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Universal access revisited

Limited reforms revive insurance debate

From the December 1997 ACP Observer, copyright 1997 by the American College of Physicians.

By Deborah Gesensway

When the Clinton health plan died a few years ago, everyone hoped that a strong economy would do a better job of solving the uninsured problem in this country than the government.

Now, despite a booming economy and numerous legislative attempts designed to make health insurance more accessible, the number of uninsured in this country is rising. Currently, about 40 million Americans—roughly 17% of the non-elderly population—are living without health insurance.

"A couple of years ago, there was the assumption that we could grow ourselves out of the problem," explained Kenneth E. Thorpe, PhD, a professor in the department of health systems management at the Tulane University School of Public Health and Tropical Medicine in New Orleans. "That has not been the case."

Without abandoning the goal of universal access, advocates are now suggesting that more limited reforms, if enacted incrementally and focused on the groups that need the help the most, might go a long way toward achieving universal access eventually. Coupled with an acceptance of the political reality that dooms any proposal containing even the quietest hint of big-government mandates, many universal access proponents are looking at new ways to expand health coverage incrementally.

ACP is supporting those efforts, in part by writing a position paper that will lay out ACP's strategies for incremental expansion of access to care, and by working with other organizations to make sure the children's health expansions are well-implemented. The College is also teaming up with the American Board of Internal Medicine to explore the issue of the uninsured and what can be done to provide medical care for those people—from expanding insurance to promoting doctors volunteering to provide free care. These projects are part of the College's effort to revitalize the debate about how to achieve universal access to health insurance.

Already, incremental legislation is being used to help the country's more than 10 million uninsured children. This year's federal budget gives states $24 billion over five years to insure children who aren't eligible for Medicaid but live in families earning less than twice of the poverty level, about $30,000 for a family of four. It is estimated that the program will reach about 2.5 million of these previously uninsured children. The Balanced Budget Act also contains federal funding for outreach programs to sign up a large chunk of the three to four million children who are eligible for but not receiving Medicaid.

Health policy experts acknowledge that the incremental approach has its strengths and weaknesses. The children's health insurance program "is clearly an exciting first step," said Dr. Thorpe of Tulane, who is helping the College draft its position paper. "But it is probably going to provide insurance for a small number of previously uninsured people, which obviously leaves a fair amount of work to be done to try to extend coverage to the remaining 38 million or so out there without insurance."

But because the approach works so well politically, experts say that strategy will be increasingly used. "This is clearly a formula that the Congress and the President have been able to agree upon to extend substantial federal funding to provide health insurance," Dr. Thorpe said. "What we're trying to do is put forth some additional options that we think are politically viable options that could attract some attention as next logical steps."

An option being explored by the College includes extending the children's health program to adults to the poverty level or even to 200% of the poverty level, which would cover many of the working poor.

Without this type of incremental reform, many health policy analysts say many working poor families will find themselves in the awkward situation "where their kids are getting health coverage, but the parents aren't," said Steven A. Schroeder, MACP, president of the Robert Wood Johnson Foundation in Princeton, N.J.

Yet another option would be to fund more outreach efforts to get many of the children already eligible for Medicaid or the new children's health program signed up. According to Dr. Thorpe, participation rates range from 40-75% depending on the state and type of program.

The College is also exploring the feasibility of providing subsidies to the temporarily unemployed to help them buy health insurance.

To better understand the problem of access—and to come up with solutions—experts are looking at the populations who are most likely to lack health insurance—the working poor who earn too much to qualify for Medicaid but whose employers don't provide health insurance; the near-senior citizens too young for Medicare but no longer receiving health insurance at work; minorities; and people living in many of the southern states. Here are some of their findings, along with the reforms being considered:

Poverty is a factor, but the poor are not necessarily the worst off. Although many of the poorest Americans qualify for Medicaid, statistics show that the uninsured tend to be poorer than the general population. About 60% have incomes of less than twice the poverty level, compared to 35% of the general population, according to the Urban Institute, a Washington, D.C., think tank. For a family of four, the federal poverty level is about $15,000 and varies from state to state.

While most ideas of how to cover this group of uninsured call for building on Medicaid, advocates of universal access are also considering other proposals to cover the working poor. Some of the thinking focuses on tax incentives and purchasing pools that would encourage more employers to provide health insurance to lower-wage workers.

Howard B. Shapiro, PhD, ACP's Vice President for Public Policy, said the College generally supports these other ideas because the proposals to expand Medicaid to higher income people invite criticism that proponents are really trying to build a huge federal health insurance program with Medicaid as its foundation.

Being employed offers no protection. The vast majority of the uninsured—85%—live in families headed by an adult who works full or part time. According to the federal government's Medical Expenditure Panel Survey, children living in families where there were two or more employed adults were just as likely to be uninsured throughout the first half of 1996 as children living in families with no employed adults.

That's due in part to the fact that fewer and fewer employers are offering health insurance to their workers. And the risk is higher for people employed in small companies—the fastest growing part of the economy. Of the 22 million new jobs created in the United States between 1988 and 1995, 21 million were in firms with less than 100 workers. Those companies tend to provide health insurance for only about 40% of their workers. (By comparison, firms with more than 1,000 workers tend to provide health care benefits for 83% of their employees.)

Even at companies that provide health insurance, benefits have been shrinking. A study published in the September/October issue of Health Affairs showed that employees' share of overall health insurance premium costs at companies with fewer than 200 workers soared—to $56 a month on average, up from $12 in 1988 for single coverage, and from $34 to $175 a month for family coverage. At the same time, total premiums increased only 8% a year. (See chart.)

Few incremental expansions have been proposed to address this problem because they either hinge on tax incentives to encourage employers to offer health benefits to workers, other ways of making insurance cheaper or mandates—all politically unpopular ideas today.

Workers between jobs—the temporarily unemployed—are a small part of the problem. In fact, half of the unemployed people who are uninsured didn't have health insurance when they were working, according to Karen Davis, PhD, president of The Commonwealth Fund in New York.

Dr. Davis also said that only about a sixth of individuals who are unemployed and uninsured had health insurance when they lost their jobs and are eligible to continue buying insurance through the provisions of the Consolidated Omnibus Budget Reconciliation Act (COBRA) or through the portability provisions of last year's Kassebaum-Kennedy law. Tulane's Dr. Thorpe added that because of the high cost of COBRA premiums, only an estimated 20% of that sixth actually purchases coverage through their former employer.

Incremental solutions being considered would give the unemployed limited financial assistance to help pay for health coverage, which could provide two to four million people with short-term insurance at a minimal cost. One idea is that aid could be provided through states' workers compensation systems, but Dr. Davis said that those individuals who need health care coverage the most may often not qualify for unemployment benefits, and thus would not be entitled to health care coverage. In part, this is because many of the people who work in low-paying jobs do not work consistently enough to qualify for unemployment.

Being retired offers no protection. As baby boomers get closer to the age of retirement, research is showing that many people between 55 and 65 are having trouble getting health care coverage. According to the U.S. Department of Labor, the proportion of retirees older than age 55 who are receiving health coverage from a prior employer fell from 44% to 34% from 1988 to 1994.

Some of these near-seniors are being hit by early retirement or layoffs from employers looking to trim back their high income workers as part of corporate downsizing. Others are married to retirees who have insurance through Medicare but themselves are ineligible for Medicare. Others are hard hit by employers' cutting back on retiree benefits. (See above story.)

A big problem is that these older adults, who now account for 14% of the uninsured, are likely to have greater health problems and a bigger need for health insurance than other groups of uninsured people. Combine that with the cost of premiums—$5,000 to $7,000 per year for an individual policy—and these people face a serious problem.

One possible solution is to allow people—particularly the spouses and dependents of people already receiving Medicare—to buy into Medicare early. Another idea is to allow early retirees who are choosing to start collecting their Social Security benefits starting at age 62 to buy into Medicare on a sliding scale. According to The Commonwealth Fund, these kinds of provisions would cover 600,000 spouses and 300,000 children of Medicare beneficiaries, as well as nearly 1.2 million early retirees. But, said Dr. Davis, the hefty price tag for early Medicare benefits would make this an option only for a small percentage of those eligible.

Location is critical. Since access to insurance varies widely among the different states, it's clear that states have leeway to slash the numbers of uninsured within their boundaries. In other words, it will not necessarily take a federal law to make more of a difference.

In Tennessee, for example, uninsured families with incomes up to 400% of poverty can buy into Medicaid on a sliding scale. In Minnesota, a new publicly subsidized program provides premium subsidies for families with children with incomes up to 275% of federal poverty level or childless adults with incomes up to 125% of poverty.

In contrast, other states allow only those families living substantially below the federal poverty level to be eligible for welfare. As a result, poor adults in Texas or Florida are two to three times more likely to be uninsured than they are in Minnesota, Oregon or Tennessee, according to the Kaiser/Commonwealth Five-State Low-Income Survey published in the September/October issue of the health policy journal, Health Affairs.

In 1996, the Medical Expenditure Panel Survey, which collects data on health care use, found that lack of insurance was a bigger problem in the South and West than in the Northeast or Midwest. Of all the uninsured in this country, 41% live in the South.

Without some federal guidelines, therefore, most analysts feel this geographic disparity is likely to grow. "My guess is that with the surplus that state budgets are facing now, there is going to competition between those that say let's give this back to taxpayers and people who say let's give some social benefits that everyone would feel good about," said Dr. Schroeder. But the later attitude "is typically only occurring in the northern tier states."

The bottom line, according to Gerald E. Thomson, MACP, associate dean at Columbia University's College of Physicians and Surgeons and a former ACP President, is that "having so many of our people uninsured is a tremendous national failing and a very pointed failing on the part of the medical profession." With the uninsured as a group likely to be sicker, to respond to care more poorly, to present later in the course of illness and die when they are hospitalized, he said, "we now know full well what it means to be uninsured."


Retiree benefits packages shrinking—and it could get worse

NEW YORK—Over the last five years, large companies dropped or dramatically diminished the health benefits they provide to their retirees, according to a new study for the Kaiser Family Foundation.

The number of companies offering health benefits to salaried retirees was 87% in 1996, down from 92% in 1991. The number of companies that now requires retirees to pay their premiums rose to 86% in 1996, up from 72% in 1991.

The study also showed that 39% of large firms now place financial limits on their future obligations for retiree health care. Five years ago, virtually no large employer had such caps. The study also found that during the '90s, a growing share of large employers tightened eligibility requirements, increased deductibles, raised contributions for dependent coverage and increased enrollment of their retirees in managed care plans.

The trends identified by the study are comparable to the actions affecting unionized, hourly employees and retirees, who have had their health benefits reduced, according to Gerry Shea, assistant to the president for government affairs at the AFL-CIO.

The findings are important to the debate about how to reform Medicare. Currently, about 12 million people get supplemental coverage from their employers to help cover Medicare deductibles and other out-of-pocket costs.

The Kaiser foundation asked Hewitt Associates, the management consulting firm that did the study, to analyze how Medicare reforms that have been considered by Congress would affect employer-sponsored health coverage for retirees. These reforms have proposed changing the payment methodology, raising the age of eligibility and changing it into a voucher-like program. The analysis found that all of these changes would shift costs to retirees and to employers offering supplemental coverage, which might prompt more employers to drop their retiree benefits.

"A lot of companies are just now trying to figure out how they are going to react to the Balanced Budget Act," said Frank McArdle, PhD, of Hewitt Associates, talking about his firm's findings. "We believe that possibly they will react by dropping more coverage."

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