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Linda J. Blumberg, Ph.D., is a principal research associate at the Urban Institute's Health Policy Center.

Abstract

In response to the growing number of uninsured and mounting evidence of the health consequences of being without coverage, state and federal policy-makers are developing proposals to expand health insurance coverage. Research is providing support to these efforts, and the components of successful reforms are becoming clearer. This testimony reviews the policy design decisions made under two reform plans—that being implemented in Massachusetts and the proposal recently suggested by California's governor. These approaches are used as case studies to highlight the features required to achieve significant coverage expansions and the policy challenges faced by such an undertaking.

The text below is an excerpt from the complete document. Read the full testimony in PDF format.

Testimony

Mr. Chairman, Mr. Kline, and distinguished Members of the Subcommittee,

Thank you for the opportunity to talk with you today about the problems faced by those without health insurance, and to share my thoughts on strategies for expanding coverage to them. I appreciate the fact that this Committee is considering this important issue. While I am an employee of the Urban Institute, this testimony reflects my views alone, and does not necessarily reflect those of the Urban Institute, its funders, or its Board of Trustees.

The problems associated with being uninsured are now widely known. There is a substantial body of literature showing that the uninsured have reduced access to medical care, with many researchers concluding that the uninsured often have inferior medical outcomes when an injury or illness occurs. Urban Institute researcher Jack Hadley reviewed 25 years of research and found strong evidence that the uninsured receive fewer preventive and diagnostic services, tend to be more severely ill when diagnosed, and receive less therapeutic care. Studies found that mortality rates for the uninsured within given time periods were from 4 to 25 percent higher than would have been the case had the individuals been insured. Other research also indicated that improving health status from "fair" or "poor" to "very good" or "excellent" would increase an individual’s work effort and annual earnings by as much as 20 percent.

But while the negative ramifications of being without health insurance are clear, the number of uninsured continues to grow. According to an analysis by my colleagues John Holahan and Allison Cook, the number of nonelderly people without health insurance climbed by 1.3 million between 2004 and 2005, bringing the rate of uninsurance to just under 18 percent of this population. The vast majority of this increase, 85 percent, was among those with incomes below 200 percent of the federal poverty level. About 77 percent of the increase in the uninsured was attributable to adults. In recent years, the share of the population with employer-sponsored insurance has fallen, while the share of those with public insurance coverage has risen, but by smaller amounts. This pattern has persisted since 2000.

Why is the rate of employer-sponsored insurance falling, causing the number of uninsured to climb in recent years? First and foremost is increasing premium costs that have outstripped wage and income growth. But additionally, overall employment has been shifting away from firms with traditionally high rates of employer-based insurance coverage, moving workers into the types of firms that are significantly less likely to offer coverage to their workers. For example, employment in medium size and large firms has fallen, and growth has occurred among the self-employed and small firms. Employment has shifted from manufacturing, finance, and government to services, construction, and agriculture. There also has been a population shift toward the South and the West, regions with lower rates of employer-based coverage and higher uninsurance.

The good news is that policymakers at both the federal and state levels are talking about the need to expand health insurance coverage again, and some states are already taking action. While proposals are being developed in a number of states and at the federal level as well, I will focus my attention here on two of the most notable state designs, that of Massachusetts and California. I chose both states as they delineate potential avenues for bipartisan compromise on this issue. In addition, Massachusetts is the only state that has already passed legislation, enacting far-reaching health care reform, and California is, of course, the largest state, and hence what it can accomplish has significant implications for the country as a whole. I treat these two approaches as case studies in policy design and use them to highlight the types of features required to achieve significant coverage expansions as well as the policy challenges faced by such an undertaking.

The complete testimony is available in PDF format.

The views expressed are those of the author and should not be attributed to the Urban Institute, its trustees, or its funders.

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Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.