THCB

The Safety Net Is Working

Most of the newspaper coverage of the just-released Census Bureau data on health insurance coverage has focused changes in coverage between 2009 and 2010.  Since the advent of the Great Recession, the reduction in health insurance coverage has been dominated by the simple fact that as unemployment has risen, since most families with prime-age earners receive health insurance as a fringe benefit of employment, the number of uninsured has risen.  The increase was large from 2008 to 2009 when unemployment rose rapidly.  From 2009 to 2010, when unemployment stabilized at high levels, the increase was smaller, although still disturbingly large.

If one looks back a bit farther, however, some noteworthy differences by age group emerge, as shown in the table.  Health insurance coverage fell for all age groups but one from 2007 to 2010 and over the longer period starting with the boom year of 1999.  That coverage would have fallen in both periods is unsurprising because, as noted, health insurance for most people is linked to employment and unemployment rose over both of those periods.

The age group that stands as the major exception to this record of declining coverage is children through age 18.  That coverage for this group rose over both of those periods is striking.  Furthermore, although coverage of the elderly fell, the drop was minuscule.  What is going on?

The answer is that the safety net is working.  The proportion of young people insured privately declined as much as did that of older age groups, but total coverage of this age group not only was sustained but actually increased. The State Child Health Insurance program, enacted in 1997, has dramatically increased coverage for youngsters.  Medicaid expansions mostly enacted earlier have helped expand coverage among the young as their parents have lost coverage through work.

In combination, the number of children age 18 or younger with Medicaid coverage rose by 11.3 million since 1999 and by 5.1 million since 2007.  Without this expansion (and assuming no other offsets), the number of uninsured Americans would have been not 49.9 million, but more than 60 million.

These developments take on particular salience in light of the current debate about how best to control federal budget deficits.  If Congress, in the end, adheres to the principle, embodied in the August 2010 debt-ceiling legislation, that programs protecting the poor should be insulated from budget cuts, the gains in coverage among the young may be sustained, despite the erosion of employment-based coverage that has been going on for more than a decade.  If it abandons this principle, the increase in ‘health-insecurity’ would be large and deeply troubling.

The health coverage statistics also bear on the continuing debate about the future of the Affordable Care Act.  No one should exaggerate the influence of mere facts on a debate so driven by ideology as that over the Affordable Care Act, but the data on the erosion of employment-based coverage should not be ignored. Trends in employer-sponsored health insurance have long been a contest between two opposing forces: the belief among employers that group health insurance offered as a fringe benefit is a powerful incentive for attracting workers, especially when labor markets are tight, and the concern of employers that the need to boost premiums and cost sharing repeatedly drains management time and saps employee morale.

During the 1990s, the first of these forces was in the ascendant.  In the face of drum tight labor markets, increasing numbers of workers were offered health insurance as a fringe benefit and took up the offer.  Since 2000, two recessions have tipped the balance the other way. The 2010 survey data—and comparisons with past years shown in the table—suggest that, without the return of tight labor markets (and, perhaps even with them), employment-based health insurance is likely to continue to erode. Given the anemic character of the current economic recovery and the regrettable possibility of yet another downturn (particularly if Congress does not at least extend the current payroll tax holiday), overall health insurance coverage is likely to continue to narrow.

The only hope for extending health insurance currently on the horizon is implementation in 2014 of the requirement in the Affordable Care Act that individuals carry affordable insurance, the associated subsidies to make coverage affordable, and the expansion of Medicaid.  Without those measures, it is hard to avoid the conclusion that the absolute number of people and the proportion of the total population without health insurance is headed upward.

Without an economic recovery far more rapid than forecasters now anticipate, the Census Bureau reports on health insurance coverage are likely to be rather dismal over the next three years.  The 2011, 2012, and 2013 surveys—each reported in the succeeding year—are almost certain to show an increasing number of people and proportion of the total population without health insurance.  Nor is there any reason now on the horizon why the growth of health care spending is likely to slow.

For all its flaws, the Affordable Care Act is currently the only instrument around that holds any realistic prospect for dealing simultaneously with the twin problems of ‘cost’ and ‘access.’  It will take the 2012 elections to resolve the current dispute over whether the ACA is to remain law.  If the ACA remains law, one hopes that the 2012 election will also result in sufficient collaboration to fix its shortcomings and to implement it effectively.

Henry Aaron is a Bruce and Virginia MacLaury Senior Fellow in the Economic Studies program at the Brookings Institution. He focuses on health care finance reform and writes at Brookings where this post first appeared.

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alex d
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alex d

Occupational health professionals must manage the complexities of medical surveillance. They have to record employee health data from workplace injuries and illnesses, clinic visits, immunizations, audiometric exams, flu clinics, wellness programs, and lab tests. And, it’s not enough to just collect the data: They must be able to report on it in multiple formats.

Martha Smith
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Very informative and impressive post. I will be back for more info.

DeterminedMD
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DeterminedMD

Safety Net? Really !? While I did a little research to the backround of Brookings and it seems to be somewhat a balanced organization, I can’t help but read a lean to the left her, but not a hard one at least. Getting everyone insured is not THE solution, it is just part of the big picture that is a possible solution. Costs are finite, interventions are infinite, yet a lot of you just don’t get that, as supplies and services are finite entities into the business model. Not paying attention to that fat square peg you just keep pounding… Read more »

BobbyG
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I see we have an infestation of site pimping trolls, Matt.

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PediaKita.com
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nate ogden
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nate ogden

Couple corrections for the academic who doesn’t work in the industry and thus doesn’t know the facts on the ground as they say. “The only hope for extending health insurance currently on the horizon is implementation in 2014 of the requirement in the Affordable Care Act that individuals carry affordable insurance, the associated subsidies to make coverage affordable, and the expansion of Medicaid. ” This is incorrect, a far more immediate and sure way to extend health insurance would be the repeal of ACA. The cost increasing provisions of ACA alone has caused many people to lose insurance. The uncertainty… Read more »

steve
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steve

” One of the largest drivers of cost is government and government regulation specifically.” Government insurance is cheaper. If we paid Medicare rates for all procedures, we would be paying about the same rates as in Europe. Let Medicare ration as much as the private insurers, and we see corresponding total decreases in costs. “This is incorrect, a far more immediate and sure way to extend health insurance would be the repeal of ACA.” We have gone many decades w/o the ACA. We did not see large scale increases in the number insured except when labor markets were tight. “The… Read more »

nate ogden
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nate ogden

“Government insurance is cheaper.” Can you provide any examples of this? Government reimbursements are cheaper but that is not insurance. Government waste is far worse which offsets any reductions in payments to providers. “Let Medicare ration as much as the private insurers,” Medicare already rations more then private insurance, they deny far more claims and don’t cover nearly as many benefits. “We have gone many decades w/o the ACA.” We haven’t gone any decades without major healthcare reform driving up cost and driving down the number of insured. Medicare, COBRA, HIPAA, Small group reform, Medicare secondary payor, etc etc Has… Read more »

steve
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steve

“Can you provide any examples of this? Government reimbursements are cheaper but that is not insurance. Government waste is far worse which offsets any reductions in payments to providers.” They cover different populations. Cost per procedure is the purest comparison. If the Medicare age gets raised to 67, we can make a better comparison. “Medicare already rations more then private insurance, they deny far more claims and don’t cover nearly as many benefits.” Private insurers limit access to drugs. Medicare is not allowed to do that. I have overseen billing for my corporation for almost 20 years. I have never… Read more »

nate ogden
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nate ogden

“They cover different populations.” Actually no they don’t Steve, if they did then there wouldn’t be all the cordination of benefit issues. I cover many people over 65 and those with Medicare. “Cost per procedure is the purest comparison.” No its not Steve, its one of the most meaningless. Medicare has a history of lower reimbursement per service only to see volume increase and wipe out any savings. Paying less is meaningless if you pay for it multiple times or pay less for a service never delivered. “Private insurers limit access to drugs. Medicare is not allowed to do that.”… Read more »

steve
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steve

““Medicare was the most likely to deny any part of a claim, with a 6.9 percent rate. Aetna was a close second at 6.8 percent while the others ranged from 2.7 percent to 4.6 percent.”” When the California Nursing Association double checked the self reported rates by private insurers, they found much higher rates of claims denial, 22%. This fits with what I have seen in my practice. With over 250,000 cases over the last almost ten years, we run about 2% denial fro private insurance. My practice manager, I had her run the numbers, reminded me that we did… Read more »

nate ogden
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nate ogden

” Let Medicare ration the same way private insurance does, and we get real total cost reduction. ” Let me look as good as George Cloony I would have a hot girl friend. You can’t let someone do the impossible. Let me reimburse at Medicaid rates I can reduce insurance premium 50%. This ignores the fact there would be no providers left in business. “The numbers I have seen put Medicare penetration at 96%-99% for the age 65 group.” Pentration is an inaccurate measure, you need to find out what percent of those over 65 is Medicare prime. “it is… Read more »

steve
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steve

“Why not? You should refuse to be in any insurance arrangement that doesn’t provide you data.”

Where does that exist? We have 47 employees (growing soon). How do I get an insurance company to guarantee rate increases? Are there insurance futures? I specifically asked our broker about such a possibility and he denies such a thing exists in PA.

Steve

nate ogden
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nate ogden

Self Fund with stop loss Partially self fund under a fully insured high deductible Form an RRG with like minded small employers also not happy with the insurance market In your defence you are in PA so your sorta screwed, depending on which side of the state your on you have Highmark or UPMC to screw you, not much competition. If their fight picks up you should have some better options. I see programs with 18 month guarantees in Ohio. The NV Chamber does 2 year rates, the entire block renews 7/1 every 2 years. Employers, especially small ones, need… Read more »