This report assesses the changes in coverage patterns and health care costs that will occur nationally if major reforms are not enacted. The authors find that by 2015, there could be 59.7 million people uninsured. The number could swell to 67.6 million by 2020, up from an estimated 49.4 million in 2010. As premiums nearly double, employees in small firms would see offers of health insurance almost cut in half, dropping from 41 percent of firms offering insurance in 2010 to 23 percent in 2020. Individual spending could jump 34 percent by 2015 and 79 percent by 2020.
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The U.S. House of Representatives and the U.S. Senate have passed separate comprehensive health reform bills, but enactment of a final law remains uncertain. Last year, we reported on the economic implications for the nation and individual states if the health reform effort were to fail. In this paper, we update our earlier national analyses. We present new findings on the composition of the uninsured in 2020 without reform, the offers of health benefits by employers, and the increase in costs to different payers.
This report makes clear that the cost of failure would be high and the status quo is probably unsustainable. The analysis shows that if federal reform efforts fail, over the next decade, the percent of the population that is uninsured will increase, employer-sponsored coverage will continue to erode, spending on public programs will balloon, and individual and family out-of-pocket costs will rise.
Using the Urban Institute's Health Insurance Policy Simulation Model, we examined the effects of maintaining the status quo
on coverage and costs for three scenarios:
- Worst case — slow growth in incomes and continuing high growth rates for health care costs;
- Intermediate case — somewhat faster growth in incomes, but a lower growth rate for health care costs;
- Best case — full employment, faster income growth, and even slower growth in health care costs.
Under any scenario, the analysis shows a tremendous economic strain on individuals and employers of all sizes. While all income levels would be affected, middle-income families would be hardest hit. Within 10 years, under the worst-case scenario,
we estimate that:
- The number of uninsured Americans would increase from 49.4 million in 2010 to 59.7 million in 2015 and 67.6 million in 2020. If states were to cut back eligibility for public coverage or make the enrollment process more difficult, the number of uninsured would be even higher. Even in the best case, the number of uninsured would rise to 57.9 million in 2020.
- A larger share of the uninsured would come from middle- and higher-income families. The share of the uninsured from families with incomes higher than 200 percent of the federal poverty level (FPL) would rise from 44 percent to 56 percent in 2020.
- Premiums would become increasingly expensive for employers and their workers. Premiums for both single and family policies would more than double by 2020, increasing from $4,800 to $10,300 for single policies and from $12,100 to $25,600 for family policies. Even in the best case, single premiums would rise to $7,800 and family premiums would rise to $19,500 by 2020, increasing much faster than incomes.
- Offers of coverage would fall significantly for workers in small and medium firms. Small firm workers would see offer rates almost cut in half, dropping from 41 percent to 23 percent in 2020. Workers in medium-size firms would see offer rates fall from 90 percent to 75 percent. Overall, the rate of employer sponsored insurance coverage would fall from 56 percent in 2010 to 48 percent of nonelderly Americans in 2020. Even in the best case, the rate of employer sponsored insurance coverage would fall to 53 percent in 2020.
- Medicaid and Children's Health Insurance Program (CHIP) enrollment and costs would increase substantially. Enrollment would increase from 45.4 million in 2010 to 58.2 million in 2020, an increase of 12.8 million nonelderly Americans. Medicaid and CHIP spending for the nonelderly would increase from $278 billion in 2010 to $576 billion in 2020, an increase of 108 percent. Even in the best case, spending would increase by 59 percent to $442 billion in 2020.
- Employers would see large increases in premium costs. Employer premium spending would increase from $430 billion in 2010 to $851 billion in 2020, a 98 percent increase. Even in the best case, employer premium spending would increase by 67 percent in ten years. These increases would be even higher if employer coverage rates were to hold steady over this period rather than decline as predicted.
- Uncompensated care costs would more than double. The cost of uncompensated care would increase from $64 billion in 2010 to $140 billion in 2020. In the best case, the cost of uncompensated care would increase by 74 percent and total $111 billion in 2020. Together with increased spending on Medicaid and CHIP, this would mean higher federal, state, and local taxes even without reform.
- Health care costs paid directly by families would increase significantly. Individual and family spending on premiums and out-of-pocket health care costs would increase from $315 billion in 2010 to $564 billion in 2020. In the best case, these costs would rise to $471 billion by 2020.
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