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The Uninsured: Problems, Solutions, and the Role of Academic Medicine

Garson, Arthur Jr MD, MPH

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Dr. Garson is dean of the University of Virginia School of Medicine, vice president of the University of Virginia, and a member of the president’s cabinet providing input on university-wide initiatives, Charlottesville, Virginia.

Correspondence should be addressed to Dr. Garson, Dean, University of Virginia School of Medicine, PO Box 800793, Charlottesville, VA 22908-0793; telephone: (434) 924-8419; fax: (434) 982-0874; email: (garson@virginia.edu).

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Abstract

The number of uninsured persons in the United States—46 million—is more than the number covered by Medicare. The author discusses why there are so many uninsured, the health effects of being uninsured, and strategies to help the uninsured, with an emphasis on changing the safety net and employer-based insurance for smaller businesses. He then asks “What can academic medicine (AM) do now?” and proposes that (1) AM can help eliminate waste in health care. For example, AM can research areas of potential waste such as how often patients with chronic disease need to be seen and what tests they need (not to restrict care, but to determine what is appropriate). AM can also continue to develop electronic medical records that eliminate unnecessary repetition of work and can have embedded national practice guidelines with reminders. (2) AM can act as a large employer and develop novel benefit plans that provide various important choices and develop ways to educate employees to choose the appropriate health plan. The University of Virginia has established the Consumer Health Education Institute, which is researching ways to educate consumers in the format most accessible for them as individuals (i.e., tailored to their health literacy). (3) AM can work with state governments to develop innovative coverage models. Because it appears that innovation in health care may be at the state level at least for the next few years, individuals in AM can be extremely helpful in making suggestions to formulate policy and implement programs. The current estimate is for the United States to have 56 million uninsured by 2013—an increase to 19.4% of the population. Academic medicine can help slow this increase.

Fact: No matter how poor you are, if you are between 19–64 years old, for all practical purposes, you are not covered for health care in the United States unless you are completely disabled.

The number of uninsured persons in the United States increased another 800,000 in 2004: 15.7% of our population, 45.8 million people.1,p.16 Forty-six million is not a number we deal with often. To put it in perspective, 46 million people is greater than the population of Canada plus Australia; 46 million people is more than those covered by Medicare; 46 million people is more than the aggregate population of 24 of our states. Of the uninsured, in 2004, a quarter make less than $25,000 per year; 33% are Hispanic, 20% are African American, 11% are Caucasian, and 36% report “other” (e.g., Asian-Pacific islander, Native American, Alaskan native, or mixed).1,p.16

The most common way (48%) for U.S. citizens to be insured is through their employers; an additional 27% are covered by government programs—Medicare, Medicaid, the State Children’s Health Insurance Program (SCHIP), the Veteran’s Health Administration, as well as various state and county systems—and 9% are self-insured, leaving 16% uninsured, the 46 million mentioned above.1

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Why So Many Uninsured?

With all of these programs, how can there be all of those uninsured people?

* Medicaid is thought of as the “universal safety net”—not so. Two major Medicaid programs cover the poor at both ends of the age spectrum: 84% are under 19 or over 65 years of age. The vast majority of the remainder are disabled. The determination of “how poor” one must be for Medicaid coverage is set by the federal government and related to the “federal poverty level”—i.e., for a family of four in 2006, the federal poverty level is $20,000. For children ages one to 19 years, Medicaid will cover those whose family have an income less than 133% of the federal poverty level. Some states have expanded Medicaid eligibility (and are contracting in times of difficult state budgets)—but there is no mandate to cover those between 19 and 64 years unless they are disabled.

* Between 10–25% of children in families making under 200% of the federal poverty level are eligible for Medicaid or SCHIP coverage but have not applied. Why? Many say it is the regulations: some states require a lengthy application (in more than one state, 16 pages) that must be completed in person with proof of residency, proof of assets (and if the person forgets one item of proof, he or she must return another day); this procedure must be repeated every six months. Some states require a personal interview each time. Frequently, these are not simple common straightforward procedures designed to increase enrollment.

* The majority of the uninsured are poor and work for a living: they are the people in service occupations whom you encounter every day who know your name. They work at the cleaners, the restaurants, the gas stations, even in some department stores—83% of the uninsured are in families with at least one full-time worker. About 40% of Americans work in small business (less than 200 employees), but many small businesses do not offer health insurance: only 47% of firms with three to nine workers offer health insurance. Overall, 59% of firms with less than 200 employees offer health insurance compared with 98% of those with 200 employees or more.2,p.4

For those whose employers do not offer insurance, the only way they can find insurance is the “individual market”: they go to an insurance broker seeking to buy a plan for themselves or their family. The price of the plan will depend upon how much coverage and deductibles are desired. The cost will also depend upon how much health care has been used over the past few years. Assume a family of four has had no unusual health care expenditures and buys “bare bones” coverage: an average annual premium in the individual market is $2,321 and both parents work for minimum wage (e.g., small restaurant), making a combined total of $21,424. Remember that the federal poverty level for a family of four is $19,350. Therefore, the family makes too much even for the two children to be covered by Medicaid. So they are on their own to pay $2,321 when they make a total of $21,424 before taxes (11% of income)—some family plans have premiums of over $10,000 for “routine coverage.”2,p.2

What is “reasonable” to expect an individual to pay as a percent of income? In surveys of those living in poverty, most would pay for health care if it was 3–5% of income.3 Why? Rent, transportation, child care, food, and taxes eat up the rest.

Now it should be clear why most of the uninsured do not have health care coverage: they cannot afford it.

Each state has developed its own way of dealing with the uninsured. For example, most have medical schools and teaching hospitals associated with state universities, such as the University of Virginia, charged, as part of their mission, with caring for the state’s uninsured. Also, there are more than 3,000 federal qualified community health centers throughout the country funded by the federal government, but these are largely for primary care and have difficulty finding specialists willing to accept patients.

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Health Effects of Being Uninsured

The uninsured die earlier than the insured; overall the uninsured have a 25% higher mortality. The uninsured with diabetes, high blood pressure, and heart disease have a 56% higher chance of premature death. Uninsured women with breast cancer are 50% more likely to die. So the uninsured clearly do not get enough care.4

One-fourth of uninsured adults report no doctor visits in the last 12 months; half of the uninsured adults report not filling a prescription “because they needed to eat,” which is five times the rate for those who have insurance. Overall, uninsured adults get about half as much care; only one third use clinics.5 One of the reasons we have such disparities in health care between whites on the one hand and Hispanics, African Americans, the poor, and those living in rural counties and inner cities on the other is because so many in these latter groups are uninsured.

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What Can Be Done for the Uninsured?

Between now and 2013, personal spending on health care is estimated to increase 7.4% per year, whereas personal income will increase 4.6% per year. Each increase in personal health care spending of 1% over personal income increases the number of uninsured by 246,000, resulting in at least 56 million uninsured by 2013—an increase to 19.4% of the population.6

In 2003, 74% of Americans said that legislation to provide health insurance to the uninsured was “extremely important.”7 In fact, most agree on the concepts and goals:

* Have coverage for all Americans. A number of different methods are possible.

* Provide high-quality necessary care; “high quality” involves a partnership of the physician and the patient where each share responsibility; the definition of “necessary” will be key.

* Control costs: elimination of waste is paramount. To this end, entrepreneurial competition is important; clearly, savings will occur with improved health information technology infrastructure, such as electronic records and electronic billing.

* Simplify the administrative side of health care.

* Recognize that any solutions will need to involve private and public financial support that can be affordable by individuals, businesses, and the nation.

It is important to note, however, that improving coverage cannot occur in isolation. In controlling costs, we must not allow quality to suffer, even though it will be by curbing the growth of costs that we will be able to afford coverage.

What approaches to coverage are possible? For the time being, let us assume that only incremental changes to improving the system are possible. We can leave relatively unchanged Medicare, the Veterans Health Administration system, and employer-based insurance for very large employers. The other two categories, employer-based insurance for smaller employers and the safety net, could change.

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Employer-based insurance for small employers

If we could insure every person who worked in a small business (and their families), the number of uninsured would decrease by 83%. There are two factors standing in the way: (1) inefficiency of providing health care through small business and (2) insufficient funding. The marketing and servicing of large numbers of small business clients is inefficient. Efficiency can be increased by the creation of “pools” of small businesses joining together, reducing administrative costs; this has been attempted in several states, such as New York’s Health Pass.8 Alternatively, individuals can join pools. The most successful of these pools is the Federal Employee Health Benefits program, where individual employees in the federal government (e.g., those working for the U.S. Postal Service) are given a choice of local health plans. Small businesses could participate either in the Federal Employee Health Benefits Program or state employee plans.

The major stumbling block to providing insurance through small business is lack of funding, and this is the major reason given for the low enrollment in many pools to date. Even if pools were able to get the price of insurance as low as the price for large businesses, premiums must be paid by a combination of the employer and the employee; each would have to be willing to pay approximately $900 per year. For a “bare bones” plan, $3,000 would be required for an individual and $6,000 for a family, leaving a required subsidy of $1,200 for an individual and $4,200 for a family. In fact, the government has proposed to cover this subsidy. In Detroit, Michigan, a plan for the county to provide one-third of the cost of the health care premium has been developed.9 The Bush Administration has proposed a tax credit of $1,000 for an individual and $3,000 for a family; whether these amounts are enough or not, the point is that a policy has been developed to support a mechanism for subsidy.10 This approach should be pursued.

Other policies have proposed to reduce the price of benefits or reduce the actual benefits provided. Many states have laws requiring certain benefits, and recent attempts have been made to have certain plans (e.g., Association Health Plans) exempt from such laws. Concerns about associations’ health plans are that benefits will be reduced below what could be considered “reasonable coverage.” The other currently popular way of decreasing the price of benefits is the high deductible plan, in which the employee pays the first $1,000 to $2,000 (or more) of expenses. Although attractive in terms of price, problems that may be encountered are that: (1) the individual is unable to pay the deductible and therefore providers are not paid; or (2) the individual may “hoard” the deductible for a rainy day so that the appropriate preventive care, or even follow-up care for chronic disease, is not sought. A great deal of education will be required so that individuals spend their money wisely and shop wisely for health plans.

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The safety net

We will always need a safety net. Most attempts to improve the safety net in recent years have been individual states’ expansions of Medicaid and/or SCHIP. The first “expansions” pursued have been to increase enrollment for children who are already eligible for these programs. Medicaid/SCHIP expansion has also been pursued with the addition of new categories of covered individuals, such as providing Medicaid coverage to all adults under 100% of poverty as was done in TennCare. Unfortunately, while the concept was sound, administrative problems plagued TennCare. A number of states expanded their covered populations either through Medicaid or SCHIP, only to reduce them when state budgets could not support the coverage expansions.

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And now?

What should we do now? We must now provide incremental improvement in both the areas just discussed: (1) develop a methodology for small businesses to pool to obtain insurance and find ways to increase individuals’ access to the Federal Employee Health Benefit Program; and (2) expand Medicaid and SCHIP coverage, perhaps to those under 200–300% of the federal poverty level.

But we are currently in an “incremental mode” nationally. We are not likely, at least in the next several years, to enact sweeping methodology for overall expansion. Therefore, fostering innovation in all three of these at the level of the states should occur.11 An encouraging development: in 2006 the Health Partnership Act was introduced into the U.S. Senate (S.2772). This legislation provides grants to states for innovative approaches to improvement in coverage, quality, and efficiency. As it becomes apparent which approaches are the most effective, other states, and eventually the country, can learn.

Clearly, the obvious problem is not lack of ideas, but lack of money. We need approximately $100 billion to fund the uninsured by any mechanism.12 The “areas of potential opportunity” include elimination of the tax deduction given to employers for health care, or a rollback of the current tax cuts. About $250 per taxpayer (individual or family) would be required to achieve $90 billion. Of course, taxes could be raised with increases in “sin taxes” such as cigarettes, or even the creation of a “fatty food tax,” where it has been estimated that a 5% tax in foods with three grams or more of saturated fat would yield $46 billion for the country.13

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What Can Academic Medicine Do Now?

I propose three ways that academic medicine can work to reduce the number of uninsured.

First, help eliminate waste in health care; that is, stop doing what provides no value. It has been said that America wastes one-third of its medical care dollars14; the waste is probably not that much, but a lot. In our medical schools and teaching hospitals, we have many of the brightest health services researchers. We can have them research areas of potential waste such as how often patients with chronic disease need to be seen and what tests they need (not to restrict care, but to determine what is appropriate); we can continue to develop electronic medical records that eliminate repetition of work (e.g., the radiograph can be repeated if the patient did not bring it); and we can have national practice guidelines with reminders embedded in the electronic medical records. Savings from these initiatives, if they occur in public programs (e.g., Medicaid), could be kept in the system and used to improve coverage, as has been suggested in the state of Virginia.

Second, act as a large employer: develop novel benefit plans that provide various benefit choices, and develop ways to educate employees to choose the appropriate health plan. At the University of Virginia, we have founded the Consumer Health Education Institute, which is researching ways to educate consumers in the format best suited to them as individuals. For example, as the elderly require increased knowledge of prescription drugs, we will be able to tailor education programs to fit each individual’s level of health literacy.

Last, work with state governments to develop innovative coverage models that could be proposed as part of a state grant in the Health Partnership Act. Most of us in academic health centers have important relationships with elected and other state officials. Because it appears that innovation in health care may be at the state level at least for the next few years, we can be extremely helpful in suggesting ways to formulate policy and implement programs.

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The Long Term: 20 Years

For the long term, major restructuring needs to occur in the safety net. Ideally, there should be a single safety net including Medicare, Medicaid, and state and community programs. This should cover those up to a reasonable level of income completely (today it would be those with incomes of 200–300% above the federal poverty level) and then let those over 300% buy into the safety net with various amounts. Those with incomes greater than 400% of the federal poverty level could buy into the safety net program but with full pay. For persons who are older than 55 years, a reduced premium for the safety net program would be available, related in some way to income. The system would have evidence-based benefits and high-quality care with appropriate incentives.

The remainder of Americans could have a completely private system with its own insurance products. In the private system, the individual would have a broader range of private physicians, and “elective procedures” such as plastic surgery would be covered, but the private system would not provide better outcomes than the safety net.

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A Rational Health Care System Ever?

Our nation will eventually and finally create a rational health care system, when the following occur:

* The current “finger in the dike” of costs will run its course and prove ineffective (e.g., HMOs were “the solution” the last time; currently, it is consumer-directed health care with high deductibles).

* This “finger in the dike” failure will occur at the time of a serious economic downturn when employer profits are decreased despite jettisoning as many “employer-sponsored” health care costs as possible; the business lobbyists will push for change.

* A large segment of the newly uninsured or underinsured will vote.

* Over time, as the new generations of Americans begin to think more about themselves and their families, it is possible, if they begin to get home before midnight, that they will start to “talk over the back fence” with their neighbors and develop more of a sense of community. We may then decide that providing health care for all (and helping to pay for it) is the right thing to do and we will vote for it. Stay tuned: when the voters, the lobbyists, the president, and the Congress are aligned, we will have a rational health care system.

We should not accept without challenge what we know to be abominable just because it appears to be inevitable. - —Jordan J. Cohen, MD, president, Association of American Medical Colleges (AAMC), remarks at the AAMC’s 1999 annual meeting

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References

1 DeNavas-Walt C, Proctor BD, Lee CH. U.S. Census Bureau, Current Population Reports, Income, Poverty, and Health Insurance Coverage in the United States: 2004. Washington, DC: US Government Printing Office, 2005.

2 The Henry J Kaiser Family Foundation and Health Research and Educational Trust. Employer Health Benefits: 2005 Summary of Findings. Report #715 (http://www.kff.org). Accessed 2 August 2006.

3 Ku L, Coughlin TA. Sliding-scale premium health insurance programs: four state experiences. Inquiry 1999;36:471–80.

4 Institute of Medicine. Care without coverage: too little too late. Institute of Medicine, May 2005:3.

5 Davidoff A, Genevieve K. Uninsured Americans with Chronic Health Conditions: Key Findings from the National Health Interview Survey. Baltimore: The Urban Institute and the University of Maryland, Baltimore County, May 2005.

6 Gilmer T, Kronick R. It’s the premiums, stupid: projections of the uninsured through 2013. Health Affairs. 2005:W5–148.

7 Blendon RJ, Benson JM, DesRoches CM. Americans’ views of the uninsured: an era for hybrid proposals. Health Affairs. 2003:W3–408.

8 Rosenberg SN. New York’s HealthPass Purchasing Alliance: Making Coverage Easier for Small Businesses. The Commonwealth Fund, September 2003.

9 Norris K. Sharing Health Coverage: Three pronged medical care. Detroit Free Press, 25 October 2004.

10 Collins SR, Davis K, Lambrew JM. Health Care Reform Returns to the National Agenda: The 2004 Presidential Candidate’s Proposals. The Commonwealth Fund, September 2003.

11 Davis K, Schoen C. Creating consensus on coverage choices. Health Affairs. 2003:W3–199.

12 Institute of Medicine. Hidden costs, value lost: uninsurance in America. Institute of Medicine. 2003:3.

13 Garson A. Health Care for all of U.S.: Start with the states. Harvard Health Policy Review. Spring 2004.

14 Wennberg JE, Fisher ES, Skinner JS. Geography and the debate over Medicare reform. Health Affairs. 2002: W104.

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© 2006 Association of American Medical Colleges

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