Healthcare For Uninsured

The Uninsured in the United States: Public Health’s Response and Responsibility

Mary E. Homan, MA

H. Douglas Adams, PhD Spring 2007 Saint Louis University School of Public Health

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For the duration of President Bush’s tenure in office, the public and private sector has been consistently reminded of the draining cost of healthcare to insurers, the insured, and to those who do business with both. We hear tales of small-business owners suffering the burden of cost to cover employee health insurance. We hear of middle-class families and working poor struggling to pay healthcare premiums, co-pays, and other health-related costs. We hear about the uninsured and the growing faction of underinsured Americans who cannot pay for chronic prescription medication or to take a child to see a specialist. However, not all the evidence is as anecdotal of a family member unable to afford prescriptions or an impoverished mother not being able to establish prenatal visits. The literature suggests and policymakers concur that lack of access to healthcare is beyond troubling; it is a crisis. The National Academies (which include the National Academy of Sciences, the National Academy of Engineering, the Institute of Medicine, and the National Research Council) reported in September 2006 that “the percentage of Americans without health insurance in 2005 rose to 15.9 percent, 46.6 million people, according to the U.S. Census Bureau. The number of uninsured children also increased, for the first time since 1998, to 8.3 million.”(1) The Institute of Medicine estimates that approximately 18,000 Americans die prematurely each year because they lack health insurance. Recognizing such a crisis, this issue paper will seek to parse out the underlying issue of lack of healthcare coverage as well as the challenges to addressing the issue. Third, this paper will articulate the public health community’s response to the crisis, taking into particular consideration the tenuous relationship between notions of justice

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versus notions of fairness especially when public health must make recommendations to policymakers. Finally, this paper will seek to recommend not an outlined procedure or legislation as that is beyond the scope of the paper but rather what should be the objectives of such legislation. In analyzing the issue of uninsured and uninsurability, this paper will operate out of the four-principles approach to bioethics developed by Beauchamp and Childress(2) in the 1970s, recognizes four key principles that arose from reflections on common morality and the medical tradition. Accordingly, the four principles, autonomy, nonmaleficence, beneficence, and justice, provide a simple, accessible, and culturally neutral approach to thinking about ethical issues in healthcare.(3)

The Crisis of Lack of Healthcare Coverage The single most influential factor contributing to the lack of insurance coverage is poverty. More than 30% of those at or below the poverty level had no insurance coverage, a rate double that for the total population. However, it should be noted that many argue that the current and official poverty measure(4)(5) in the United States is flawed and does not adequately inform policy-makers or the public about who is poor and who is not poor, according to a national research panel led by Robert Michael, the Eliakim Hastings Moore Distinguished Service Professor in the Irving B. Harris Graduate School of Public Policy Studies.(6) One study points out that persons who border the poverty line (between 100 and 125% of the poverty line) faced an uninsured rate of 28%.(7) It is this pervasive influence of poverty on the uninsured rate that is so compelling. A review of other factors contributing to a lack of insurance demonstrates

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that for almost every variable influencing the uninsured rate, the addition of poverty further increases the rate of the uninsured.(8) The State of Missouri faces similar challenges. The Missouri Foundation for Health reports that in 2005, between 635,000 and 707,000 Missouri residents were without health insurance. In 2004 dollars, the total national value of health lost in a single year because of lack of insurance is estimated at $104 billion, which represents more than two times the estimated $48 billion cost of covering all of the nation’s uninsured.(9) Economically speaking, the more people are ill, the more work is missed, the less pay is earned and the lower taxes are gathered. Women and in particular pregnant women find themselves in a very difficult spot with healthcare coverage. The number of women in the United States who are uninsured grew 3 times faster than the number of men without health insurance during the late 1990s and early 2000s.(10) In 2003, it was estimated that of the 45 million Americans (15.6% of the total population) without health insurance for the entire year, 21.2 million were women (14.4% of all women).(11, 12) This represents an increase from 2002 when it was estimated that of the 43.6 million Americans (15.2% of the total population) without health insurance for the entire year, 20.2 million were women (13.9% of all women).(13) Approximately 13% of all pregnant women are uninsured.(14) The following diagram from the Institute of Medicine illustrates pregnant women and infants’ lack of coverage.

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The challenges to addressing healthcare coverage It should be noted that because someone is uninsured or underinsured does not mean that they are Medicare/Medicaid eligible. Medicare was established as a federal health insurance program in 1965 under the Social Security Act. This act provided a hospital insurance program for the with a supplementary medical benefits program. This expanded program of medical assistance was to increase benefits under the Old-Age, Survivors, and Disability Insurance System and to improve the Federal-State public assistance programs. Whereas, Medicaid is a state administered program and each state sets its own guidelines regarding eligibility and services. Medicaid is a program of health coverage for certain people with low incomes or very high medical bills where eligibility

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for depends on age, disability or family status and on an individual’s (or family’s) income and resources. Although the Federal government establishes general guidelines for the program, the Medicaid program requirements are actually established by each State. Whether or not a person is eligible for Medicaid will depend on the State where he or she lives.(15) The Missouri Foundation for Health reported in 2005 that Missouri Medicaid currently covers over 540,000 low-income children and more than 200,000 low-income adults in families with children. The majority of covered adults in families with children are women. Children represent the largest demographic group served by Missouri Medicaid, with nearly 56 percent of all Missouri Medicaid consumers being age 18 or younger. (16) Missouri Medicaid also covers approximately 74,000 Missourians age 65 and over as well as 140,000 residents who are blind or disabled. Between 2000 and 2004 Missouri experienced a sharp economic decline. Missouri’s seasonally adjusted employment topped out at 2.886 million in December of 2000 and then hit a low of 2.827 million in August of 2003 for a job loss of 59,000. Employment has since climbed to 2.903 million for a job gain of 76,000 jobs off of the low. Despite this increase in jobs, it should be noted that in the most recent recession, Missouri had a 2% decline in employment compared to a national decline of only 1.5%. Furthermore, despite the fact that Missouri employment is up 2.7% off of the low in August of 2003, the nation as a whole has experienced an increase of 6.5% in its total employment since coming off of its employment trough in January of 2002.(17) During this period of time, the number of people below 200 percent of the federal poverty level (FPL) increased by 330,000 (194,000 adults and 136,000 children). The

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rate of employer-sponsored insurance (ESI) fell from 71.9% to 64.2% while Medicaid, SCHIP, and state-sponsored insurance only increasing 3.8%.(18) The Missouri Foundation for Health reports that a loss of Medicaid coverage because of the 2005 cutbacks in eligibility will likely translate into increases in the number of uninsured Missourians. The decline in Employer-Sponsored Insurance (ESI) is likely to continue. Increases in health care costs and thus insurance premiums are likely to continue to grow faster than workers’ earnings. The decline in ESI will be further exacerbated if employment losses in large firms and the shift in employment from high-ESI industries to low-ESI industries continue. The increased numbers of uninsured will place heavy pressures on safety net providers throughout Missouri.(18) Many cannot afford the health premiums of large insurance companies typically offered by employers. The Kaiser Family Foundation reports that the average annual premium for an individual was $4,242, while family coverage cost an average of $11,480. The 2006 poverty threshold for a family of four in the United States was $20,000.(19) That means over half of the family income would be going towards health insurance. The US Census Bureau reported in 2004, over 13% of Missourians lived in poverty. Therefore, at minimum 13% of Missouri residents would have no way of paying for employer health insurance. President Bush’s healthcare reform plan from the 2007 State of the Union Address encourages a “tax-credit” for businesses for employee health insurance. Under this new plan, the President's proposal “levels the playing field for Americans who purchase health insurance on their own rather than through their employers, providing a substantial tax benefit for all those who now have health insurance purchased on the

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individual market.”(20) The President’s plan “lowers taxes for all currently uninsured Americans who decide to purchase health insurance.”(20) The plan begs the following questions: Shouldn’t all people have health insurance? Why should a low-income family, who statistically is at greater risk for workplace injury, chronic workplace disease, and other diseases and illness derivative of lower socio-economic status, be forced to hand over almost one-fourth of their family household income (under the new plan, workers would receive a tax deduction – $7,500 for singles, $15,000 for couples and families) because their income would be taxed at $35,000 instead of $20,000.(21) These unreasonably high costs don’t only affect persons of lower-income status. Middle-class families and working adults will also face an increase in costs especially when searching for companies willing to cover high-risk occupations (factory line jobs, construction, etc.) that previously were not as high when employers purchased an employee package. The other major challenge to uninsured persons aside from lacking healthcare coverage is going without needed medical services. Uninsured families report the most financial difficulties accessing care: nearly 25 percent of low-income uninsured families reported forgone care, and almost 20 percent of uninsured families across all income groups did so.(22) The Commonwealth Fund found that 54 percent of underinsured people went without at least one of four needed medical services because of cost—twice the rate of those with adequate insurance.(23) A 2005 Kaiser study found that the careseeking behavior of those with private coverage and medical debt was more like the uninsured than the insured without medical debt: about 28 percent of both the insured with medical debt and the uninsured postponed care because of costs, compared to six percent of the privately insured without medical debt.(24) Kathleen Stoll, health policy

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director at the Families USA consumer advocacy group, said 10.7 million insured Americans spend more than a quarter of their annual paychecks on health care.(25) In 1999, the Missouri pool’s average yearly premium for individual coverage was $4,920 (the highest of all pool states), which is about 12.2 percent of the state’s median household income. Also, Missouri’s quoted rate relative to pool rate is upwards of 300%. Therefore the premium cap as a percentage of the average comparable plan is 150-200%. For mental health benefits, Missouri has $25,000 lifetime maximum on benefits allowing for 30 inpatient days per year, and $3,000 per year for outpatient services.(26)

The following table illustrates reasons why families forgo medical care.

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Responses from the Public Health Community Diane Rowland, executive vice president of the Kaiser Family Foundation believes that "States that are using Medicaid to broaden health care coverage are using it as a foundation to build upon for low-income people, which frees up other ways to make insurance more affordable.” However, as recent as 12 April 2007, the Missouri Senate passed legislation(27) that would move the state's Medicaid patients into three health plans, two of which would be administered by managed-care companies. The new benefit packages would replace the state's existing Medicaid program by 2013. Some critics argue that Missouri ended Medicaid coverage prior to this bill. Timothy McBride, PhD, Director, Division of Health Policy and Professor, Department of Health Management and Policy at Saint Louis University School of Public Health recounts that, “they [Missouri General Assembly] voted in 2005 to end Medicaid as we know it in Missouri. This [MO HealthNet] would be its replacement.”(28) In replacing Medicaid with MO HealthNet, Missouri is taking advantage of new federal rules, which took effect last year, that allow states to modify their Medicaid programs on their own rather than through the burdensome process of petitioning the federal government for approval.(29) SB577 repeals the June 30, 2008 expiration date for Missouri’s Medicaid program. The bill establishes a pay-for-performance system for doctors and other medical providers. It also introduces healthy lifestyle choice incentives that work on a debit card system where one is credited for signing health improvement plans and making healthy lifestyle choices. These credits could be spent on co-payments, over-the-counter medications, vitamins, and other health-related services. Women age 18

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and older who earn up to 185% FPL ($18,889/yr single woman) can access various women’s health and family planning services but they cannot have access to employersponsored health insurance.(30) Amy Blouin, executive director for the Missouri Budget Project blasts the changes in a letter to the editor. She writes that MO HealthNet does not move Missouri towards universal coverage “by not restoring health coverage to the more than 300,000 low-income Missourians whose Medicaid health insurance was cut or decreased over the past several years. Nor does HealthNet help the more than 700,000 uninsured Missourians.”(31) Other democrat senators agree that a restoration of previous Medicaid cuts is necessary because to not bring “the tens of thousands of people back into Medicaid is burdensome to hospitals that treat the uninsured in emergency rooms. Democrats also say the move ensures that Missouri will lose hundreds of millions of dollars in matching federal funds to other states.”(32) Another bill receiving significant attention addresses insurance portability in compliance with HIPAA.(33) Rep. Sam Page of the 82nd District feels this bill shows a movement to protecting high-risk individuals who move from one group health insurance to another.(28) One insurance broker, Rick Gary, CEO, Equos Financial Group, LLP points out that the bill is an attempt to make Missouri more compliant with an already existing statute particularly in cases of pre-existing conditions. Rick Gary suggests that those who are opposing the bill because it does not impact those who are uninsured.(28) It only addresses people who have health insurance currently. It does, however, address high-risk (risk will be assessed by members) individuals and that care is retained for that 30% risk. This means people who typically paid 300% of premiums would pay 150%

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instead. Another opposition comes from insurance companies because the bill does not address group termination (how can they selectively eliminate group they don’t want to cover; this bill prohibits group health providers to terminate group at will). This bill protects people who move from one company to another especially a smaller company because once a person is dropped from group health coverage, obtaining individual insurance is problematic. Fellows from the Brookings Institution believe that individual health plans could work if the individual health plan market were not such a disaster.(21) Much of the mess, they write, is due to inadequate pooling of risks. Pooling risks means grouping people with high and low expected health outlays. Pooling makes health insurance affordable for the average person. The workplace serves that function – not ideally but adequately. Individual health plans cannot serve this function. They also write that the bigger problem with the Bush plan is that it would not ensure that people would be able to find insurance at a reasonable price. President Bush’s insistence on privatizing a public good puts millions of healthy and ill Americans at risk. It places the burden of finding an affordable insurance plan with adequate coverage on the shoulders of families who are barely making it through the month. The new plan will force insurers to question every procedure, every office visit, more so than before. Families will be forced to endure higher co-pays and longer wait times because so many families will not be able to afford private insurance. With this plan, less money will go to services such as Medicare and Medicaid which will endanger seniors, the disable, and the poor.

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Recommendations for Policy Objectives As discussed in the introduction, this paper will seek to recommend not an outlined procedure or legislation as that is beyond the scope of the paper but rather what should be the objectives of such legislation. In naming objectives and goals, it is pertinent that legislatures and public health practitioners operate out of a sense of justice. Beauchamp and Childress concede that justice is often equated with fairness or equality.(2) Another way to look at justice is from the perspective of the common good and acting in good stewardship. David Hollenbach explains that the common good is the good of being a community where people work and make choices together about the “direction in which our lives are going to go together.”(34) “The common good is understood as the social conditions that allow people to reach their full human potential and to realize their human dignity.” The promotion of the common good involves the principles already considered: respecting human dignity, protecting the poor and vulnerable, calling for full and active community participation and practicing good stewardship. Ideally, the common good enables each and every human person to achieve his or her human development more fully. The principle of common good is the total of social living, not just the sum of individual goods. In order to establish a universal healthcare system that benefits all, administrators, policymakers, and the general public (to name a few) must operate out of a sense of social justice and from the operating principle of the common good. We might attempt a cost-benefit analysis pertaining to prenatal women that might prove when women receive prenatal visits they are at a lesser risk of delivery problems as well as a greater chance of appropriate birth weights, etc. Limiting services based on cost alone needs to be

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eliminated. Insurance brokers in conjunction with clients need to seek out both academic and practioners’ professional expertise based on longitudinal studies and clinical evidence of what needs ought to be addressed and covered. To operate within a common good mentality means looking outside of a sheer political or business model. The Institute of Medicine’s Committee on the Consequences of Uninsurance identified five key principles(35) for guiding policy development. The first principle is listed as the most fundamental however the remaining four receive no specific priority. These guiding principles are as follows: 1. 2. 3. 4. 5.

Healthcare coverage should be universal. Healthcare coverage should be continuous. Healthcare coverage should be affordable for individuals and families. The health insurance strategy should be affordable and sustainable for society. Health insurance should enhance health and well-being by promoting access to high-quality care that is effective, efficient, safe, timely, patient-centered, and equitable. Policymakers at the national level have a particular responsibility in coming to embrace these five principles because not only is healthcare law established here but also insurance laws, public health initiatives and funding as well as any amount of lobbying transpiring to pass or earmark funds in legislation. Holding policymakers and policy enforcers to a greater sense of accountability is also in the hands of the general public. We can particularly exercise this in our voting rights so that we are electing officials who don’t just have one special interest group in mind but truly operate out of a sense of responsibility to the common good and in line with this paper, operate out of the five guiding principles put forth by the Institute of Medicine. Once such a precedent is set, we may move to enhanced and ultimately universal healthcare insurance coverage for every resident in the United States.

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References: 1. Pickoff-White L. Number of Uninsured Americans Up. In: Sciences NAo, ed.: Office of News and Public Information; 6 September 2006. 2. Beauchamp TL, Childress JF. Principles of Bioethics. 4th ed. New York: Oxford UP; 1994. 3. Gillon R. Medical Ethics: Four Principles Plus Attention to Scope. BMJ;309:18490. 4. “In the 1960s, Molly Orshansky, an employee of the Social Security Administration, developed the original poverty thresholds by using the U.S. Department of Agriculture's Economy Food Plan, which she used to estimate a family's minimum food needs. In 1955, Orshansky had determined that most families spent approximately one-third of their after-tax income on food. Therefore, the Economy Food Plan for various family sizes was multiplied by three to determine the poverty threshold figures.” 5. Poverty at Issue. University of Missouri Extension. (Accessed 6 November 2006, at http://outreach.missouri.edu/cfe/quiz/1a.htm.) 6. Harms W. Poverty definition flawed, more accurate measure needed. University of Chicago Chronicle;14(17). 7. Census UBot. Health Insurance Coverage in the United States: 2002. In; September 2003. 8. Trotochaud K. Ethical Issues and Access to Healthcare. Journal of Infusion Nursing 2006;29(3):165-71. 9. Consequences of the Lack of Health Insurance on Health and Earnings: Missouri Foundation for Health; January 2006. Report No.: 1. 10. Labrew J. Diagnosing disparities in health insurance for women: a prescription for change. New York: The Commonwealth Fund; 2001. 11. DeNavas-Walt C, Proctor B, Mills R. Income, poverty, and health insurance coverage in the United States:2003. In: Bureau USC, ed.; 2004. 12. 2004 annual social and economic supplement. Current Population Survey. In: Bureau USC, ed.; 2004. 13. Mills R, Bhandari S. Health insurance coverage in the United States: 2002. Consumer income. Current Population Reports. In: Bureau USC, ed.; 2004. 14. Thorpe K, Flome J, Joski P. The distribution of health insurance coverage among pregnant women, 1999.: March of Dimes, Emory University April 2001. 15. Medicaid at a glance 2005: a Medicaid information service. In: Department of Health and Human Services CfMMS, Center for Medicaid and State Opportunities, ed.; 2005. 16. Missouri Medicaid Basics 2005: Missouri Foundation for Health Winter 2005. 17. Economic Forecast 2006 3rd Quarter: Bureau of Economic Research, College of Humanities and Public Affairs, Missouri State University; 2005. 18. The Missouri Economy and Changes in Health Insurance Coverage, 2000-2004: Missouri Foundation for Health; March 2006. Report No.: 3. 19. Pugh T. Bush moves to expand health insurance by revising tax code. McClatchyTribune 22 January 2007. 20. The 2007 State Of The Union Address. In: Communications WHOo, ed.; 2007. 21. Aaron HJ. The healthcare three-step. Los Angeles Times 10 February 2007.

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22. Blumberg LJ, Clemans-Cope L, Blavin F. Lowering Financial Burdens and Increasing Health Insurance Coverage for Those with High Medical Costs: Urban Institute; 2005 19 December 2005. 23. Schoen C, Doty MM, Collins SR, Holmgren AL. Insured but not protected: how many adults are underinsured? Health Affairs 14 June 2005;Supl Web Exclusives:w5.289. 24. Hoffman Cea. Medical Debt and Access to Health Care: Kaiser Commission on Medicaid and the Uninsured 23 September 2005. Report No.: 7403. 25. Karash JA. Report finds insurance coverage inadequate: Even those who are insured struggle making medical payments. The Kansas City Star (MO) 23 March 2007. 26. Achman L, Chollet D. Insuring the Uninsurable: An Overview of State High-Risk Pools. New York: The Commonwealth Fund August 2001. 27. Enacts the "Missouri Health Improvement Act of 2007". In: 2227S06P. 94th General Assembly ed; 2007. 28. Homan ME. personal communication. In: Timothy McBride P, Director, Division of Health Policy and Professor, Department of Health Management and Policy at Saint Louis University School of Public Health, ed.; 2006-2007. 29. Lopes G. States tailor Medicaid to meet individual needs. The Washington Times 12 April 2007. 30. A look at Medicaid overhaul legislation. The Associated Press 11 April 2007. 31. Editor Ltt. Blunt’s HealthNet plan does nothing to aid the uninsured. The Columbia Tribune 16 April 2007. 32. Rosenbaum J. HealthNet garners vote by senators: Revamped Medicaid advances in House. The Columbia Tribune 12 April 2007. 33. Establishes the Missouri Health Insurance Portability and Accountability Act and changes the laws regarding the Missouri Health Insurance Pool, prescription drug formularies, and claims information. In: 1261L05P. 94th General Assembly ed; 2007. 34. Higgins RJ. Interview with David Hollenbach. Boston College Magazine;Summer 2002. 35. Insuring America's Health: Principles and Recommendations. Washington, D.C.: Committee on the Consequences of Uninsurance. Institute of Medicine; 2004.