Health Care Reform Center

Arthur L. Kellermann, M.D., M.P.H., and Lawrence S. Lewin, M.B.A.

In the next few weeks, Congress will determine the fate of health care reform. An early and important objective of the Obama administration, reform once carried an air of inevitability. But a spirited anti-reform effort and concerns about the legislation’s cost have raised doubts about its prospects.

Congressional Republicans are united in opposition to the current reform bills. Although the Democrats hold commanding majorities in both chambers, they also face defections from within their ranks. The House bill passed with a razor-thin majority; Senate action is far from certain. Articles about reform have largely focused on various implications of the House and Senate bills. But if history is a guide, equal scrutiny should be given to another legislative possibility — a “no” vote that preserves the status quo.

Recently, a committee of the Institute of Medicine (IOM) analyzed the current trajectory of our health care system. It studied the dynamics driving downward trends in insurance coverage and examined the health consequences of the lack of insurance for individual adults, children, and communities. The committee’s report,¹ released earlier this year, built on and updated the work of a previous IOM committee that issued six reports on this topic between 2001 and 2004.² Collectively, the reports of these committees (which we chaired) paint a compelling picture of the harmful health and financial effects of the status quo — not only for people without coverage but also for people who have health insurance.

Health care costs and coverage are tightly intertwined. For more than four decades, health care costs have grown faster than our national economy. As a result, health care consumes a steadily growing share of federal and state budgets and the budgets of American families. Relentless cost growth threatens employer-sponsored insurance, undermines publicly funded programs such as Medicare and Medicaid, and renders individual insurance policies inadequate or unaffordable.

Most Americans get coverage through their workplace, but the proportion is falling. Between 2000 and 2008, the fraction of nonelderly Americans with employer-sponsored health insurance declined from 66.0% to 59.7% (see graph). The recession will push the proportion even lower.

Percentage of Nonelderly Americans Covered by Employer-Sponsored Insurance (ESI), 2000–2008.

The Census Bureau revised the methods for its Current Population Survey in 2004, as shown in the graph. Data are from the Kaiser Commission on Medicaid and the Uninsured and an Urban Institute analysis of the Annual Social and Economic Supplements to the Current Population Survey for 2001 through 2009.

Several factors are driving this decline. Fewer workers, particularly among low-wage earners, are being offered health insurance. Manufacturing jobs, which traditionally provided generous benefits, have been replaced by service jobs such as those in wholesale and retail trades that typically cover fewer employees. Rising premiums are encouraging employers to hire more part-time workers and contractors who don’t receive benefits. More employers are dropping coverage; others are shifting a larger share of insurance costs to their employees through decreased wages, higher premiums, and steeper copayments. As a result, fewer workers can afford employer-sponsored insurance.

The economic forces driving these trends are unlikely to ease up any time soon. Between 1999 and 2009, the average annual cost of family coverage increased by 131%, from $5,791 to $13,375.³ It could double again in the next 10 years.

In addition, the recession has cost 7 million Americans their jobs. The effect on coverage has been mitigated, so far, by rapid expansions in public insurance, mainly for children in low-income families. The American Recovery and Reinvestment Act (ARRA) allocated $87 billion to boosting the federal share of Medicaid through December 2010. It also offered subsidies to help laid-off workers maintain private coverage through COBRA (the provision of the Consolidated Omnibus Budget Reconciliation Act that allows eligible people to purchase coverage through their former employer’s group insurance plan for a limited period).

Unfortunately, the job market is unlikely to rebound before these programs expire. And because every state is struggling with budget problems of its own, many states will cut their Medicaid programs as soon as the ARRA funding ends. The Urban Institute predicts that in the absence of reform, the costs of uncompensated care will double in 45 states over the next 10 years, and the number of uninsured could grow by more than 30% in 29 states.⁴

There is clear evidence that the way we pay for health care stimulates cost growth. A “no” vote in Congress will leave these policies undisturbed. The Congressional Budget Office (CBO) projects that under existing approaches to payment, federal spending on Medicare and Medicaid will exceed $10 trillion over the next decade. In 2017 — the year the Medicare trust fund is expected to be exhausted — the CBO estimates that Medicare and Medicaid will drain $1.2 trillion from the federal budget.

Adults who can’t get coverage through work, are too young for Medicare, and don’t qualify for Medicaid have only one option — individual health insurance. Consumer Reports describes the individual insurance market as a “nightmare” for consumers: “more costly than the equivalent job-based coverage, and for those in less-than-perfect health, unaffordable at best and unavailable at worst. Moreover, the lack of effective consumer protections in most states allows insurers to sell affordable plans whose skimpy coverage can leave people who get very sick with the added burden of ruinous medical debt.”⁵ In recent years, several states have attempted to reform the individual health insurance market, with little success.

Coverage matters. On average, uninsured Americans get about half the preventive services and medical care that insured Americans receive. Studies have shown that uninsured people with cancer, heart disease, stroke, lung diseases, and other conditions are more likely to have poor health and to die prematurely than similar people with coverage. Existing safety-net services are insufficient to overcome the gap between those who have health insurance and those who do not.

The economic consequences of a lack of insurance are equally grim. If even one family member lacks coverage, the entire family is exposed to the financial burden of severe illness or injury. In 2009, 20% of uninsured adults used up all or most of their savings paying medical bills.

When many people lack insurance, everyone’s access to care is compromised. University of Pennsylvania economist Mark Pauly and colleagues have found that in communities with high proportions of people who are uninsured, insured people are more likely than those elsewhere to have difficulty obtaining needed care and to be dissatisfied with the care they receive.¹ In such communities, emergency services are strained, access to trauma care is diminished, and a growing number of specialists are unwilling to take emergency department call.

If states cut their Medicaid programs when ARRA funding runs out, uncompensated care will increase sharply. The burden that this increase will impose on health care providers will be more than some can bear. If many safety-net clinics and hospitals close their doors, the patients these institutions serve will have nowhere else to go. When they end up in private hospital emergency departments and inpatient beds, it could trigger additional facility closures. Access to care will be diminished for the insured and uninsured alike.

Voting for the status quo may be politically tempting, but it won’t stop the steady erosion of coverage in the United States. The authors of the 2009 IOM report were blunt: “There is no evidence,” they wrote, “to suggest that the trends driving loss of insurance coverage will reverse without concerted action.”¹ Six years ago, the IOM Committee on the Consequences of Uninsurance was equally direct.² It recommended “that the President and Congress develop a strategy to achieve universal insurance coverage and establish a firm and explicit schedule to reach this goal by 2010.” That deadline is less than 2 months away.

Financial and other disclosures provided by the authors are available with the full text of this article at NEJM.org.

The opinions expressed in this article are those of the authors and do not necessarily represent those of Emory University or the Institute of Medicine.

Source Information

From the Emory School of Medicine, Atlanta (A.L.K.); and Chevy Chase, MD (L.S.L.). Dr. Kellermann cochaired the IOM Committee on the Consequences of Uninsurance from 2001 to 2004; Mr. Lewin chaired the IOM Committee on Health Insurance Status and Its Consequences from 2008 to 2009.

This article (10.1056/NEJMp0910138) was published on November 18, 2009, at NEJM.org.

References

1. Institute of Medicine Committee on Health Insurance Status and Its Consequences. America’s uninsured crisis: consequences for health and health care. Washington, DC: National Academies Press, February 2009.
2. Institute of Medicine Committee on the Consequences of Uninsurance. Insuring America’s health. Washington, DC: National Academies Press, January 2004.
3. Kaiser Family Foundation and Health Research and Educational Trust. Employer health benefits: 2009 summary of findings. Menlo Park, CA: Kaiser Family Foundation. (Publication no. 7937.)
4. Garret B, Holahan J, Doan L, Headen I. The cost of failure to enact health reform: implications for states. Princeton, NJ: Robert Wood Johnson Foundation and the Urban Institute, September 2009.
5. Hazardous health plans: coverage gaps can leave you in big trouble. Consumer Reports. May 2009. (Accessed November 18, 2009, at http://www.consumerreports.org/health/insurance/health-insurance/overview/health-insurance-ov.htm.)