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

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 constitutes 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.

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.

"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."

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