Date: June 17, 2003 Contacts: Christine Stencel, Media Relations Officer Heather McDonald, Media Relations Assistant Office of News and Public Information (202) 334-2138; e-mail <firstname.lastname@example.org>
FOR IMMEDIATE RELEASE
U.S. Loses up to $130 Billion Annually as Result of Poor Health, Early Death Due to Lack of Insurance
WASHINGTON -- The value of what the United States loses because of the poorer health and earlier death experienced by the 41 million Americans who lack health insurance is estimated to be $65 billion to $130 billion every year, according to a first-ever economic analysis of the costs of uninsurance for society overall. This lost value is a hidden cost that could be recouped by extending health coverage to all, says a new report from the Institute of Medicine of the National Academies.
"By identifying and, where possible, quantifying the economic inefficiencies and losses that stem from having 41 million Americans without health insurance, this report looks at our national health policy within a cost-benefit framework," said Mary Sue Coleman, co-chair of the committee that wrote the report and president, University of Michigan, Ann Arbor. "Our findings are based on the same approach that federal agencies use to determine whether the benefits of reducing a particular risk or harm justify the costs to society. As policy-makers weigh the costs and benefits of expanding coverage, they should factor in the estimated $65 billion to $130 billion value of improved health that could be realized each year through continuous coverage."
The societal costs of maintaining an uninsured population usually are thought of only in terms of the public costs of free or reduced-price care used by uninsured individuals. To capture the hidden costs of uninsurance's effects, the committee employed the concept of "health capital" to estimate the value that would be gained if health insurance were extended to all. Health capital represents, in monetary terms, the value of an individual's health over future years of life, and includes the subjective value of being alive and healthy, earning potential, and children's physical and mental development. The differences in health status and life spans between the uninsured and otherwise similar people with coverage represents the value of health capital lost due to being uninsured.
The estimated value of improved health that an uninsured individual would gain with each year of coverage ranges between $1,645 and $3,280 annually. The aggregate value that could be realized for the entire population – $65 billion to $130 billion – likely exceeds the estimated costs – $34 billion to $69 billion – to provide the uninsured with the additional health services that they would use if they gained coverage and used the same amount and kind of services as the insured. It is important to note that the committee did not attempt to project the full costs of a plan to cover everyone.
The report also examines evidence that there are other costs related to lack of health coverage beyond the $65 billion to $130 billion estimate that cannot be calculated with current data. These costs include reduced availability of health care services for both the uninsured and the insured in communities with high rates of uninsurance, and higher costs for public programs. "Providing health care coverage to those who lack it is likely to be a cost-effective strategy that pays not only in lives saved and better health, but also in economic dividends," said committee co-chair Arthur Kellermann, professor and chair of emergency medicine at Emory University School of Medicine, Atlanta.
The value of providing coverage to those who are now uninsured accrues over the lifespan of the individuals and to society as a whole. One challenge is that employers may not individually derive enough value to make it worth their while to offer insurance to their workers. At the same time, studies have demonstrated that impaired health – which is more common among those without health insurance – is related to absenteeism and reduced productivity. Almost one-fifth of the working-age population lacks health coverage.
With the publication of this report, the fifth in a series on the consequences of uninsurance, the Institute of Medicine offers the most complete evidence-based picture of the coverage issue and its effects on individuals, families, communities, and the nation as a whole. The series is designed to lay the groundwork for a more informed public debate about health care coverage. The committee's sixth and final report 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.
Read the full text of Hidden Costs, Value Lost: Uninsurance in Americafor free on the Web, as well as 2,800 other publications from the National Academies Press; tel. (202) 334-3313 or 1-800-624-6242 or on the Internet at http://www.nap.edu. Reporters may obtain a pre-publication copy from the Office of News and Public Information (contacts listed above).
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 Emory University Atlanta
Ronald M. Andersen, Ph.D. Wasserman Professor in Health Services; 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 Harvard Medical School Brigham and Women's Hospital Boston
Robert J. Blendon, M.B.A., Sc.D.* Professor Health Policy and Political Analysis Department of Health Policy and Management Harvard School of Public Health and Kennedy School of Government Boston
Sheila P. Davis, B.S.N., M.S.N., Ph.D. Associate Professor School of Nursing University of Mississippi Medical Center Jackson
George C. Eads, Ph.D. Vice President Charles River Associates Washington, D.C.
Sandra R. Hernández, M.D. Chief Executive Officer San Francisco Foundation San Francisco
Willard G. Manning, Ph.D. Professor Department of Health Studies 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 MacColl Institute for Healthcare Innovation Center for Health Studies Group Health Cooperative Seattle
Lawrence Wallack, Dr.P.H. Director School of Community Health College of Urban and Public Affairs Portland State University Portland, Ore.
Wilhelmine Miller, M.S., Ph.D. Study Co-Director
Dianne Miller Wolman, M.G.A. Study Co-Director
*Committee member from September 2000 to December 2002