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Transcript of Web-assisted Teleconference

Trends in the Uninsured: Impact and Implications of the Current Economic Environment

Addressing the Needs of the Uninsured in a Challenging Economic Environment

On March 12, 2002, the first session of this teleconference was held by the Agency for Healthcare Research and Quality (AHRQ) and the Council of State Governments.

The transcript follows for the first session, "Addressing the Needs of the Uninsured in a Challenging Economic Environment." Select for the Streaming Audio for the session (Length, 1 hour, 19 minutes; 9.7 MB).


Cindy DiBiasi: Good afternoon and welcome to Addressing the Needs of the Uninsured in a Challenging Economic Environment. This is the first in a series of three Web-assisted audio conferences for State and local health policymakers sponsored by the User Liaison Program within AHRQ, the Federal Agency for Healthcare Research and Quality and by The Council of State Governments. My name is Cindy DiBiasi and I will be your moderator for today's session entitled "Trends in the Uninsured: Impact and Implications of the Current Economic Environment."

This is the first event of this Web-assisted audio conference series on strategies to address the needs of the uninsured in these difficult times. As you are well aware, in times of rising health care costs, growing unemployment and shrinking State budgets, any gains made over the past few years in addressing the problem of the uninsured are at risk of being reversed. Rising unemployment could mean the loss of employer-based health insurance for thousands of Americans, while shrinking State revenues and budget deficits may limit the ability of public programs to provide coverage for individuals and families who would otherwise be uninsured.

Given these factors, many State and local governments are struggling to maintain or at least minimize any decrease in the level of resources available to help the uninsured and they are searching for ways to maximize the effectiveness of the scarce resources they do have. Let me tell you about each of the calls in this audio conference series.

Today's event will provide an overview of the size and characteristics of today's uninsured population and will explore important health-related and economic consequences of being uninsured. We will also examine efforts by the individual States to better understand specific circumstances in their own jurisdictions in order to design more effective approaches to address the needs of the uninsured.

On tomorrow's call, we will discuss State and local efforts to close the gaps between public and private insurance coverage. This Web-assisted audio conference will highlight the opportunities available for States to use existing public programs to address the needs of the uninsured and provide examples of strategies State and local governments are using to maintain coverage including how to design public/private partnerships.

On Thursday, March 14, we will discuss State efforts to stretch scarce resources to design effective and affordable benefit packages. We will hear firsthand from a State struggling with this issue and hear from health services research experts on the potential for cost sharing and innovative benefit management models to control costs and encourage appropriate utilization of services.

Today we will take a closer look at the issue of the uninsured in the context of an uncertain and unfavorable economic environment. In the studio with me, I have three experts who will be participating in our discussion. Len Nichols is the vice president of the Center for Studying Health System Change in Washington, DC. Sam Zuvekas is a senior economist for the Agency for Healthcare Research and Quality, and Paula Roy is the executive director of the Delaware Healthcare Commission. Welcome everyone.

Before we begin our discussion, I have a few housekeeping items to take care of. If at any point during this event you have Web-related technical difficulties, please use the "Tell" function to contact tech support. Also, if you lose the audio stream on your computer at any time, you may dial 1-888-868-9080 and give the password "uninsured audio conference" and you will hear the audio portion of this event. If you are getting your audio through the phone and need tech support, just press *0 on your keypad and you will be connected to someone.

Later in the call, our fine panel of experts will also be taking your questions and there are three ways you can communicate your questions to us. If you want to ask your question by phone, press "14" on your phone keypad. You may remove yourself from the queue at anytime by pressing the "#" key. You may also E-mail us your question at You may also directly type your question in the message field and hit "enter." Please note that your sent message will not appear in the chat box.

If you prefer not to use your name when you communicate with us, that is fine but we would like to know what State you are from and the name of your department or organization. Please indicate that regardless of the way in which you transmit your question.

We will have audiotapes of this Web-assisted audio conference series available for purchase after all three events are completed and I will give further details about this at the end of today's show.

Finally, an archive of this Web-assisted audio conference will also be available on the AHRQ/ULP Website. The address is\news\ulpix.htm.

Session 1

Cindy DiBiasi: Now I think we are ready to turn to the important matter of discussing the uninsured in today's context and Len, let me start with you. What do we know about the impact of current economic conditions on the uninsured?

Len Nichols: Well Cindy, the best predictor of what will happen in the current recession is what happened the last recession. I have a slide that shows some of the trends that we have observed over time and the top line is a line that describes the ratio, the portion of the population that is uninsured and the bottom line is the proportion of the population that is unemployed. What is striking about the graph is fundamentally the business cycle has a very lag and relatively minor effect on the number of uninsured.

If you look at the first recession, the most recent recession from '89 to '92 you see unemployment going up from about 5.3 to 7.5, which is a fairly large move in that basically the uninsurance rate just trends upward almost imperceptibly affected by the business cycle at all.

In the long recovery that began in the early '90's and continued until recent times, again didn't have very much of an effect on the trend in the uninsured at all. It continued to trend upward until labor markets got very, very tight at the very end. There you see a significant reduction in the number of uninsured, although that graph exaggerates it a bit because some of that drop was caused by the change in the nature of the question.

If you turn to the next slide, you can also see we know a bit more detail about who becomes uninsured in a recession and what this graph shows whether you had private coverage through an employer through your own name or whether you are a dependent. What seems to be the case in the last recession was families tended to drop family coverage, that is to say they dropped dependents and more and more workers switched from family to single coverage. So you have this real decline in the number of dependents who were covered and that led to an increase in the number of children uninsured and a number of dependent spouses who were uninsured. So that is what we know about the effect of the recessions.

Cindy DiBiasi: Let's talk about the impact on the sociodemographic characteristics of the uninsured.

Len Nichols: OK. First I think it is useful to remind ourselves of who is uninsured at a given moment and then I will talk about what happens during a recession. First of course, a fairly well known fact, Hispanics are about 3 times as likely to be uninsured as are whites and blacks 1.7 times as likely. If you see, if you look in the next panel, the poor are about 5 times as likely to be uninsured as those who have incomes above 4 times poverty and the income to coverage ratio is fairly straightforward. As you may know, children are less likely to be uninsured. That is primarily because of our public coverage programs, which reach out to them, both Medicaid and SCHIP. There is a significant regional disparity in the United States. The South and the West tend to have higher rates of uninsurance than do the Northeast and the Midwest. If you turned into what we know about who becomes uninsured in a recession, what turns out to be surprising in that typically we think about minorities and the poor as being disadvantaged vis-à-vis whites and non-poor. But it turns out in a recession it is the whites and higher income people who lose coverage because they are the ones who had employer-sponsored coverage in the first place.

Our bottom line here is that it is not that recessions are unkind to minorities and the poor, life is unkind to minorities and the poor and in fact it is whites and high income who lose coverage during a recession. That also leads to a strong middle-class constituency to do something about the problem when a recession is long and deep as we saw in the early '90's.

The other thing about the last recession was basically every region suffered fairly equally except for the Northeast. The Northeast was almost insulated from the last recession in terms of increases in the uninsured.

Cindy DiBiasi: Besides the relationship between unemployment rates and access to employment-based health care coverage, what other aspects of current economic conditions affect the issue of the uninsured?

Len Nichols: Well, that is a good question because unfortunately the recession began long enough ago that most States have actually been in a budget deficit situation now for over a year and that has led them to be very reluctant to expand either Medicaid or SCHIP to take up some of the slack that would normally occur in a recession. At the same time, again unfortunately, we had been experiencing low cost growth, but cost growth has come back and some would say with something of a vengeance. That cost growth is driven both by a pharmaceutical cost. As you know, prescription drugs are becoming more effective and more popular and more expensive, but it is also driven by provider push back. They are pushing back on managed care plans more effectively and the reality is that long-term cost (unclear) is driven by technology. Technology works, we like it, it is good, but it costs money. For those cost cope forces are there and they are coming back at a time when as labor markets weaken it is particularly difficult for employers to pay those higher premiums and to maintain coverage. What the slide does here is sort of depict some of the policy problems and make it a little more clear about why we talk about different kinds of solutions for different kinds of people.

The first column shows the percent of the uninsured. For example, 30 percent of the uninsured in the United States have incomes below poverty. Only 13 percent of the uninsured have incomes above four times poverty. What the next two columns do is describe of those in a particular row in a particular income class, how many of them have access to either employer-sponsored coverage or some kind of public coverage. The surprising little-known fact is that of the poor uninsured, only 36 percent are eligible for Medicaid or SCHIP. So that means that 2/3 of the poor uninsured are not even eligible for Medicaid or SCHIP as we speak. That is why people talk about expanding those kinds of programs for the poor because they really have no hope of buying coverage. As you see, only 12 percent of them have access to employer-sponsored coverage. Whereas if you go higher up the income scale, public eligibility declines, but access to employer-sponsored coverage goes up. There people talk about giving them smaller subsidies to buy their employer coverage or maybe in the private market some other way, but not so much public expansion.

Cindy DiBiasi: What are the implications of the situation for State and local policymakers?

Len Nichols: Well, unfortunately as we talked about, the recession makes it very difficult for them to have very many degrees of freedom if you will, because their revenues are declining. Many States have balanced budget requirements. They have to cut spending. Medicaid tends to go up in a recession because more people become eligible and the entitlement nature of the eligibility puts more people on Medicaid roles so that makes it very tough for them to do anything but basically try to tread water and hang on. In fact, what we are seeing is that many States are talking about different ways to try to save money by cutting back not so much in enrollment eligibility per se, but in reducing the scope of the benefit package, maybe increasing some co-payments. The same kinds of things frankly that private employers and private insurers are doing across the nation.

I think the reality is that Federal dollars are needed in order to cushion the blow of the recession on the States because they just don't have the resources otherwise.

Cindy DiBiasi: There seems to be a lot of talk that the economic downturn is now going to turn around. I know you don't have a crystal ball, but are you seeing that as well?

Len Nichols: Well, yes, it turns out, and I must say I am a little bit surprised, but recent signs are very encouraging. We had positive growth in the economy in the fourth quarter of 2001 and if you think about it, that is right after September 11. We have seen the unemployment rate drop 2 months in a row now. Alan Greenspan is optimistic. How bad can it be? Fundamentally this is very good news. I think it is fair to say that most State budgets will probably be back in the black by 2003. The difficulty is by the time they are, they are going to be faced with these higher costs because cost growth is going to continue in that period so therefore it is going to be more difficult for them to expand coverage given the higher cost down the road again, without some kind of infusion of Federal dollars.

Cindy DiBiasi: OK. We are going to be back with more questions and also questions from the audience. But so far we have been talking about the size and the characteristics of the uninsured population in the United States. Perhaps we really need to step back and put this issue in a broader context. Sam Zuvekas, perhaps you could help us with that. Why do we care that someone doesn't have health insurance coverage? I know it is kind of a harsh question, but if you could just put some qualifiers around this, what exactly are the implications of being uninsured?

Sam Zuvekas: Well, as policymakers, researchers and taxpayers, ultimately we care for a lot of different reasons. Lack of insurance reduces access and use of health care services. Those access problems in turn have implications for the health of the uninsured. Being uninsured can expose individuals and families to very large financial risk when they really need health care. Finally, we need to be concerned about the burden of caring for the uninsured on the delivery system.

Cindy DiBiasi: Well, let's take a look a little bit more closely at each one of these categories. What do we know about the implications of being uninsured on access to care?

Sam Zuvekas: We know that being uninsured can have a very large impact on access to care. On a wide range of markers or yardsticks used to look at access to care, the uninsured do not do well. The first one, I will just mention a couple here, the first one that is very widely used is whether a person has a usual or regular source of care. This provides a first point of contact into the health care system. Ideally it provides you with someone who knows you, knows your health care issues and can help you navigate the health care system. Looking at this, the uninsured almost 40 percent of the uninsured report that they have no usual source or regular source of care, which is a rather large number. Contrasted with the number of people with private insurance only 14 percent don't have a usual source of care. There is a very large gap between those who are insured and those who aren't insured in terms of this measure of access.

Another common marker or yardstick is just to look at the amount of health care services that the uninsured consume. By this measure, the uninsured are much less likely to use health care services and when they do they use less than half as much as those who have either private insurance or public insurance.

So you take a look at this and you might be saying, so what? Maybe the uninsured are younger and in better health and don't really need a doctor or health care on a regular basis and when they do need something, when they have a catastrophic health care event, the safety net is there to take care of everything.

The uninsured themselves tell us a different story. One-fifth of families with at least one family member uninsured and 25 percent of families where everyone in the family is uninsured report that they experienced difficulties or delays in getting the needed care or simply did not receive health care that they thought they needed. This is every year that people report this. In contrast, only 7 percent of families covered by private insurance report difficulties. The uninsured are telling us that they have a very large perception that they face significant barriers to getting treatment that they need.

Cindy DiBiasi: What does this mean for health outcomes?

Sam Zuvekas: That is sort of the $64,000 question. We care about insurance coverage because hopefully the services that are covered by insurance do something, that they improve health. One thing that we know for sure is that the uninsured use a lot fewer preventive services than people who are on private insurance or have public coverage. If you look at the slide, you can see that the uninsured are much less likely to get their blood pressure checked regularly. For women, uninsured women are much less likely to have mammograms and regular Pap smears. I won't go into the recent controversy about mammograms that we are all familiar with, but certainly Pap smears have demonstrated to be very effective in reducing mortality. There is also a whole body of research that shows that the uninsured with chronic illnesses such as diabetes, hypertension and HIV or AIDS are less likely to initiate and continue preventive treatment for their conditions.

Indirectly we have a lot of evidence that health insurance should affect health outcomes by way of reduced use of preventive services. If I were a lawyer instead of an economist, I would say we would have a pretty good circumstantial case that it matters. Unfortunately, you have only limited direct evidence that being uninsured leads to poor health outcomes. This isn't because researchers think it is an unimportant or uninteresting question; quite the opposite. It is just exceedingly difficult to study. I should give a trailer for a report coming out this summer by the Institute of Medicine that will look at this issue in great detail. It is part of their series, "Examining the Consequences of Being Uninsured."

Cindy DiBiasi: Sam, you mentioned that being without health insurance can expose individuals and families to significant financial risk. Let's talk a little bit more about that.

Sam Zuvekas: The principle function of insurance of course is to insure people against the cost of treatment when they need it. If you have a chronic condition such as diabetes, your medical bills can easily run into the thousands or tens of thousands of dollars. All it takes is something as simple as appendicitis to generate significant bills. This point was driven home to me a couple of years when I had an otherwise healthy family member hospitalized for 12 days with a particularly nasty infection. The charges for this hospital stay alone were $25,000 plus another $20,000 for all the diagnostic tests before and the home IV [Intravenous] therapy after. Since we were well insured it cost us nothing out of pocket, but it would have been a disaster to us if we hadn't had insurance. As Len showed us earlier, the uninsured tend to be poor, so they have fewer resources to begin with. We have to remember that the median family income in this country is $42,000. Many uninsured have family incomes well below that but above the amounts that would qualify them for Medicaid assistance as Len also alluded to. That $25,000 bill would be ruinous for most families in this country.

Sometimes uninsured patients can negotiate with providers to reduce the fees or they are written off as charitable or bad debt, but often times the presumption is that they would pay full charge. The uninsured don't have access to the kinds of insurance discounts that are negotiated by insurers or imposed by Medicare and Medicaid.

Cindy DiBiasi: How does caring for the uninsured place a burden on the health care delivery system?

Sam Zuvekas: In spite of access problems and barriers that the uninsured face in getting health care, they still do get some health care. They don't use as much and they pay a lot more out of pocket. Typically the uninsured pay about 45 percent of all the health care for them out of pocket. Obviously others then are stepping in to pick up the tab. Some is financed by charitable donations. The Federal Government obviously plays a large role through both community block grants, the Medicaid DSH [disproportionate share hospital] payments; certainly there is the VA [Veterans' Administration] and IHS [Indian Health Service] systems. There is State and local financing of public hospitals and a myriad of other safety net providers. We have also heard a lot about cost shifting from the uninsured to private and public insurance programs. There is some thought that managed care and reforms in Medicaid and Medicare considerably reduce the potential for cost shifting, but how much remains now and in the 21st century is a little unclear.

In some sense, these are just resources that could be redirected towards providing insurance coverage for the uninsured—thinking about how best to provide services for this population. At an aggregate level, you are kind of talking about just shuffling dollars around, but we do need to be worried about how we finance care for the uninsured for two big reasons. One is that the burden is distributed very unevenly throughout the health care delivery system. Some providers serve very few uninsured persons while others face great cost pressures because they serve very large uninsured populations—think of any large public hospital in a city. The other major reason we need to care is we want to make sure resources are spent as wisely and as efficiently as possible. People who have access problems present at the emergency room instead of getting the preventative services that would have prevented them getting there if they were treated more cheaply in other settings. Obviously it reduces the total number of funds, dollars, out there to provide services for everyone.

Cindy DiBiasi: We are going to come back and talk more about this with you but let's go to Paula Roy to talk more about what is going on at the State level. So far we have examined the issue of the uninsured looking at national data. To what degree is this information useful to an individual State that is trying to get a handle on its own situation?

Paula Roy: Actually, national information is really great. The work that Sam and Len do is very, very helpful for us in the States, largely because it helps you put your State in context. It is important to know if your State is experiencing some of the similar problems that other people in other places are or are you an outlier? You need to know that. But I know in my State whenever you trot out national data the first thing you hear is, "That's great, but what is going on in Delaware?" I want to know what is happening here. To use the old adage, when you have seen one State, you have seen one State. [laughs] It is real important to understand how what is going on in the Nation helps your State. You need to understand your economic drivers in your State, what your employment situation is like and what your own particular State's problems are if you really want to get a handle on it.

Cindy DiBiasi: What have you done to analyze the situation with respect to the uninsured in Delaware?

Paula Roy: Glad you asked, Cindy. Perfect. Because it really builds on the question that you just asked me. That is, how do we take national data? How do we understand what our own local needs are and then turn that into something? First of all before I get into that, I do have to say though that we have been very, very lucky in Delaware because we have been able to use State and some Federal funding together to develop a wonderful program that we are calling our Uninsured Action Plan. That comes to us thanks to AHRQ's sister agency, HRSA (the Health Resources and Services Administration) that has made some grants available to about 23 States to actually take in-depth looks at their own State and they have been doing just this. They have been taking the data that Sam and Len have been talking about and then delving more deeply into their own State experience. Those grants have helped all that kind of data collection activity come alive, if you will. I also have to mention the [unclear] with jobs and State coverage initiatives. That has been a very helpful thing too.

In terms of specifics, what we have been able to do then is really dig into information about who our uninsured are. Where do they work? What are their incomes? Are they single? Are they married? How old are they? So we can really start to get a handle on what that population looks like. We also think it is important to know how much we are spending on health care so we launched a study on where we are spending our health care dollars. How much are we spending and where are we spending it? To pick up on Sam's point, we also thought it was real important in Delaware to measure cost shift because we do know that when the uninsured seek care, our hospitals don't turn them away, they treat them. But there is a cost for doing so. That cost is shifted to the rest of the paying customers if you will. We think that is an important tool to help us explain why addressing the needs of the uninsured are important because we are all paying for it and we shouldn't be kidding ourselves. So we took a look at that.

We also wanted to see how our folks in Delaware, both insured and uninsured, rated our health care system. We have been using a consumer assessment survey which I know is also managed by AHRQ and we thank them for that because it has been a real benefit to help us rate and see how consumers rate the health care system depending on whether they are insured or not insured, whether they are in managed care or in fee-for-service and by their health status. That has been real important. But I think reaching out to employers and surveying them and finding out what their issues are has really been a very important research or data collection tool as well.

I think then in addition to that also as a result of a Federal community access program grant, we are actually putting together a service delivery model if you will, that helps identify low-income, uninsured people who are not eligible for an existing program and matching them up with a health home. That will give us some real good information about how the uninsured access care and give us opportunities to stress the importance of that regular source of care that Sam spoke about.

Cindy DiBiasi: What lessons are you learning from this data?

Paula Roy: Well, we have counted a whole bunch of lessons that we have been able to learn and it has been real important. I think one of the interesting things when we reached out to employers is finding out that many of them really just don't know much about purchasing health insurance and that is particularly true for small businesses. I think your large businesses have HR [human resources] departments and they get fairly sophisticated about that but small businesses in some cases we found that employers who do not offer insurance are not even aware that there is a tax benefit to offering insurance. They tend to overrate how much purchasing health insurance costs and many just express general confusion about what are the right questions to ask. They also ask how to even know if they are making a good purchasing decision. Those are real important answers.

We also did find out, and we just keep coming back to this question of why insurance matters. We would find out that the uninsured really do put off seeking care. I think that was a key finding. I think one of the other things that we probably didn't fully appreciate going into this project that we now do appreciate is the importance of that safety net. Those providers are community health clinics and those folks who do provide care for the uninsured. It has really given us an appreciation for understanding their role in the total delivery system and has led us to conclude that we need to really support that as much as we can.

Cindy DiBiasi: But still you have to keep in mind that we still have a certain economic situation that we are living in and with States scrambling to fill serious budget deficits, why is it so important to focus on the uninsured?

Paula Roy: I think it is something, and we have been talking about it but I really believe there is something going on right under the radar screen. With health care costs going up it looks like maybe we have sort of bottomed out of the recession. Alan Greenspan and Len Nichols as far as I am concerned, once they say the recession is over that is good enough for me. [laughter] I am ready to start rolling. But with costs going up, I think there really are going to be more pressures. As Len said, there is a real potential for a new class of uninsured to be created with those kinds of issues and if we are not paying attention now and if we don't really understand what is going on in our State, what is going to happen is our policymakers are going to be confronted with a hot potato and those States that are paying attention and looking at how to address it are going to be better prepared to respond when that need comes.

Cindy DiBiasi: Paula, how do you think States should prioritize? Based on your experience, what type of information gathering activities do you consider to be the highest priorities for States?

Paula Roy: I think you need to really understand who your uninsured are. You have to really understand the economics of what is going on in your State. How is your State, what are its economic drivers and how is it responding or how is it impacted by external economic factors? What is your employment base? Is it an employment base that tends to have high rates of employer-sponsored insurance or not? What is going on in your insurance market? We have some real problems with our small group markets and that gives us some real pause. We are really worried about that. I think you need to understand what is going on in your State and put it in context with that national information to see if you have got some problems or not.

Cindy DiBiasi: This is a great start giving us a basis for questions. In a moment we are going to open up the discussion for your questions. Recall that you can communicate your questions to us in the following ways: If you are on the phone, dial "14" on your keypad to get into the line and if for any reason your question is asked or you need to get out of the line, just hit the "#" key on the keypad. You may also E-mail us your question at and you may also directly type your question in the messaging field and hit "enter." Please note that the sent message will not appear in the chat box. Also remember that it is fine if you prefer not to use your name when you communicate with us, but we would like to know what State you are from and the name of your department or organization so please indicate that regardless of the way in which you transmit your question.

Before going into the questions, however, I would like to say a few words about our sponsors, AHRQ and The Council of State Governments. The mission of AHRQ is to develop and disseminate research-based information that will help clinicians and other health care stakeholders make decisions to improve health care quality and promote efficiency in the way that health care is delivered. Within AHRQ, the User Liaison Program serves as a bridge between researchers and State and local policymakers. We not only take research information to policymakers so they are better informed; we take the policymakers questions back to researchers so they are aware of the priorities. Hundreds of State and local officials participate in ULP workshops every year.

The Council of State Governments is a multi-branch State association that serves elected and appointed officials in the executive, judicial and legislative branches of State government. CSG's mission is to champion excellence in State branches of State government advocating multi-State problem solving and tracking trends and innovations and providing education, research, and leadership training services.

Both sponsors hope that today's Web-assisted audio conference and the other two events in this series this week will provide a forum for a productive discussion between our audience of policymakers and researchers. We'd appreciate any feedback you have on these Web-assisted audio conferences. Please E-mail those comments to the AHRQ User Liaison Program at

Now we have some questions. Let's go to the first one from Ron. This is directed to Len. Why are so many uninsured, below-poverty ineligible for Medicaid? That is a question a lot of people want to know. People think if you are under poverty level you are eligible.

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