Statement of John Sheils, Vice President, Lewin Group, Falls Church, Virginia
Testimony Before the Subcommittee on Health
of the House Committee on Ways and Means
Hearing on Uninsured Americans
June 15, 1999
My name is John Sheils. I am a vice president with The Lewin Group, a Washington-based consulting firm, specializing in health care finance issues. Our firm has conducted numerous studies of the financial impact of rising health care costs and the growing uninsured population. We have also performed financial analyses of various health care reform proposals for several public and private organizations.
I am appearing today as an independent health policy analyst. My testimony is my own and I am not appearing on behalf of any individual or organization.
In my testimony, I discuss the continuing growth of the uninsured population. I also discuss the characteristics of the uninsured and identify coverage opportunities that are currently being declined by many of the uninsured. At the suggestion of your staff, my testimony is presented in a bullet-point format with charts that is designed for easy reference.
The Number of Insured Continues to Grow
• The Bureau of the Census reports that 43.3 million Americans were uninsured in 1997. This is equal to 16.1 percent of the population.
• The number of uninsured has steadily increased for the past two decades. The number of uninsured increased from 24.5 million persons in 1980 to 43.3 million persons in 1997 (Figure 1).
• The number of uninsured has increased at a rate of roughly 10 million persons every decade. At this rate, the number of uninsured reported by the Bureau of the Census will grow to about 54.0 million persons by 2007, which will be equal to about 19.1 percent of the population.
Figure 1
Number and Percent of Persons Who Are Uninsured for Selected Years
Source: Lewin Group analysis of the Current Population Survey (CPS) data for 1980 through 1998.
The Census Data Overstates the Number of Uninsured
• About 18 percent of Medicaid recipients fail to report that they are covered by the program in the Bureau of Census data and are erroneously counted as uninsured. Underreporting is most severe for children.
• Correcting for this problem reduces the number of uninsured in 1997 from 43.3 million to 38.1 million (Figure 2).
• The Children's Health Insurance Program (CHIP) created under the Balanced Budget Act of 1997 will cover 2.1 million uninsured children.
• Accounting for both CHIP and underreporting reduces the number of uninsured to 36.0 million persons, of whom 6.3 million are children.
• Even with these adjustments, however, the annual increase in the number of uninsured is still expected to be about 1.0 million persons over the next ten years.
Figure 2
Estimate of the Number of Uninsured Persons in the US (in thousands)
Uninsured Persons |
|||
| Total | Children | Adults | |
| Uninsured Persons as Reported in 1998 CPS a/ | 43,329 |
11,211 |
32,118 |
| Correction for Underreporting of Medicaid Coverage b/ | (5,227) |
(2,865) |
(2,362) |
| Expanded Eligibility under CHIP c/ | (2,071) |
(2,071) | - - |
| Total Uninsured | 36,031 |
6,275 | 29,756 |
a/ Based upon Lewin Group analysis of the March 1998 Current Population Survey (CPS) data, which reports insurance coverage data for 1997.
b/ Adjustment required to correct for underreporting of Medicaid coverage in the March CPS data. The CPS underreports Medicaid coverage by about 18.2 percent.
c/ Estimated number of children who ultimately will become covered under the Children's Health Insurance Program (CHIP) established under the Balanced Budget Act that is designed to extend coverage to persons with incomes of up to 200 percent of the federal poverty level (FPL).
Source: Lewin Group estimates using the Medicaid Eligibility Simulation Model (MedSim) and the March 1998 Current Population Survey (CPS) data.
Many of the Uninsured are Young and Healthy Adults
• About 17.4 percent of the uninsured are children under age 19 (Figure 3).
• About 42.7 percent of the uninsured are young adults aged 19 to 34, even though this is the age group where premiums for adults tend to be lowest.
• About 8.9 percent (3.2 million) of the uninsured are aged 55 and older where health costs and insurance premiums can be four times greater than for an adult age 25.
• Females are less likely than males to be uninsured because many mothers and pregnant women qualify for coverage under Medicaid.
Figure 3
Distribution of Uninsured Persons by Age and Sex (in thousands)
Source: Lewin Group estimates based upon the 1998 Current Population Survey (CPS) data corrected for underreporting and adjusted for the expansion of children's coverage under CHIP using the Lewin Group Medicaid Eligibility Simulation Model (MedSim).
The Uninsured are Found in All Income Groups
• About 38.5 percent of the uninsured have incomes below 150 percent of the federal poverty level (Figure 4).
• However, about 26.6 percent of the uninsured have incomes in excess of 300 percent of the FPL.
• In fact, about 7.1 million of the uninsured (19.8 percent) are in families with incomes in excess of $50,000.
• About 40.7 percent of the uninsured are in middle income groups ranged from $20,000 to $50,000.
Figure 4
Distribution of Uninsured Persons by Income (in thousands)
Source: Lewin Group estimates based upon the 1998 Current Population Survey (CPS) data corrected for underreporting and adjusted for the expansion of children's coverage under CHIP using the Lewin Group Medicaid Eligibility Simulation Model (MedSim).
About 13.4 Percent of the Uninsured are Eligible for Either Medicaid or CHIP
• Even after CHIP is fully implemented, we estimate that 4.8 million of the uninsured (13.4 percent) will be eligible for either Medicaid or CHIP.
• Of these eligible but not enrolled persons, 3.4 million will be children.
Figure 5
Distribution of Uninsured Persons by Income (in thousands)
| Number | Percent | |
| Uninsured Persons Eligible for Medicaid/CHIP Who Do Not Enroll | ||
| Children under Age 19 | 3,445 | 9.6% |
| Adults Age 19 - 64 | 1,146 | 3.2% |
| Elderly Age 65 and Over | 236 | 0.6% |
| Total | 4,827 | 13.4% |
| Total Uninsured | 36,031 | 100.0% |
Source: Lewin Group estimates based upon the 1998 Current Population Survey (CPS) data corrected for underreporting and adjusted for the expansion of children's coverage under CHIP using the Lewin Group Medicaid Eligibility Simulation Model (MedSim).
About 10.2 Million Uninsured Have Access to Employer-Sponsored Coverage But Do Not Take It
• About 3.4 million uninsured persons are actually eligible to participated in their employer's health plan.
• These workers have about 2.8 million dependent spouses and children that go uninsured.
• There are another 4.0 million uninsured dependents of workers who have taken coverage at work but have not elected the family coverage option.
• Overall, about 28.5 percent of the uninsured (10.2 million) have declined the employer coverage that is available to them.
Figure 6
Distribution of Uninsured Persons by Access to Employer Coverage in 1996 using the Medical Expenditures Panel Survey Data
| Uninsured Persons | ||
| Number (in thousands) |
Percent of Uninsured | |
| Uninsured with Access to Employer Coverage | ||
| Workers Who Have Declined Employer Coverage a/ | 3,389 | 9.4% |
| Dependents of Workers Who Have Declined Employer Coverage | 2,834 | 7.9% |
| Dependents of Covered Workers Who Have Declined Family Coverage | 4,023 | 11.2% |
| Total Uninsured With Access to Employer Coverage | 10,246 | 28.5% |
a/ The MEPS data report about 44.7 million uninsured person in the first quarter of 1996. These data reflect an underreporting of Medicaid enrollment of between 4.0 million and 5.0 million persons. These data are not directly comparable with the CPS data. MEPS data report the number of uninsured in the first quarter of the year while the CPS reports the number of persons who were uninsured for all 12 months of the year.
Source: Lewin Group analysis of the 1996 Medical Expenditures Panel Survey (MEPS) data.
Many of the Uninsured Work
• About 76.2 percent of the uninsured are either employed or are the dependent child or spouse of a worker some time during the year (Figure 7).
• However, many of these individuals work only part time and for only part of the year.
• If you look at the uninsured in any given month, only 54.2 percent are working full time or are the dependent of a full time worker. In any given month, about 45.8 percent have no connection to employment.
Figure 7
Uninsured Persons by Relation to Employment (in thousands)
Source: Lewin Group estimates based upon the 1998 Current Population Survey (CPS) data corrected for underreporting and adjusted for the expansion of children's coverage under CHIP using the Lewin Group Medicaid Eligibility Simulation Model (MedSim).
Increases in the Employee Premium Contributions Seem to be Part of the Problem
• The average percentage of the premium paid by the worker for single coverage increased from 13.0 percent in 1991 to 22.0 percent in 1996 (Figure 8). For family coverage it increased from 23.0 percent in 1991 to 31.2 percent in 1996.
• A recent Lewin study showed that a 1.0 percent real increase (i.e., inflation adjusted) in premium prices results in 300,000 fewer persons taking employer coverage.(1)
• Recent survey data also indicates that the percentage of individuals accepting the employer coverage available to them declined from 88.3 percent in 1987 to 80.1 percent in 1996.(2)
Figure 8
Percentage of Premium Paid by Workers in Employer-Sponsored Plans for Single and Family Coverage 1991 to 1998
Source: Based upon KPMG Peat Marwick data.
Troubling Findings
• The uninsured population is growing by an average of 1.0 million persons per year.
• About 13.4 percent of the uninsured (4.8 million) will actually be eligible for Medicaid or CHIP but will not enroll.
• About 10.2 million of the uninsured (28.5 percent) could take coverage through an employer plan but have declined.
• Nearly 20 percent of the uninsured have family incomes in excess of $50,000 per year yet do not purchase health insurance.
1. Sheils, John, Hogan, Paul, and Manolov, Nikolay, "Exploring the Determinants of Employer Health Insurance Coverage," (Report to the AFL-CIO) The Lewin Group, Washington, DC, January 20, 1998.
2. Cooper, Philip and Steinberg-Schone, Barbara, "More Offers, Fewer Takers for Employment-Based Health Insurance: 1987 and 1996," Health Affairs, Nov-Dec 1997, 16(6): 142-9.