Behind the new health insurance numbers

Original Link: http://www.marketwatch.com/news/story/45-million-lacking-coverage-pressure/story.aspx?guid=%7B7B6EFE9E%2D60B7%2D43EC%2DA158%2DDB8D8A6C8466%7D

By Kristen Gerencher, MarketWatch

New Census Bureau figures released this week contained some good news: The number of Americans without health insurance fell 1.3 million last year from 47 million uninsured in 2006.

The bad news: 45.7 million still lacked coverage. That's 15.3% of the U.S. population.

A staggering number of uninsured has persisted for years. What's different this time is a change in the mix of coverage. Government-funded public programs increased their enrollment by about the same number of people who were newly insured in 2007, underscoring the importance of strong safety-net programs such as Medicaid and the state children's health insurance program, or S-chip, health-policy experts said.

The number of children under age 18 without health insurance dropped to 8.1 million last year from 8.7 million in 2006, or to 11% of all U.S. kids from 11.7% the previous year, the report found.

Several states expanded their programs in recent years in the absence of federal health-care reform. That's helped to offset some of the loss of employer-sponsored coverage, which has continued to erode this decade as health-care costs ballooned, said Karen Davis, president of the Commonwealth Fund, a private foundation in New York that supports independent health-care research.

"We had a 1.3 million reduction in the uninsured and had a 1.3 million expansion in Medicaid growth," she said. "Clearly, without Medicaid and particularly the expansion of coverage for children we would've continued to see a rise in the number of people who were uninsured."

The reauthorization of S-chip, launched in 1997, became a lightning-rod political issue at the end of last year after President Bush twice vetoed Congress' efforts to extend and expand the program, designed for children in low-income families who earn too much to qualify for Medicaid. A temporary extension is set to expire in March unless a new bill is passed.

What's at stake

The portion of people covered by job-based and other private insurance declined and likely will continue to do so, placing more pressure on public programs, said Len Nichols, a health economist and director of the health-policy program for the New America Foundation, a nonprofit, nonpartisan research group in Washington.

"While it's superficially good news in that more people have coverage, it exemplifies the stress the system is bearing," Nichols said. "I don't think most governors are going to be happy to sustain the current [Medicaid and S-chip] rolls they have as the economy weakens."

"If private coverage can't keep up with population growth, then we're going to constantly have fewer people covered in the private sector in the absence of reform," he added. "That's why [national health] reform is necessary to save the private sector....The federal role here is to try to do comprehensive reform and put financing of our health-care system on more sustainable footing."

The nation's problem with helping people secure health insurance remains status quo, said Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute in Washington.
"The story hasn't changed from last year," he said. "The numbers have changed a little bit, but it really doesn't matter if we're talking about 47 million, 45 million or 43 million. The fact is it's a significant number of people who don't have health insurance."

People who don't have health insurance tend to put off or forgo needed health care because they can't benefit from the negotiated discounts and financial protection that coverage offers. They often suffer with more illness, disability and lower productivity and may die prematurely compared with their insured counterparts. They also may drive costs higher if they seek medical attention in hospital emergency rooms after their illnesses have progressed and they can't pay the bill.

The uninsured issue is important to follow for a number of reasons, Fronstin said.

"It matters because it puts pressure on the health-care system in terms of uncompensated care. It matters because more people are not getting the kind of health care they need because they think they don't have access to the system or have the kind of access to the system that insured people have," he said. "It matters to policy people because if we're going to try to solve this problem we need to know what it's going to cost."

Role of the economy

The Census Bureau has tracked annual health insurance trends since 1987, when 31 million Americans lacked coverage. The agency enhanced its survey in 2000 and added more questions about children's coverage in 2002. In March of this year, investigators conducted in-person interviews with 76,600 households to inquire about individuals' insurance status for calendar year 2007. If respondents had coverage for any part of the previous year, they were counted as insured.

By the time the figures for one year are released the following year, they already may lag the current situation. Because the new data represent 2007, which saw the U.S. unemployment rate averaging 4.6% compared with the most recent rate of 5.7% in July, the health-insurance snapshot doesn't reflect today's sputtering economy, Fronstin said.

"We have a higher unemployment rate so fewer people with access to coverage," he said. "And those people with coverage are undoubtedly facing the decision of whether to keep their health insurance when dealing with higher gas prices and higher food prices."

Nichols agreed. "The economy had just begun to weaken in the fourth quarter of 2007. All reasonable models will predict that 2008 numbers will be worse and we would expect more people to have lost private coverage by then. But given how vibrant the S-chip and Medicaid safety net is, that doesn't mean the uninsured will go up a lot. It just means we expect erosion in the private sector to continue and indeed intensify."

Though some states' uninsured rates improved, the overall distribution of those with the highest and lowest portion of uninsured was little changed, according to the census report. Regionally, the South and West had the highest rates of uninsured people, with 18.4% and 16.9% respectively. Texas had the highest percentage of uninsured, at 24.4% using a three-year average from 2005 to 2007.

States falter

The level of state health-care reform efforts reached a 15-year high after Massachusetts began its landmark comprehensive statewide health reform plan in 2006, according to a study published in the January issue of the journal Health Affairs.

But the flurry of activity faded quickly as states became strapped with budget shortfalls resulting from decreased tax revenues and higher outlays of unemployment insurance, Davis said.

"Massachusetts and Vermont at this stage are the only states that have a commitment to universal coverage," she said. "There were major proposals in California, Pennsylvania, Illinois. Those have floundered. You haven't had proposals from the states that have had major problems like Texas, Florida."

Such failed attempts suggest states can't handle the problem without more comprehensive national reform, she said.

"What's shocking is the U.S. is the only major industrialized nation that fails to cover everyone, and yet we spend twice per capita what the next closest country spends on health care," Davis said. "Many of these countries in Europe are older and have a higher fraction of elderly as total population and yet cover everyone at substantially lower costs."