Date: Oct. 11, 2001
Contacts: Saira Moini, Media Relations Officer
Cory Arberg, Media Relations Assistant
(202) 334-2138; e-mail <>

Health Care Costs, Policies, and Misperceptions
Pose Obstacles to Obtaining Insurance

WASHINGTON -- The high cost of health insurance, along with public policies, prevents tens of millions of Americans from obtaining health care coverage, says a new report from the Institute of Medicine of the National Academies. A dip in the number of uninsured in 1999 and 2000 can be attributed in part to a stronger economy, but an increase is expected in the future because of rising health care costs and insurance premiums, a weakening economy, and a growing population.

"More than the state of the economy, the rising cost of health care services and insurance premiums, combined with a hodgepodge of policies and practices, undermines affordability for employers, their workers, and the public at large," said Mary Sue Coleman, co-chair of the committee that wrote the report and president of the Iowa Health System and the University of Iowa, Iowa City. "Unless health insurance is made more affordable, the number of uninsured Americans is likely to continue growing over time."

Pervasive misperceptions about the uninsured also present obstacles to addressing the issue constructively, the committee found. In addition, the report confirms research findings that people without insurance are less likely to seek health care when needed.

The report is the first of six that will constitute an extensive review of public policy, economic, and health services research intended to paint an accurate portrait of who lacks health insurance and why, along with the personal, social, and economic consequences. Rather than add to the many policy recommendations already on the table, the study is designed to lay the groundwork for a more informed and productive public debate about health care coverage. This report aims to replace common myths with fact. It identifies factors that make it more or less likely that a person will lose coverage at some point, explains why so many people lack health insurance and which individuals and groups are most affected, and provides data about the size and nature of the problem. It also establishes a conceptual framework for subsequent reports.

Barriers to Coverage

Because health insurance in the United States is largely provided through employment, two-thirds of people under age 65 are covered through their job or that of a spouse or parent. Providing or purchasing insurance is voluntary for employers and their employees. As a result, many people gain or lose coverage as they marry or divorce, change jobs, start or graduate from college, or experience other life transitions. An estimated one out of seven Americans goes without coverage for an entire year, at some point in life, while many more do so for shorter periods of time. For some, a lapse in health care coverage is a temporary or one-time event. For others, particularly those covered by Medicaid or individual insurance policies, gaps may be recurrent.

With the cost of health care services and insurance premiums increasing, more employers and consumers may view coverage as prohibitively expensive, the committee concluded. Many employers absorbed premium increases during the economic boom of the 1990s, but they are not expected to continue this trend in the current, softening economy. Many lower-wage workers pass up coverage because they cannot afford their share of the premium. On average, workers pay 14 percent of the cost of individual coverage and 27 percent of family coverage. Over the past 20 years, private-sector employers have become less likely to cover part-time or new workers. And small businesses, faced with hurdles such as higher group-premium rates, frequently do not offer coverage to their employees.

About 13.6 million of the uninsured work for employers that do not offer health insurance. In such cases, and for those who decline to enroll at work or are not covered by a family member's benefits, individual policies may be an alternative. The high cost of individually purchased coverage, however, limits the number of people who sign up for it, and it may not be available to people in poor health, the report says. Only 7 percent of the general public is covered by individually purchased insurance.

Public insurance programs such as Medicaid and the State Children's Health Insurance Program (SCHIP) present their own set of issues. Stringent eligibility requirements and enrollment processes make coverage difficult to obtain and even harder to keep, the report says. SCHIP, for example, has begun to reduce the numbers of uninsured children, but many families lack information or understanding about eligibility. Further complicating the picture, eligibility standards vary from state to state. About 94 percent of the 7.1 million uninsured children in lower-income families are eligible for public insurance but are not enrolled.

"Our system of health care coverage functions more like a sieve than a safety net, with more and more people slipping through the holes," said committee co-chair Arthur Kellermann, professor and chair, department of emergency medicine, School of Medicine, Emory University, Atlanta. "Having health insurance is critical to accessing preventive and routine health care services. Without coverage, roughly 40 million Americans face steep barriers to care and an increased risk of serious illness."

Debunking Myths

The report sets out to debunk a range of popular misconceptions, as measured through surveys, about who lacks health care coverage and the scope and nature of the problem. Some of the most problematic myths follow.

> Myth: The number of uninsured Americans is not particularly large and has not increased in recent years. In fact, the number of uninsured people is greater than the combined populations of Texas, Florida, and Connecticut, the report says. Despite a modest dip at the end of the 1990s and in 2000 following an extended period of economic growth and low unemployment, the number of uninsured people has grown over the long term.

> Myth: Most people who lack health insurance are part of families in which no one works. On the contrary, 80 percent of uninsured children and adults under age 65 live in working families. The uninsured population includes heads of families juggling several jobs to make ends meet. Families with two full-time wage earners have a one in 10 chance of lacking coverage. Most young adults between the ages of 18 and 34, who make up nearly 40 percent of the uninsured population, are members of working families or are employed themselves but at jobs that do not offer them coverage.

> Myth: Recent growth in the number of immigrants has been a major source of the increase in the number of uninsured people. About 80 percent of uninsured people are U.S. citizens, and about half are non-Hispanic whites. However, among Hispanics under age 65, more than one-third do not have insurance. Among both Hispanics and African-Americans, higher-than-average uninsured rates reflect lower rates of employment-based coverage and lower family incomes, compared with non-Hispanic whites.

> Myth: People without health insurance get the medical care they need. People without coverage are less likely to see a doctor when they become ill or for treatment of a chronic condition. For some, their relatively poorer health poses additional barriers to purchasing coverage on their own, and high out-of-pocket costs for health care also substantially affect their use of services. Many people who lack health insurance tend to forgo necessary care until their condition becomes intolerable. Hospital emergency departments or outpatient departments serve as the regular source of care for one out of every six uninsured patients.

Reports to be published over the next two years will examine in greater detail topics such as how a lack of insurance affects health; the impact of the problem on families and communities; the economic costs of having a large uninsured population; and strategies and models for providing health insurance.

The study was 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 Coverage Matters: Insurance and Health Care for free on the Web, as well as more than 1,800 other publications from the National Academies. Printed copies are available for purchase from the National Academy Press Web site or by calling (202) 334-3313 or 1-800-624-6242. Reporters may obtain a copy from the Office of News and Public Information (contacts listed above).

[This news release and the report are available at]

Board on Health Care Services

Committee on the Consequences of Uninsurance

Mary Sue Coleman, Ph.D.* (co-chair)
Iowa Health System and University of Iowa
Iowa City

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

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

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

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

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

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

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

James J. Mongan, M.D. *
President and Chief Operating Officer
Massachusetts General Hospital

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

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.
W.A. MacColl Institute for Healthcare Innovation
Center for Health Studies
Group Health Cooperative of Puget Sound

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.


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

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

* Member, Institute of Medicine