Fact and Fiction: Debunking Myths in the US Healthcare System

Umut Sarpel, MD; Bruce C. Vladeck, PhD; Celia M. Divino, MD; Paul E. Klotman, MD

Disclosures

Annals of Surgery. 2008;247(4):563-569. 

In This Article

Myth 2: There Will Always Be a Certain Segment of the Population That Remains Uninsured

There is a general misconception that the uninsured are also unemployed, that they represent the marginalized section of society. Epidemiological studies clearly show that this is false: two-thirds of the nonelderly uninsured are employed.[11] And rather than representing an invisible minority, the number of uninsured persons is steadily growing. At last count, there were 46.6 million uninsured people in the United States,[12] but this number is projected to grow to 56 million by 2013.[13] It is notable that one-third of the recent increase in the number of uninsured adults occurred among those with incomes more than 200% of the federal poverty level, and about half the growth was among young adults ages 19 to 34.[14]

The reasons for the rising number of uninsured are many and complex. In part, the character of the US workforce has changed. From 1977 to 1998, there was a decrease in unionized factory jobs from 25% to 15%, with a concomitant rise in service or clerical work from 19% to 29%.[15] Members of unions receive insurance, whereas workers in the service industry typically have no health coverage. This shift in the workforce created a new rank of people, still employed but now without health insurance.

The single most influential factor in the rise of the uninsured has been the increasing cost of health insurance and the growing share that employers expect employees to absorb. In a system in which employment-based insurance is still the dominant mode, a smaller and smaller proportion of employers now offer health insurance to their employees at all.[16] Of those that do, most are increasing the amount that individual employees must contribute at a rate that is rising much faster than employees' incomes. This cost-shifting to employees has had an especially significant effect on the coverage of dependents.[16] Finally, the growing cost of health insurance policies has essentially destroyed the market for individual self-purchased policies in most states.

Even for those with insurance, the growing share of expenses that must be covered out of pocket through deductibles and copayments is a mounting problem. Some health economists have recommended high out-of-pocket payments, as a means of deterring frivolous discretionary use of health services.[17] Judging by certain parameters, cost-sharing is effective. In the widely cited RAND Health Insurance Experiment, between 1975 and 1982 about 4000 patients in 6 cities around the United States were randomly enrolled into 1 of 4 test plans with varying amounts of cost-sharing. Those patients in plans with the largest deductible used 25% to 30% fewer medical services than patients with free care.[18] However, high-deductible plans also resulted in some lower health outcomes: poorer control of blood pressure, corrected vision, and oral hygiene.[18,19] In the subgroup of patients who were poor and sick, the subpar control of blood pressure increased the annual likelihood of death by 10%.[20] Thus, although total physician visits dropped, the financial deterrent did not differentiate between necessary and unnecessary visits. Patients who were unable to afford their copayment, despite the fact that they were insured, chose to forgo necessary visits and suffered a decline in health.[18]

An extraordinary demonstration of the effects of cost-sharing occurred when, in 1996, the province of Quebec instituted a 25% copayment for prescriptions that had previously been free to the elderly and those on welfare.[21] This new policy affected over 1 million Canadians. In the following year there was a reduction in the use of essential medications by 9% in the elderly and 14% in those on welfare (Figure 1). Adverse events rose 117% in the elderly and 97% in those on welfare. Emergency department visits rose 43% in the elderly and 78% in those on welfare.[21]

Observed and predicted use of essential medication in the prepolicy and postpolicy periods. Reproduced with permission from Tamblyn et al.[21]

Those individuals who are officially insured, but still suffer from lack of healthcare, have been termed the under-insured. They may miss doctors' appointments, leave prescriptions unfilled, or defer recommended laboratory tests. People without any insurance at all represent only the tip of the iceberg; there are far more individuals who are under-insured. Currently, there are an estimated 50 million individuals who are considered under-insured.[22] Meanwhile, the burden of cost-shifting continues to grow. Average yearly premiums have risen precipitously, at far greater rates than general inflation (Figure 2). [23] Rates of copayments and deductibles continue to rise markedly as well, creating increased burdens on family budgets. In the years 1996-1997 and 2001-2002, the average family's out-of-pocket spending rose nearly twice as fast as did family income.[24]

Cumulative changes in health insurance premiums, overall inflation, and workers' earnings. Reproduced with permission from The Kaiser Family Foundation.

Cost-shifting may decrease initial healthcare spending up front, but it does not decrease the national healthcare expenditure.[21,25,26] The United States, for example, has both the highest insurance deductibles and the highest national healthcare expenditures in the world. As the number of under-insured grows due to the demands of cost-shifting, more and more people will be driven to give up their insurance completely.

Rather than comprising a static group of people, the number of uninsured is steadily rising, and this new generation of uninsured is made largely of people who are employed and have-or recently had-medical insurance. The current system of job-based insurance and cost-shifting are creating this dysfunctional environment.

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