Health Uninsurance

We have promised and promised that we would write about health insurance and the Affordable Care Act, but every day that comes seems to crowd and cloud the scene with more confusing information.  We hardly know where to begin and where to expect that all this information might take us.  But we can try to do something.

Let's start at one of the beginning places:  according to a summary of the "Affordable Care Act" by the Kaiser Family Foundation, the main object of the law is to require everyone to have health insurance[1].  A tabulation by the Census Bureau shows that during 2012, just over 47 million Americans under age 65 had no health insurance.   These people represent almost 18% of the "nonelderly", the population under age 65.[2]  This sounds like a simple enough connection.  A lot of people have no health insurance, which causes all kinds of extra distress and added cost when those people become ill.  So we'll devise a law that provides ways to try to correct that: an expansion of Medicaid for those with low incomes and a standardized collection of insurance policies sold through online exchanges for everyone else.  For those in the latter group with somewhat limited incomes, we'll subsidize their premiums with refundable tax credits.  This is what the ACA tried to do.

But so far, it hasn't turned out that to be simple at all.  A couple of major complicating conditions exist before we even get to the badly designed websites and payment systems.  Maybe it will help to be aware of some of this complexity.

Varying Periods of Uninsurance

First, people are not simply "insured" or "uninsured".  They move in and out of insurance status perhaps more than we think.  One of the surveys the Census Bureau takes follows income and welfare trends across several years among groups of specific individuals, called "waves"; the same people are interviewed repeatedly for a span of four years.  Professors at Penn State and Harvard School of Public Health analyzed the individual responses from the 2004-2007 wave, that is, the wave that concluded just before the financial crisis and the Great Recession.  In an article published in the journal Medical Care Research and Review in December 2012[3], they report that a survey number equivalent to 89 million nonelderly people experienced some period of "uninsurance", that is, twice as many as were seen in a separate poll to be without insurance at one particular point in time.  The 89 million amounts to 36% of the nonelderly population, well over one-third of them.

About 20% of those were without insurance for a span of 1 to 4 months, another 20% for 5 to 12 months, 20% for 13 to 24 months and 40% for more than 24 months, that is, two years of the four-year duration of the survey wave.  There were several patterns of uninsurance; 13.5% of the people were uninsured throughout and almost 26% had repeated spells of uninsurance.  Other people started with insurance and lost it once and for all; some picked up insurance and still had it at the conclusion of the survey.  Some had a temporary gap in coverage; others had a single period of coverage which then lapsed.  Another transition involved shifts from private insurance to public, especially shifts into and out of Medicaid.  Children often had different patterns of coverage than adults.

So right at the moment, many people are trying for an initial enrollment in an ACA-designed policy, and it is important to note that this will hardly be their only encounter with the system.  It wasn't clear to Professor Short and her colleagues, the authors of this time-lapse study, whether the ACA system was designed to facilitate such changes seamlessly and to facilitate the movement of the premium subsidies up and down with falls and rises in incomes.  Perhaps it is, but since we haven't gotten through the first step, it's hard to know how affairs will carry on in the future.

Differences in Uninsurance Among the States

The other major complication of "uninsurance" concerns geography. Apart from the Medicare program, health care is generally financed and administered at the state level.  So there are as many as 50 different insurance systems in existence which must be taken into account.  As an example of how complex this can become, we cite Edie Sundby, a cancer patient who wrote an essay in the Wall Street Journal at the beginning of November.  Her existing plan was being cancelled, but her coverage could not be duplicated because the new ACA-conforming plans would not cover her in a different part of her own state, California, from where she lived: in her former plan, she had been receiving some of her treatment in the north, Berkeley, even as she lives in the south, San Diego.  Further, the coverage she had for treatment at a specialized hospital in Houston, Texas, was also eliminated.[4]

With the state-focused coverages, it's obviously important to be aware of the patterns of uninsurance that characterize each state.  Writers from Vanderbilt and Harvard used separate data on health care in the states together with the "wave" data from the Census Bureau to produce localized estimates of insurance and uninsurance.[5]  The populations of the various states differ greatly in age mix, race, professions and rural vs. urban locations.  So people in different states experience very different trends as they move into and out of coverage and, obviously, as they also move from state to state.  In Colorado, if you had insurance at the beginning of this study period, you had a 15.8% chance of experiencing a break in your coverage at least once during the following two years.  But in neighboring New Mexico, the chance of a break was noticeably greater, at 25.8%.  If you were already uninsured at the beginning of the study, the variation was wider still:  in Pennsylvania, the chances you might remain uninsured were 14.4%, but in Florida, they were more than twice as much, 30.1%.

These writers, John Graves and Katherine Swartz, point out that differences in uninsurance may occur because some people have simply chosen not to buy insurance while others may have lost a job.  The variety of reasons for being without insurance mean "the uninsured" can have very differing incomes.  Strategies states need to use to arrange and encourage use of various insurance programs thus also differ.   We're seeing TV commercials now aimed at young adults, who might be convinced to sign up for at least the bronze plans, while getting the word out to low-income people about the availability of Medicaid requires a different kind of outreach.  As Grave and Swartz explain, such outreaches are important and will bring long-run cost-saving to each group as they could be encouraged to visit primary care physicians more regularly and as they might take other preventive actions.  More, use of differing approaches in different locations is significant.

A Decentralized System Is Natural in the U.S., A Badly Designed Website Is Not

When we first wrote about health care in 2009, one of the points we made is that, unlike most countries, the U.S. population is highly diverse.  It's no wonder to us that a fragmentary health care system emerged from our spread-out and historically decentralized society.  Health care is seen as highly personalized.  Imposing standardization on such a structure is really hard.  Central planners can't possibly think of everything, as we see with Mrs. Sundby.  It is all the more complicated then when the underlying website technology was badly designed and organized.  Just this week as we have been writing this article, we see that the Obama Administration is doing something for Healthcare.gov that they should have done at the outset: an overall manager has been named, Kurt DelBene, recently president of Microsoft's Office Division.  Thus, finally, a senior official with significant experience building software and, in its most recent version, developing it into a "cloud" version, will oversee the internet connections in the new insurance exchanges.  Issues like security and the payments system, which are incomplete, can be given greatly needed and rigorous attention.

All of this is very complicated.  We hope we have gotten a start here.  We will continue after the Holidays with at least two other articles, one on innovations in delivering health care and one on health itself.  Toward the latter, the growth of health care costs slowed over the three years through 2011 and we think one of the reasons might have something to do with the drastic reduction in smoking, along with numerous other factors.  There's also some interest in employer insurance plans and we'll have to figure out how to talk about those too.  Stay tuned!

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[1]Kaiser Family Foundation.  "Summary of the Affordable Care Act".  April 2013.  http://kaiserfamilyfoundation.files.wordpress.com/2011/04/8061-021.pdf .  Go to www.kff.org for a whole passel of good information on many facets of the act and the system it is fostering.

[2]U.S. Census Bureau.  "Income, Poverty, and Health Insurance Coverage in the United States: 2012".  Issued September 2013.  http://www.census.gov/prod/2013pubs/p60-245.pdf.  Page 22ff.

[3]Pamela Farley Short, Deborah R. Graefe, Katherine Swartz and Namrata Uberoi.  "New Estimates of Gaps and Transitions in Health Insurance",  Medical Care Research and Review, Vol. 69, No. 6, December 2012. Pp 721-736.

[4]Edie Littlefield Sundby.  "You Also Can't Keep Your Doctor."  The Wall Street Journal. November 3, 2013.   http://online.wsj.com/news/articles/SB10001424052702304527504579171710423780446.

[5]John A. Graves & Katherine Swartz.  "Understanding State Variation in Health Insurance Dynamics Can Help Tailor Enrollment Strategies for ACA Expansion", Health Affairs.  Vol. 32, No. 10, October 2013.  Pp. 1832-1840 plus online Appendix:  www.healthaffairs.org.