Health Care Coverage:
Different Problems, Different
Solutions, Everyone’s Issue
Marcia L. Comstock, MD MPH
Carol A. Staubach, MPH
1
Today’s Agenda
on the Uninsured
What does it mean?
 Why should you care?
 How did we get here?
 What do you think?
 What do others think?
 What can be done?

2
Cover the Uninsured Week
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Does insurance “coverage” equal
“access”?
Is each of us our “brothers’ keeper”?
Should it matter to us as an individual, as
a member of a family, as a member of
society that many Americans are not
assured access to healthcare that
promotes and sustains health and
productivity?
3
Key Facts About
Health Insurance



About 246 million people have health insurance that pays
part of the costs of getting care.
Almost 46 million individuals do not have health insurance.
The likelihood of an individual or family being covered
depends on many factors, including the kind of job they
have, their income level, where they live, their age, and
their health status.
4
Who Lacks Access
to Health Insurance?
More than 1 in 7 Americans – almost 46 million – do not
have health insurance.
 They are not necessarily “poor.”
 Over 80% are members of working families, often they
can’t afford to buy health insurance.
 Over 80% of uninsured children live in families with at
least one working parent.
 Some uninsured could afford to buy health insurance,
but choose not to.
5
Who are the
Uninsured?
Source: Economic Research Initiative on the
Uninsured; based on MEPS 2002 data.
6
Most Uninsured People
Work
Note: Numbers may not add up to 100% due to rounding.
Source: Economic Research Initiative on the Uninsured, 2005.
7
Most Uninsured People
Have Incomes
Above the Poverty Line
Note: Numbers may not add up to 100% due to rounding.
Source: Economic Research Institute of the Uninsured, 2005.
8
In fact, the fastest growing
segment of the population
lacking insurance is for
individuals and families with
annual incomes over $75,000.
9
The Uninsured* are More Likely to
Not Get Care Due to Cost
Source: Centers for Disease Control and Prevention, National
Center for Health Statistics, 2005.
*People under age 65 in 2003.
10
Becoming Uninsured
Could Happen To You!!!
Unexpected changes can affect coverage:
 Serious illness or injury
 Worsening of a chronic condition
 Losing or switching jobs (after federal COBRA
protection
runs out or is unaffordable)
 Changes to health insurance policies
11
What are the Consequences of
Being Uninsured?
People without insurance:

Are less likely to get health care that they need,
especially preventive care and treatments for
chronic health problems

Are at risk for the huge expenses of catastrophic
health care

May have worse health outcomes

~18,000 died last year because they did not have
health insurance, according to IOM
12
What are the Consequences of
Having Uninsured People in
Our Community?

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A burden on hospitals for uncompensated
care
Cost-shifting to employers
Negative impact on community health
Drain on economic development
13
How Did We Get Here?
In the beginning…….
Insurance: Coverage by contract in which
one party agrees to indemnify (guard or
secure against anticipated loss) or
reimburse another for any loss that occurs
under terms of the contract.
14
Before Health Insurance…


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US railroads and wanted to insure
productivity of employees
Hired contract physicians (surgeons) to
care for employees
No insurance—healthcare services
provided for employees…but in the
interest of their employer!
15
The Beginning of Health
Insurance-”The Blues”

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Blue Cross 1st created by President of Baylor University to
pay for hospital care
If everyone paid a small amount ($15/wk), those that
needed hospitalization could be cared for (benefit of
$25,000)
1932-Texas Legislature passed the enabling statute to
create the first blues plan
Law became a national model
It was expanded after a decade to include payment for
physician services, “blue shield”
The plans were NFP companies
BODs represented community-citizens, providers,
businessmen
Concept of “shared social responsibility”
16
Employer Role in Healthcare

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Originally employer-based insurance was not for healthcare. It
started as insurance for lost wages when ill
Early 1940s: amendments to Tax Codes allow business to
offer health insurance to help recruit workers despite wartime
wage freezes
1950-1970: growth in cost & utilization of medical services by
employees, supported by labor unions
Health insurance typically 80/20; co-pays, deductibles
1980s: growth of managed care as response to rising coststemporarily effective—1st dollar coverage, NOT insurance
Late 1990s-resurgence of costs
2000+ move to consumer-directed health plans…..??solution
Some employers offer on-site clinics/pharmacies….?Back to
the future?
17
The 5 A’s of Access
Health insurance does not equal
access to the right healthcare!
 Affordability
 Accessibility
 Acceptability
 Assurance
 Appropriateness
18
Coverage & Access: What Does it
Mean?



Coverage refers to the ‘menu’ of what is
available through an insurance policy (limited vs
comprehensive.) Relates to technical adequacy
and assurance of services
Access refers to what is 'practically' available and
encompasses barriers such as affordability and
logistical accessibility
Coverage opens the door but does not
ensure access!
19
Issues with Coverage & Access

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What are we trying to achieve with coverage
and access??
Language is important! People don’t use these
terms to mean the same thing.
If coverage equals insurance, we need to
answer the question, insurance for what?
We have not been able to reconcile our split
approach to “sponsorship” of health insurance,
or pick one over the other.
Coverage means more than insurance. It is
'protection', 'security' that is defined at the
individual level
20


Do you have health insurance?
Did you purchase it yourself?
21
The Plight of Employers
22
Our Health Care Crisis

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Total health care spending represents 16 percent of the
gross domestic product
Estimated to reach 20 percent by 2015.
The US has the highest per worker health care costs in
the world
Impact

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Erodes corporate profits
Reduces growth of business
For small enterprises or those with low profit margins

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Reduces number of jobs
Reduces compensation packages
Increases unemployment and uninsurance
23
What Do We Get for What We
Spend?

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We spend 33% more than Canada, our nearest
competitor on costs
We do not have more doctors or nurses or hospital days
We do have more MRIs and get more tests-many
unnecessary
We rank lowest of English speaking countries on patient
satisfaction and access and on the doctor-patient
relationship
We rank well only on access to specialists and nonurgent care! Is this most important?
24
Health Care Costs and Profit
Margins
60%
60%
53%
59%
49%
50%
Health Care 40%
Costs as a
30%
Percentage of
20%
Profit
37%
58%
40%
40%
40%
34%
Before Tax Profits
After Tax Profits
10%
0%
1996 1997 1998 1999 2000
Fiscal Years
Source: Cowan CA, McDonnell PA, Levit KR, Zezza MA. Burden of
health care costs: businesses, households and governments. Health
Care Financing Review. 2004
25
Projections by 2015
Can Employers Really Afford It?
$35,000
$30,000
2015 rates:
$15,000
15%-$29,128
12%-$22,362;
10%-$18,675;
8%-$15,544
$10,000
Cost per employee per year
$20,000
$5,000
$0
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
PEPY
$25,000
15%
12%
10%
8%
2005-2015 Timeline
Comparing Healthcare trend figures at compounded rates: 15%,12%,10% and 8% over a 10 year period.
Starting point $7,200 or approximately $600 PEPM.
26
2005 Trends

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9.2 % increase in premiums
Previous years 2000 – 2004 – 14%
Smallest employers (under 200) hit with
highest increases across all sectors – 15%
Manufacturing sector hit with highest
increases – 11.2 %; healthcare and
transportation the least at less than 8%
27
Reaction to Premium
Increases
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For Employers
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Cost shifting to employees
Cost sharing in premiums
Increase co-pays and deductibles
Reduce coverage
Drop Insurance
Employee Response
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Pay the Increase
Drop Coverage
28
2005 Status of Employer
Coverage

60% of employers offer insurance,
down from 69% in 2000

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98%
93%
87%
72%
47%
for firms greater than 200
for firms between 50 – 199
for firms between 25 – 49
for firms between 10 – 24
for firms between 3 - 9
29
The Small Employer

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Firms with less than 20 employees make
up 89% of American business and 19% of
the working population.
Firms with 20 – 499 employees make up
10% of businesses and represent 33% of
the working population
30
Who Provides Coverage &
Who Doesn’t
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Firms with higher wages where 65% or more of workers earn
$20,000 or greater have higher coverage rates than where the
majority earn $20,000 or less annually.
Nearly 50% of employers not offering health benefits, pay annual
wages of less than $15,000 per year to 40 percent or more of their
employees, compared to 13 percent of companies that do offer
health benefits.
There are a greater proportion of part-time workers in smaller firms
who do not offer benefits.
The demographics reflect a larger proportion of females, workers
under age 30, and minority employees.
65 percent of those small employers’ not offering benefits have
annual gross revenues that are less than $500,000, 65 percent. For
employers with $1,000,000 in gross revenues or more, only 18
percent do not offer benefits.
Firms in business less than five years are less likely to offer benefits.
31
Hidden Costs of Insurance

Employee Retirement Income Security Act
of 1974 - Federal governs self-funded
plans; states oversee fully insured plans.

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Rules, regulations and offerings differ from
state to state
Variables

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Risk Rating & Underwriting – Some less fair
than others
Administrative Costs – can be as high as 40%
of premium
32
WHAT DO YOU THINK?
33
What is good public policy to
promote adequate coverage &
access for all?
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Is there a level of health services
that everyone should be guaranteed?
Should it be heavily subsidized by
government and employers?
Should individuals who can afford to
be allowed to "buy up?"
34
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Should we work toward financial equity
(justice/fairness)?
What does pluralism mean in healthcare?
Pluralism that meets the needs of
individuals for the kind of care and setting
that is appropriate to them? Pluralism in
funding streams?
Do we need to ration healthcare? How
should it be done?
35
WHAT DO OTHERS THINK?
36
Voices from Communities…

“The measure of a health care system is how it
cares for the have-nots.” CEO, Community Health Center,
California

“Will the majority of the voting public support
giving something up to get everyone covered?”
Psychologist, Mississippi

“Are we willing to ration for ourselves? When we
get sick, we want everything available.” Physician
representative of the White House
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“More people realize now [than in the early 90s]
that the uninsured represent a threat to all of
us.” Physician Leader, NH
37
Harris-Commonwealth Fund
Opinion Leaders Survey

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Covering the uninsured should be
Congress’ top priority over the next 5
years
The proportion of Americans without
health insurance (currently 18% under 65)
should be reduced by half to about 8% in
10 years.
38
The Citizens’ Health Care
Working Group

Charged by Congress with engaging the
public in a dialogue on healthcare

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What healthcare benefits and services should
be provided?
How does the American public want healthcare
delivered?
How should healthcare coverage be financed?
What trade-offs is the public willing to make?
Recommendations and an action plan will
be presented to Congress
39
What Does the Public Think?
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95% thinks the US healthcare system is in
a state of crisis or has major problems
>90% believe it should be public policy
that all Americans have affordable health
care coverage
~90% think it would be better to provide
a defined level of services for everyone,
rather than providing coverage for
particular groups of people as it is now
(elderly, poor, employees)
40
What Does the Public Think?
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>60% believe the most important reason
to have health insurance is to pay for high
medical costs
~30% believe the most important reason
to have health insurance is to pay for
everyday medical expenses
~74% believe everyone should be
required to enroll in basic health coverage,
either public or private
41
What Does the Public Think?
~ 69% think some people should be
responsible for paying more than others
Criteria varied: Income most popular
response; health behaviors also quite high
Should public policy continue to use tax laws
to encourage employer-based health
insurance?
Yes 47.9% (29.3-86.8)
No 52.1% (13.2-70.7)
42
What Does the Public Think?
Guaranteeing all Americans have health
insurance was cited as the number 1
spending priority in nearly all communities
Guaranteeing all Americans get healthcare
when they need it through public “safety
net” programs, (if they cannot afford it)
also ranked quite high in most places
43
What Does the Public Think?
REACTION TO PROPOSALS TO ADDRESS
UNINSURED:
Not Popular:
Offer uninsured Americans income tax deductions,
tax credits or other financial assistance to help
them purchase private insurance:
Rely on free market competition among doctors,
hospitals, other healthcare providers and
insurance companies rather than having
government define benefits and set prices
44
What Does the Public Think?
REACTION TO PROPOSALS:
Mixed reactions:
Expand state government programs for low income
(Medicaid, SCHIP)
Require businesses to offer health insurance to all
employees
Require all Americans to enroll in basic healthcare
coverage, public or private
45
What Does the Public Think?
REACTION TO PROPOSALS:
Most popular:
Create a national health insurance program,
financed by tax payers, in which all
Americans would get their health insurance:
(1st in almost all cities)
Expand neighborhood health clinics
Open up enrollment in federal programs, e.g.,
Medicare or FEHBP
46
WHAT CAN BE DONE?
47
If you segment the uninsured, it is
apparent that different answers are
needed for different groups:

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The working poor
Those temporarily uninsured between
jobs
Those who can afford but do not choose
to buy insurance
The young and healthy who feel it is not
worth the investment for them
48
Solutions for Employers
49
Potential Solution
Join a Purchasing Pool

Small employers join forces to create
purchasing power and reduce individual
inequities by virtue of their size
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Share risks
Negotiate competitive prices
Gain access to a variety of plans
Provide affordable co-pays
Streamline and reduce administrative costs
50
Examples
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COSE – Council of Smaller Enterprises, part of
Cleveland Chamber of Commerce
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Health Pass – New York Business Group on
Health – for employers with less than 50
workers
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Assume role of purchaser
At least three health plan alternatives
28 benefit plan designs
Provides consulting services
Handles all administrative duties
PacAdvantage – California – Pacific Business
Group on Health – 2 – 50 employees
51
Community and Private Sector
Partnerships

Muskegon County, Michigan – for those
businesses with median hourly wage of
$11.50 or less and have not offered any
coverage in previous 12 months
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County pays 1/3; employer pays 1/3;
employee pays 1/3
Plans offered are ½ of cost if employer
sought plan as an individual employer
New Mexico Health Insurance Alliance
52
Another (But Risky) Solution –
Self Insurance
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Financial strategy used primarily by large
employers – employer assumes all or part of risks
Sets funds aside to pay claims as they come in (Vs
paying an insurance company a premium) - actors
out administrative costs
Exempts the company from state mandates that
can be costly and cumbersome for employers who
operate in multiple states
Increase risk for small firm – one catastrophic
medical case could be devastating

Purchase Stop Loss Insurance to cover any individual’s
medical expenses higher than $25,000
53
Latest Health Plan Solution
Consumer Directed Health Plans
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High Deductibles
HSAs
Requirements

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Learn to manage an HSA
Learn to be a savvy medical consumer
Learn to lead a healthier life
54
Employer Costs for Poor
Health
R. Goetzel, JOEM, Jan. 2001
Costs Per Employee - 1998
$310
$513
$810
Health Plan
Turnover
$4,666
Absenteeism
Disability
$3,693
Work Comp
Total = $9,992
55
Trends in Health Status CDC

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In 10 years

Obesity increased 61%

Diabetes increased 49%
Serious smoking related illness affects
8.6 million Americans

$92 billion in lost productivity annually

$75.5 billion in medical expenditures
56
Less Healthy People – Huge
Costs
3%
19%
50%
25%
35%
53%
10%
5%
% Employees
% Claims
57
Determinants of
Healthcare Costs
50%
40%
30%
20%
10%
0%
Determinant
Access to
Care
Genetics
Environment
Behavior
10%
20%
20%
50%
Source: Center for Disease Control
and Prevention
58
Statistically….For Every 100
Employees
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64 are overweight
25 have high blood pressure
18 or more have high cholesterol
6 have diagnosed diabetes
4 have undiagnosed diabetes

16 smoke
8 are heavy drinkers
29 don’t wear safety belts regularly
50 sit all day to do their work

21 have cardiovascular disease

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Source: Wellness Council of America 2005
59
Strategies to Integrate
Benefits and Work Site Health
Management

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WEYCO Inc. - service company for benefit
plans and management - 186 Employees
Healthcare – eating the bottom line

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Employers give employees an unrestricted
medical card
Employees are making unilateral lifestyle
decisions that affect the bottom line and other
employees’ paycheck
60
WEYCO, Inc.

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Health plans do not emphasize prevention,
personal health improvement and
compliance
Little or no employee involvement in cost
Plan Strategy

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Align plan with Weyco health strategy
Involve employees and families in prevention
Move to qualified high deductible plans with
health savings accounts (HSA) by 2007
61
WEYCO, Inc.

Health Strategy – As important as
customer service, quality, & safety

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Personal health improvement
Reduce demand to reduce costs
Eliminate lifestyles that create risk

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Illegal drugs and tobacco
Excess use of alcohol
Unhealthy eating
Physical inactivity
62
WEYCO Inc.

Worksite Programs

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HRA & Biometrics
Health Education: Cardio, Strength &
Flexibility, Weight Management, Stress
Management
Web-based info & Telephonic Health Coach
Physical Evaluations
Screenings
63
WEYCO Inc.

Incentives

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Employer contributions/credits for participation in
preventive exams, personal evaluation, physical
evaluation
Credits used to reduce employee contributions to
plan. Employee pays if chooses not to participate.
Preventive Exams at 100% - Health Credits if exams
are completed & verified by 12/31 of each year
If employee waives coverage, WEYCO provides
$1560.00 in an HRA if employee provide proof of
other medical coverage
64
WEYCO Policy

Tobacco-Free Program
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Stop hiring or retaining tobacco users
Ban the use of tobacco on property
Tobacco assessments and voluntary testing
Company sponsored smoking cessation
programs
Mandatory testing
Random testing for all employees
Extend program to spouses
65
Recent State & Federal Efforts
66
S. 1955: Health Insurance Marketplace
Modernization and Affordability Act of
2005

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A bill to amend title I of the Employee Retirement
Security Act of 1974 and the Public Health Service Act to
expand health care access and reduce costs through the
creation of small business health plans and through
modernization of the health insurance marketplace
Introduced by Senator Michael Enzi (R-WY)
approved by the Senate Health, Education, Labor and
Pensions (HELP) Committee
67
Critics Fears


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Legislation, eliminates state jurisdiction and with it
almost all state-enacted consumer protections for people
buying insurance individually or through their employers
States will no longer be able to mandate coverage of
benefits, services, or categories of providers for
individuals, small groups, or large group
Premium rating protections, enacted by states to make
small group insurance more affordable to older and
sicker workers, will be set aside
Insurers will be allowed to sue states that do not comply.
The bill sets a ceiling on, but no floor under, what states
can do to protect insurance consumers
68
Massachusetts
Universal Health Care
Coverage


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Those without coverage must purchase an
“affordable” plan (to be defined) or pay financial
penalties
Businesses with at least 11 workers will provide
insurance or pay $295 per employee per year to
the state
Residents with coverage must certify their
insurance status on state income tax forms, or
face tax penalties
State will provide sliding-scale subsidies for
people who can't afford to buy a health plan on
their own
69
Observations



Ability to gain consensus
Compromise may be a way to break the gridlock
and logjam that exists in Washington and in
states across the country
Details important to the overall acceptability of
the new program



How much people will have to pay to get insurance
What will the affordable plans cover
Massachusetts precedent of agreeing to
expanding coverage with Medicaid waiver
program provided the building blocks of working
together at state level to allow this next step
70
What About the Future??
71
Perspective of Leaders



Comprehensive proposal in the shortterm unlikely…until the REAL crisis
strikes…?? By 2008 or 2012 elections
To develop a long range plan, create
a sense of urgency!
Healthcare industry leadership must
agree that solving the problem will
require compromise
72
How Can We Make Real
Progress?





We need to clarify what we want to
achieve long-term!
Don’t assume the federal government will
solve the problems
Look to communities for solutions
Focus on health—not just healthcare
Everyone needs to be involved! Our health
is too important to leave to others
73
A Vision for Patient-Centered Care
"The care we need and no less, the care we
want and no more."
Albert Mulley, MD
Chief of Internal Medicine, Massachusetts General Hospital
74
Marcia L Comstock, MD MPH
COO
WRGH/FAHCL
117 Lafayette Road
Wayne, PA 19087
Phone: 610-687-2320
Fax: 610-687-5963
mlcomstock@wrgh.org
www.wrgh.org
75
Carol A Staubach, MPH
CA Staubach & Associates
305 E. St. Andrews Drive
Media, PA 19063
Phone: 610-891-6034
Fax:
610-891-6035
email: castaubach@comcast.net

76