Gaps in Coverage Create Health Insurance

By itself, the most recent U.S. census estimate of 43.6 million uninsured Americans--up from about 40 million only two years ago--is a staggering number. However, new data indicate that the total number of Americans who may go without health insurance for a significant period is even higher, and that has disturbing implications for policy-makers and health care providers.

"Given these dynamics, policy-makers should think of 'uninsured' as referring not to people, but rather to gaps in coverage over time," wrote Pamela Farley Short and Deborah R. Graefe in the November/December issue of Health Affairs. Short and Graefe are researchers at the Commonwealth Fund, a private foundation that supports independent research on health and social policy issues. In their report, they concluded, "At least as many people are repeatedly uninsured as experience a one-time interruption in generally stable coverage."

The authors pointed out:

Half to two-thirds of the people who are uninsured over the course of any year move into or out of coverage during that year. High turnover means that many of the approximately forty million people who are now uninsured will not be among the forty million who are uninsured a year from now.

Short and Graefe also found, "A total of 84.8 million Americans under age sixty-five were uninsured for at least one month in the four years from 1996 through 1999."

"Few people are continuously uninsured for as long as four years," they continued, "but many of the uninsured are exposed to major financial and health risks over time."

"A lot of the uninsured are people who are working, but are living just above the poverty line," Steven Sharfstein, M.D., president-elect of the American Psychiatric Association, told Psychiatric Times. "They're in the so-called gray zone, just above the threshold for Medicaid. Surveys underestimate the need in terms of people who have no health insurance coverage for mental health. There are probably another 10 to 20 million who have health insurance but for whom mental health coverage is nonexistent or totally inadequate. That means there are between 55 and 60 million people with no mental health insurance. That is tragic. These are the folks who end up in the emergency rooms or stuck for days trying to find a bed in a state hospital.

"That group also may include some folks who had some insurance and lost it. The parity law in Maryland means that if people have insurance it usually is pretty good. But it can still run out, and people with Medicare can hit their lifetime limits. Then they wind up either in a state hospital, on the streets or in jail. In any case, the cost is shifted; whether the costs are actually more is an interesting empirical question. But in any case, the care they receive is often inappropriate and bad for them. It's not good for a person with schizophrenia to have their treatment in jail. It's not a therapeutic environment."

In addition to increasing the burden on public health programs such as Medicaid, uninsured individuals cost private health care providers substantial amounts in terms of unpaid care and lost resources. The Institute of Medicine (IOM) reported that uncompensated care for the uninsured in 2001 amounted to roughly $35 billion, which included $23.6 billion in patients' unpaid hospital bills, $7.1 billion in public expenditures for government grant and direct services (e.g., care in Veterans' Affairs facilities, local health programs and targeted population programs, such as Indian Health Services).

Also included in the $35 billion figure is "$5.1 billion in free or reduced-cost care provided by office-based physicians and through volunteer service in clinics."

Sharfstein, who is president and chief executive officer of the nonprofit Sheppard Pratt Health System in Baltimore, cites his own institution as an example of the impact the uninsured can have.

"They are a significant factor in our bad debt," he said. "Last year, 6% of Sheppard Pratt's budget--about $8 million--was for free care. It's a major problem. We are basically a break-even institution. The high number of people without insurance compromises the integrity of the treatment system in addition to the terrible suffering for both patients and their families. They're already impoverished by the high cost of medications, by the continual visits to psychiatrists. If they have to be hospitalized, they have to go to a public or state hospital."

Lack of insurance often leads patients to postpone getting needed treatment, which can exacerbate both the severity of the illness and the costs to the system when those patients eventually do seek care.

"Uninsured people use fewer health services than their insured counterparts," according to the IOM. "When they do use services, they are more likely to use costly emergency room services or require hospitalization that could have been avoided if they had received timely primary care."

The IOM also found that care for the uninsured cost $99 billion in 2001, including "the $26.4 billion the uninsured paid out of their pockets, any public or private insurance payments made for services if they were covered for only part of the year, and workers' compensation payments," in addition to charity care.

Researchers are now looking at the long-term health consequences of postponing needed medical care. Recent studies have looked at the increase in the usage of services by uninsured older Americans as they become eligible for Medicare at age 65.

In an interview with PT, Marilyn Moon, Ph.D., vice president and director of health programs at the American Institutes for Research, said, "In their first few months in the program, many people do things they've put off doing, especially things like, say knee surgery, things that are elective but can be put off. That tends to mean an increase in Medicare expenses for a while. It's a rational expectation when you think that the whole reason that a lot of private insurers exclude pre-existing conditions is exactly that."

"People without insurance in their early 60s are going without needed services," John Z. Ayanian, M.D., M.P.P., told PT. Ayanian was co-author of a study that examined changes in the usage patterns for preventive or diagnostic procedures among adults aged 60 to 64 before and after they became eligible for Medicare.

Ayanian and colleagues wrote (JAMA 2003;290[6]:757-764):

Both continuously and intermittently uninsured adults were significantly less likely than continuously insured adults to report having received each [studied] preventive service prior to Medicare eligibility.

"There is another aspect to this problem," Sharfstein said, "and it underscores the tragedy for the uninsured. We have effective treatment. People recognize it. When the uninsured are asked, many of them now want mental health care because they realize it works, it's helpful. They know that sophisticated medication strategies combined with psychotherapy and psychosocial treatments are helpful, and they want the coverage."

Researchers from the National Institutes of Health assembled a panel of uninsured individuals in North Carolina and asked them to design what they would consider an ideal health insurance plan, given finite resources for the whole package, represented by a controlled number of pegs that could be placed in a diagram with all of the coverage choices (J Gen Intern Med 2002;17:125-133). Twenty-one out of 22 groups of participants selected mental health coverage as an essential component of their ideal plan.

In individual interviews, 59% of the participants initially selected mental health coverage. After two rounds of group selection activities, the participants were interviewed individually again. In the second round of individual interviews, 65.2% of the participants selected mental health coverage. Participants who reported being employed were less likely to select mental health coverage than participants who were both unemployed and uninsured.

The authors wrote:

While the public is thought to stigmatize mental illness and mental health coverage does not have parity with other medical benefits in many managed care plans, nearly all groups in this study chose to include mental health coverage in their plans. We speculate that the more frequent selection of mental health benefits by the unemployed during the individual round of benefit selection may be due to more frequent personal experience with mental illness in those who were unemployed.

People without health insurance are at greater risk than those with insurance, according to a report from the Kaiser Commission on Medicaid and the Uninsured:

Eight studies of outcomes of specific diseases (breast cancer, colorectal cancer, cardiovascular disease, and trauma) found that the odds of dying within a particular time period were about 1.2 to 2.1 times greater for an uninsured person with the particular condition compared to a privately insured person. Another seven studies of adult mortality from all causes found comparably higher relative odds of dying for the uninsured compared to the privately insured and quantitatively consistent estimated effects of greater medical care use ... Other research cited above strongly suggests that the mechanism underlying these results is a combination of less preventive care, later diagnosis at a more advanced stage of disease, and less therapeutic care after diagnosis among the uninsured.

"The implications are that any time you ignore a problem like the uninsured and assume there will be no consequences, you're likely to be wrong," explained Moon. "People who have health care needs are going to be a cost to the system. If you have delayed taking care of those needs, they're more likely to be expensive than if they had been taken care of six months or a year earlier. This is particularly true for older Americans. It might have some off-setting savings if you could provide them access to the system at an earlier age."

"The solution is a universal health insurance plan," said Sharfstein, "where the risk is spread across the entire population, in all risk categories, and it's understood that every individual has a right to access quality care. It's going to be one of the major issues in this year's political campaign. It's already rising on the political agenda. After the economy, health care is the highest priority on the minds of Americans. They worry about the cost, they worry about losing coverage. It is possible that we could see some major reforms in the foreseeable future.

"The uninsured are a major public policy problem," he added. "Being uninsured and mentally ill is a disaster."