., 2000; Kasper et al., 2000~.
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From page 49... ...
Medicaid enrollment periods for single women tend to be short; more than half maintain enrollment for less than one year, not quite one-third last more than two years, and only 15 percent last longer than five years. One study of a sample of unmarried women between the ages of 19 and 44 found that one-third of all new Medicaid enrollees had private health insurance just prior to enrolling in Medicaid (Short and Freedman, 1998~.
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From page 50... ...
Group health insurance premiums vary geographically, with the highest individual and family coverage premiums occurring in the Northeast region, and the lowest in the West. This regional variation amounts to about 15 percentage points around the national average premium price (Kaiser-HRET, 2000~.
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From page 51... ...
The choice reflects, in part, a comparison of employee premium costs and health care costs not covered by the policy, which constitute the individual's or family's out-of-pocket expenditures, with what they expect to incur in total health care costs, plus some allowance for the desire to avoid the risk of higher payments absent insurance. It also reflects the value of health services relative to other goods and services the family needs, such as food, rent, and utilities.
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From page 52... ...
For all families, but particularly those of lower and moderate income and for persons faced with a health problem, cost considerations often limit choices. Families with very limited income may have to choose between paying a high share of family income on health insurance premiums or having to decline enroll37.2% 9.7% Ave rage Worse r's Portion ($1 ,656)
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From page 53... ...
Health insurance premiums increased faster in 1999 than in the previous five-year period (6.5 percent compared with a 5 percent average annual growth rate) (Healer et al., 2001~.
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From page 54... ...
Between 1979 and 1997, health insurance coverage rates for government workers and their families remained relatively stable at about 80 percent, while coverage of workers employed in the private sector and their families declined by 7 percentage points to 64 percent (Farber and Levy, 2000~. Two factors contributed to this decline in private-sector employmentbased coverage.
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From page 55... ...
Ups and Downs in Public Program Enrollment Fundamental changes in public policies have affected both the size and the composition of the uninsured population over the last 15 years. Expansions of Medicaid eligibility for children and pregnant women beginning in the mid-1980s boosted eligibility and, to a lesser degree, enrollments in state public insurance programs.
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From page 56... ...
The manufacturing sector is one that is more likely to offer health benefits, which workers who are laid off may lose if they cannot afford to pay the premiums. SUMMARY This chapter has described the conditions under which health insurance coverage is obtained and lost, and the individual, economic and policy factors that affect opportunities for coverage and that increase or diminish the likelihood of being uninsured.
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