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News from the National Academies

Date: March 6, 2003
Contacts: Christine Stencel, Media Relations Officer
Andrea Durham, Media Relations Assistant
Office of News and Public Information
(202) 334-2138; e-mail <news@nas.edu>

FOR IMMEDIATE RELEASE

Problems Arising From Lack of Health Insurance
Ripple Through Whole Communities

WASHINGTON -- Communities with high rates of uninsurance are more likely to reduce hospital services, divert public resources away from disease prevention and surveillance programs, and reallocate tax dollars so that they can pay for uncompensated medical care, says a new report from the Institute of Medicine of the National Academies. The presence of large numbers of uninsured people can result in reduced access to emergency care, specialty services, and hospital care across the community -- even for those who have health coverage.

"It is misguided and even dangerous to assume that lack of health insurance harms only those who are uninsured," said Arthur Kellermann, co-chair of the committee that wrote the report, and professor and chair of emergency medicine at Emory University School of Medicine, Atlanta. "The rest of the community pays for uncompensated medical care either directly or indirectly, and high rates of uninsurance can strain community health systems to the point that important services have to be cut or eliminated."

Given current economic conditions -- high unemployment, escalating health care costs, and budget deficits at the federal, state, and local levels -- the uninsurance rate will probably continue to grow and have greater communitywide impact. Public funds make up for as much as 85 percent of the shortfall in unreimbursed expenses incurred by the uninsured, which amounted to between $34 billion and $38 billion in 2001.

There is little evidence that the public funds that pay for the bulk of uncompensated medical care for uninsured patients are being allocated or targeted efficiently, however. If sufficient public funds are not available, resources may have to be diverted from other public purposes to pay for health programs, the committee found. For example, Hillsborough County in Florida had to reallocate $2.5 million in property taxes that had been earmarked for road construction to help offset a $6.6 million shortfall in a program serving the medical needs of the uninsured and indigent.

Lack of reimbursement for care provided to the uninsured has contributed to the unavailability of specialty care in some areas and prompted some facilities not to offer the kinds of services that the uninsured tend to use, such as HIV/AIDS and trauma care. For example, some specialists in Phoenix have ended affiliations with certain hospitals, or refused to offer on-call services, in part to avoid treating uninsured patients for whom they do not expect to be reimbursed. The shortage of specialists willing to provide treatment at these facilities also affects insured patients.

When patients lack access to care, their health problems may have an even more direct impact on others. For instance, almost 20 percent of people infected with HIV are uninsured; these individuals are less likely to be aware of their infection status because they lack regular care, and hence they may be at greater risk of transmitting the virus to others.

A number of cities across the United States have closed facilities or converted them from public entities to for-profit ones due in part to the burden of uncompensated care, the report notes. Insured as well as uninsured people may feel the impact of the reduced availability of services. For example, Los Angeles County closed 11 of its 18 public health clinics and one of six public hospitals last year. The county also cut roughly 5,000 jobs. Officials in Milwaukee, Boston, and Hillsborough County, Fla., cited the burden of unreimbursed costs as a factor in their decisions to switch three large urban hospitals to private ownership.

Shifting costs to private insurance payers is not likely to lighten the burden placed on communities by uncompensated care. Efforts to control health costs over the past 25 years have constrained insurance payments to hospitals. Consequently, hospital surpluses generated from privately insured patients have dwindled from a high of nearly 12 percent in 1992 to just 5 percent in 2000. Meanwhile, the proportion of costs from uncompensated care has remained relatively constant on average nationally, increasing the financial burden on hospitals.

Hospitals generally have attempted to control costs by reducing the number of staffed inpatient beds. However, fewer staffed beds can translate into longer wait times before patients who require admission are transferred out of the emergency room. The resulting overcrowded emergency rooms reduce access to emergency and trauma care for everyone in the community.

High rates of uninsurance also take a toll on local public health departments, an important part of the health care safety net. Public health officials across the country report feeling caught between diminishing budgets, demands for populationwide services, and an increasing need to provide medical care to the uninsured. The result may be a shift of funds toward health care delivery at the expense of disease surveillance, injury control, and other traditional public health programs, the report says. This is a serious concern, given that public health departments play a crucial role in detecting and responding to bioterrorist attacks and naturally occurring disease outbreaks.

Nationwide, 16.5 percent of the population under age 65 lacks health coverage, according to the March 2002 Current Population Survey by the Census Bureau. Uninsurance rates vary by state, from a low of 8.7 percent in Iowa to a high of 26 percent in Texas. In California, New Mexico, Arizona, Oklahoma, Louisiana, and Florida, one in five residents lacks coverage. Fourteen other states have uninsurance rates exceeding 15 percent.

With the publication of this report, the fourth in a series on the consequences of uninsurance, the IOM offers the most complete evidence-based picture of the problem and all its effects on the individual, the family, and whole communities. "By exploring in depth the health, social, and financial consequences of lack of coverage, this report and its companions correct several misperceptions that surround the uninsured, such as the notion that the problem affects only the indigent and those who lack health coverage," said Mary Sue Coleman, committee co-chair and president of the University of Michigan, Ann Arbor.

The series is designed to lay the groundwork for a more informed and productive public debate about health care coverage. The committee's next report, expected in June, will explore in greater detail the broader societal costs of having a large uninsured population. The final report, due to be released in October, will identify promising strategies for addressing the problem of uninsurance.

The series is sponsored by the Robert Wood Johnson Foundation. The Institute of Medicine is a private, nonprofit institution that provides health policy advice under a congressional charter granted to the National Academy of Sciences. A committee roster follows.
Copies of A Shared Destiny: Community Effects of Uninsurance are available from the National Academies Press; tel. (202) 334-3313 or 1-800-624-6242 or on the Internet at http://www.nap.edu. The cost of the report is $29.00 (prepaid) plus shipping charges of $4.50 for the first copy and $.95 for each additional copy. Reporters may obtain a copy from the Office of News and Public Information (contacts listed above).


INSTITUTE OF MEDICINE
Board on Health Care Services

Committee on the Consequences of Uninsurance

Mary Sue Coleman, Ph.D. (co-chair)
President
University of Michigan
Ann Arbor

Arthur L. Kellermann, M.D., M.P.H.. (co-chair)
Professor and Chairman
Department of Emergency Medicine, and
Director
Center for Injury Control
Rollins School of Public Health
Emory University School of Medicine
Atlanta

Ronald M. Andersen, Ph.D.
Fred W. and Pamela K. Wasserman Professor of Health Services and Chair
Department of Health Services, and
Professor of Sociology
School of Public Health
University of California
Los Angeles

John Z. Ayanian, M.D., M.P.P.
Associate Professor of Medicine and Health Care Policy
Department of Health Care Policy
Harvard Medical School
Brigham and Women's Hospital
Boston

Robert J. Blendon, M.B.A., Sc.D.
Professor of Health Policy and Political Analysis
Department of Health Policy and Management
Harvard School of Public Health and
John F. Kennedy School of Government
Boston

Sheila P. Davis, B.S.N., M.S.N., Ph.D
Associate Professor
Department of Adult Health
School of Nursing
University of Mississippi Medical Center
Jackson

George C. Eads, Ph.D.
Charles River Associates
Washington, D.C.

Sandra R. Hernandez, M.D.
Chief Executive Officer
San Francisco Foundation
San Francisco

Willard G. Manning, Ph.D.
Professor
Department of Health Studies
Pritzker School of Medicine and
Harris School of Public Policy
University of Chicago
Chicago

James J. Mongan, M.D.
President and Chief Executive Officer
Partners HealthCare Inc.
Boston

Christopher Queram, M.A.
Chief Executive Officer
Employer Health Care Alliance Cooperative
Madison, Wis.

Shoshanna Sofaer, Dr.P.H.
Robert P. Luciano Professor of Health Care Policy
School of Public Affairs
Baruch College
New York City

Stephen J. Trejo, Ph.D.
Associate Professor of Economics
Department of Economics
University of Texas
Austin

Reed V. Tuckson, M.D.
Senior Vice President
Consumer Health and Medical Care Advancement
UnitedHealth Group
Minnetonka, Minn.

Edward H. Wagner, M.D., M.P.H., F.A.C.P.
Director
McColl Institute for Healthcare Innovation
Center for Health Studies
Group Health Cooperative
Seattle

Lawrence Wallack, Dr.P.H.
Professor of Public Health and Director
School of Community Health
College of Urban and Public Affairs
Portland State University
Portland, Ore.

INSTITUTE STAFF

Wilhelmine Miller, M.S., Ph.D.
Study Co-Director

Dianne Miller Wolman, M.G.A.
Study Co-Director