Small Steps or a Giant Leap for the Uninsured?

Health insurance originated in the industrialized nations of Europe, emerged in the United States in the early 20th century, and spread through US employers who sought to attract workers with this benefit. Health insurance was designed to protect workers against the catastrophic costs of medical care and create an incentive for individuals to pursue cost-effective preventive services that would keep them healthy enough to remain on the job.¹ In 1965, the government introduced Medicare and Medicaid to extend health insurance coverage to elderly and some poor persons. However, for a variety of reasons, the United States remains the only industrialized nation without universal health insurance coverage.

In 2001, 41 million Americans lacked health insurance (at the time of an annual survey)² and 58 million were without health insurance for at least part of the year.³ The number of uninsured Americans has not varied by more than 1 or 2 percentage points for more than a decade. The majority of Americans receive private health insurance through their own or a family member's employer. However, employees of large businesses are much more likely to be offered health insurance than employees of small businesses, and, contrary to popular belief, 8 of 10 uninsured persons are members of families with at least 1 working adult.⁴ Individuals who decline health insurance at work and recent immigrants together comprise less than a quarter of the uninsured.

The only randomized study of the benefits of health insurance in the United States was performed in the 1970s. The RAND Health Insurance Experiment randomized individuals to free care vs varying levels of co-payments and deductibles and found that the more individuals paid for health care, the less they used it.⁵ Reducing the cost of medical care through health insurance increased both appropriate and inappropriate use, and the amount individuals contributed to the cost of their care had little impact on the percentage of health care use that was appropriate.⁶ Most recent evidence regarding the value of health insurance comes from cross-sectional comparisons of insured and uninsured individuals and from longitudinal studies of individuals whose health insurance status changes over time. In general, uninsured persons are less likely to have a regular source of care⁷ or to receive preventive services.⁸ Uninsured individuals are also more likely than their insured counterparts to experience barriers to initial contact with the health care system, and even after they have been evaluated, they continue to experience longer waits for specialist services⁹ and are less likely to receive medications¹⁰ and procedures¹¹ for their conditions. The disparities in care are even greater among those with chronic health conditions. Despite a wide range of safety net health care programs, uninsured persons are less likely to receive care when they really need it and, as a result, experience significant morbidity¹² and excess mortality.¹³

The study by McWilliams et al¹⁴ in this issue of THE JOURNAL extends the evidence regarding the importance of health insurance to the near elderly (individuals aged 55-64 years), a group that has previously received relatively little research attention. Unlike most studies that infer the value of health insurance among individuals who lose health insurance, this study compares the benefits of gaining Medicare insurance between those who were and those who were not previously insured. The investigators found that with advancing age and entrance into the Medicare program, disparities between previously uninsured and insured individuals in physician visits and receipt of preventive services, such as mammography and cholesterol testing, narrowed dramatically. In addition, procurement of Medicare insurance also attenuated differences in the receipt of less clearly indicated services, such as prostate examinations.

The other striking finding from this study was that obtaining Medicare insurance did not significantly diminish the disparities between previously uninsured and insured individuals in the likelihood that they would be taking medications indicated for treatment of hypertension or arthritis. This finding underscores the financial barrier Medicare beneficiaries face in purchasing medications and the importance of the current debate regarding the lack of a prescription drug benefit in Medicare.¹⁵ The average percentage of income spent on health care by Americans older than 65 years is now greater than what it was prior to the implementation of Medicare, in large part due to prescription drug costs.¹⁶

Adults between 55 and 64 years of age are of increasing interest to health policymakers. The number of such individuals is about to rapidly expand, as baby boomers began turning 55 in 2001. In little more than a decade, 1 in 5 Americans will be between 55 and 64 years old.¹⁷ The percentage of uninsured near-elderly adults is also increasing, in large part because the age at which Americans are retiring is decreasing.¹⁸ When separated from employment, many older adults enter the ranks of the uninsured until they regain benefits through Medicare. The age at which Medicare benefits begin, currently 65 years, can have a large impact on the number of uninsured adults.

One policy option to stem the growth in the number of uninsured adults is to extend Medicare benefits either through public or private investment to adults younger than 65 years. The notion of using Medicare as a platform for health insurance expansion has been raised in the past with the argument that the marginal cost of doing so would be less than starting a new program for the uninsured from scratch.¹⁹ Policymakers who are concerned about the financial strain the impending expansion of the elderly population will place on Medicare may be more interested in a policy that raises rather than lowers the age at which Medicare benefits are available. However, raising the age at which Medicare benefits are available would have a detrimental effect on the number of uninsured individuals. The argument for expanding Medicare to the uninsured could be strengthened by demonstrating that the increased provision of preventive care services for uninsured adults younger than 65 years results in cost savings when these individuals inevitably enter into Medicare.

Although some might argue that any approach that results in fewer medically uninsured persons is worth pursuing, there is a risk that an incremental approach such as making Medicare available to adults aged 55 to 64 years could ultimately make it more difficult for all uninsured persons to receive health insurance. The political arguments used to expand insurance coverage to the uninsured who are regarded as deserving might be used as a justification for not addressing the needs of those uninsured who are deemed less deserving. Those who wish to see the benefits of health insurance extended to the entire population need to make a policy assessment of whether they are more likely to be successful by dividing the pool of uninsured and targeting groups with incremental changes or by addressing the needs of all who are uninsured with more sweeping reform.

The failure of the Clinton administration to gain congressional approval for a far-reaching universal coverage plan swung the pendulum of health care reform toward incremental change. During much of the 1990s, health insurance expansion was pursued in a marketplace that experienced high levels of job growth and steep declines in the inflationary costs of health care. Yet, even when these extremely positive market conditions were combined with a new public program for uninsured low-income children, the State Children's Health Insurance Plan,²⁰ the number of uninsured persons barely changed, and any gains that were made were quickly eliminated by the later downturn in the economy. In the wake of the recent failure to use the market and selective public programs to expand insurance coverage, policy analysts are coming to the conclusion that the chasm of the uninsured cannot be bridged with small steps but only with a giant leap of political will.²¹

Americans are expressing a growing discontent with their health care system.²² The arrival of a new presidential campaign will most likely provide another opportunity to reconsider whether it is time for marginal or major reform to address the plight of the uninsured. The persistent nature of this problem is daunting, even though a recent report suggests that the cost of extending health insurance coverage to the uninsured would be only about half of what the inflationary cost of health care was between 2000 and 2001.²³ Abba Eban once commented that "History teaches us that men and nations behave wisely once they have exhausted all other alternatives."²⁴ For the sake of the uninsured, the era of trying small steps and using the wrong approaches hopefully is over; it is time to take a great leap forward.