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mu nsura J U Pro -ce and Health Care Committee on the Consequences of Uninsuranc Board on Health Care Services INSTITUTE OF MEDICINE NATIONAL ACADEMY PRESS Washington, D.C.

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NATIONAL ACADEMY PRESS 2101 Constitution Avenue, N.W. Washington, DC 20418 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. Support for this project was provided by The Robert Wood Johnson Foundation. The views presented in this report are those of the Institute of Medicine Committee on the Consequences of Uninsurance and are not necessarily those of the funding agencies. International Standard Book Number 0-309-07609-9 Additional copies of this report are available for sale from the National Academy Press, 2101 Constitution Avenue, N.W., Box 285, Washington, D.C. 20055. Call (800) 624- 6242 or (202) 334-3313 (in the Washington metropolitan area), or visit the NAP's home page at www.nap.edu. The full text of this report is available at www.nap.edu. www.iom.edu. For more information about the Institute of Medicine, visit the IOM home page at Copyright 2001 by the National Academy of Sciences. All rights reserved. Printed in the United States of America. The serpent has been a symbol of long life, healing, and knowledge among almost all cultures and religions since the beginning of recorded history. The serpent adopted as a logotype by the Institute of Medicine is a relief carving from ancient Greece, now held by the Staatliche Museen in Berlin.

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"I(n owing is not enough; we invest apply. Widing is not enough; we must do." Goethe ..... ..... ........ ....... ... - ....... .. . . . . INSTITUTE OF MEDICINE Shaping the Future for Health

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National Acaclemy of Sciences National Acaclemy of Engineering Institute of Meclicine National Research Council The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achieve- ments of engineers. Dr. Wm. A. Wulf is president of the National Academy of Engineer- ng. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the respon- sibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medi- c~ne. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Wm. A. Wulf are chairman and vice chairman, respectively, of the National Research Council.

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COMMITTEE ON THE CONSEQUENCES OF UNINSURANCE MARY SUE COLEMAN (Co-chair), President, Iowa Health System and University of Iowa, Iowa City ARTHUR L. KELLERMANN (Co-chairJ, Professor and Chairman, Department of Emergency Medicine, Director, Center for Injury Control, Emory University School of Medicine, Atlanta, Georgia RONALD M. ANDERSEN, Wasserman Professor in Health Services, Chair. Department of Health Services, Professor of Sociology, University of California, Los Angeles, School of Public Health JOHN Z. AYANIAN, Associate Professor of Medicine and Health Care Policy, Harvard Medical School, Brigham and Women's Hospital, Boston, Massachusetts ROBERT I. BLENDON, Professor, Health Policy & Political Analysis, Department of Health Policy and Management, Harvard School of Public Health and Kennedy School of Government, Boston, Massachusetts SHEILA P. DAVIS, Associate Professor, The University of Mississippi Medical Center, School of Nursing, Jackson, Mississippi GEORGE C. EADS, Charles River Associates, Washington, D.C. SANDRA R. HERNANDEZ, Chief Executive Officer, San Francisco Foundation, California WILLARD G. MANNING, Professor, Department of Health Studies, The University of Chicago, Illinois JAMES I. MONGAN, President, Massachusetts General Hospital, Boston, Massachusetts CHRISTOPHER QUERAM, Chief Executive Officer, Employer Health Care Alliance Cooperative, Madison, Wisconsin SHOSHANNA SOFAER, Robert P. Luciano Professor of Health Care Policy, School of Public Affairs, Baruch College, New York, New York STEPHEN I. TREJO, Associate Professor of Economics, Department of Economics, University of Texas at Austin REED V. TUCKSON, Senior Vice President, Consumer Health and Medical Care Advancement, UnitedHealth Group, Minnetonka, Minnesota EDWARD H. WAGNER, Director, W.A. McColl Institute for Healthcare Innovation, Group Health Cooperative Puget Sound, Seattle, Washington LAWRENCE WALLACK, Director, School of Community Health, College of Urban and Public Affairs, Portland State University, Oregon v

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IOM Staff Wilhelmine Miller, Project Co-director Dianne Miller Wolman, Project Co-director Lynne Page Snyder, Program Officer Tracy McKay, Research Assistant Ryan Palugod, Project Assistant Al

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Reviewers This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures ap- proved by the NRC's Report Review Committee. The purpose of this indepen- dent review is to provide candid and critical comments that will assist the institu- tion in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the follow- ing individuals for their review of this report: BRUCE BRADLEY, Director, Managed Care Plans, General Motors Health Care Initiatives, Detroit, Michigan HARRY P. CAIN, Adjunct Faculty Member, Graduate School of Business, College of William and Mary, Williamsburg, Virginia JACOB FELDMAN, Senior Fellow, Center for Health Affairs, Project HOPE, Bethesda, Maryland ROBERT L. JOHNSON, Professor of Pediatrics & Clinical Psychiatry, Direc- tor, Adolescent & Young Adult Medicine, University of Medicine and Dentistry of New Jersey, New Jersey Medical School, Newark SCOTT C. RATTAN, Senior Technical Advisor and Population Leadership Fellow, Center for Population, Health, and Nutrition, U.S. Agency for Interna- tional Development, Washington, D.C. DIANE ROWLAND, Executive Vice President, Henry I. Kaiser Family Foun- dation, Executive Director, The Kaiser Commission on Medicaid and the Unin- sured, Washington, D.C. . . v''

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V111 RE VIEWERS FRANK A. SLOAN, I. Alexander McMahon Professor of Health Policy and Management, Professor of Economics, Director, Center for Health Policy, Law & Management, Duke University, Durham, North Carolina KATHERINE SWARTZ, Professor of Health Economics, Department of Health Policy and Management, Harvard School of Public Health, Boston, Mas- sachusetts DAVID TAKEUCHI, Professor of Sociology, Indiana University, Bloomington Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommenda- tions nor did they see the final draft of the report before its release. The review of this report was overseen by Hugh H. Wilson, Adjunct Professor, School of Public Health, University of North Carolina, Chapel Hill, appointed by the Institute of Medicine and Joseph P. Newhouse, John D. MacArthur Profes- sor of Health Policy & Management, Harvard University, appointed by the NRC's Report Review Committee, who were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.

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Preface This is the first report in a series of six that the Institute of Medicine (IOM) Committee on the Consequences of Uninsurance will issue over the next two years to evaluate and consolidate our knowledge of the causes and consequences of lacking health insurance. The Committee was established just one year ago with the charge of reviewing and assessing evidence across a spectrum of disciplines to expand our understanding of the problem of uninsurance. The Committee agreed to undertake this formidable task in order to delineate more clearly the personal, family, community, and economic consequences of the existing public and private health insurance mechanisms a system that leaves almost one out of six Ameri- cans without coverage. This initial report of the Committee establishes both a conceptual framework and baseline data about the magnitude and extent of the problem nationwide. It seeks to answer the basic questions of who, when, where, and why so many Americans lack health insurance. The report provides an overview of health insurance in America, describes the dynamic and often unstable nature of insur- ance coverage, profiles populations that frequently lack coverage, and identifies factors that make it more or less likely that a person will be uninsured at some point in life. Finally, the report outlines the research agenda that the Committee will pursue in this series of six reports. Many people have made substantial contributions to this report. The Sub- committee on the Status ofthe Uninsured, chaired by Willard Manning, produced a draft for the full Committee's consideration within an extraordinarily short time and continued to work with the full Committee in revising the initial draft. Committee members John Ayanian, Sheila Davis, Willard Manning, and Larry Wallack were joined on the subcommittee by Peter Cunningham, Paul Fronstin, IX

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x PREFACE and Catherine Hoffman, who generously contributed their expertise to the report throughout its conceptualization and drafting. Committee member Ron Andersen advised the subcommittee from the start as it devised the conceptual framework that will be employed throughout the series of studies. IOM staff under Study Co- directors Dianne Wolman and Wilhelmine Miller provided excellent research and writing support to the subcommittee and Committee throughout their delibera- tions. Program Officer Lynne Snyder served as lead staff analyst on this report. We hope that this report will stimulate public dialogue and a reexamina- tion of long-standing issues of health care financing and continuity of coverage. The Committee's future reports on health outcomes for the uninsured, family impacts of lacking health insurance, implications for communities, the economic costs to society as a whole, and models of reform will provide in-depth and closely considered information that should sustain and hopefully advance policy debates about health care coverage. We are grateful to The Robert Wood Johnson Foun- dation for its support of the Committee's work. Mary Sue Coleman, Ph.D. Co-chair Arthur Kellermann, M.D., M.P.H. Co-chair September 2001

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Foreword Coverage Matters: Insurance and Health Care is the first installment of a sustained effort by the Institute of Medicine (IOM) to inform the debate about a pressing and persistent challenge to American health care and public policy: lack of health insurance for about 40 million Americans. In 1999, the IOM determined that this long-standing problem should be a priority of the Institute's policy research agenda. We are grateful to The Robert Wood Johnson Foundation for support of a series of six studies addressing the personal and social impacts of uninsurance. This is the first report in that series. The 16-member IOM Committee on the Consequences of Uninsurance brings an exceptional breadth of experience to this project. Its members have backgrounds in clinical medicine, epidemiology, public health, nursing, health services organization, health and labor economics, strategic corpo- rate planning and small businesses, academic health care, and provision of care to those without coverage and other populations at risk. This first report of the Committee lays the groundwork for subsequent re- ports that will identify the costs and consequences for individuals, families, com- munities, and American society when a large population of individuals does not have health insurance. Although much of the information in this initial report has been available before, Coverage Matters integrates findings from an extensive public policy, economics, and health services research literature to produce a coherent and comprehensible account of who has and who lacks health insurance, and why. This report provides the reader with a road map to subsequent reports, outlining both their content and the analytical framework that the Committee will employ to look at a wide range of impacts. The second report, which will follow in about nine months, will examine the evidence accumulated to date about the risks and health consequences of lacking health insurance, both sporadically and, especially, Xl

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xt! FOREWORD for extended periods of time. Policy makers and general readers alike should find this initial report and the five to follow a valuable contribution to their under- standing of a matter of vital concern to us all the consequences of having mil- lions of uninsured Americans. Kenneth I. Shine, M.D. President, Institute of Medicine September 2001

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Acknowledgments A project ofthis scale and complexity requires a team effort. Many individuals have contributed to the quality of this first report. The Committee takes this opportunity to recognize several of those who have helped. At the beginning of such an extensive effort, gathering information is crucial. Many health policy researchers and others contributed to a workshop in Decem- ber 2000 and to public Committee sessions then and in April 2001. Gerry Fairbrother, Hanns Kuttner, Edward Maibach, and Jack Needleman, consultants to the Committee, prepared background papers and served on workshop panels. Other presenters at the workshop were E. Richard Brown, Thomas Buchmueller, Peter Cunningham, Darrell Gaskin, Jack Hadley, Karla Hanson, Catherine Hoffman, Judith Kasper, Genevieve Kenney, Honda Kotelchuck, Nicole Lurie, Kristin Moore, Keith Mueller, Julie Rovner, Cathy Schoen, Lawrence Wallack, Ray Werntz, and Charlotte Yeh. William Hall, Catherine McLaughlin, Diane Rowland, Steven Schroeder, and Anne Weiss addressed the Committee during its public meetings. This first report has benefited from the participation of consultants who provided guidance and technical expertise. Edward Maibach and Diana Rubin of Porter Novelli provided communications advice, and Hanns Kuttner and Eugene Moyer provided economic and statistical expertise. Anirban Basu contributed his time in the preparation of original data analyses presented in this report, and the Committee extends special thanks to him. The Committee specifically acknowledges the members of the Subcommittee on the Status of the Uninsured, which developed this foundational first report: Willard Manning (chair), John Ayanian, Peter Cunningham, Sheila Davis, Paul Fronstin, Catherine Hoffman, and Larry Wallack. . . . x'''

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xiv A CKNO WLED GMENTS The Committee recognizes the hard work of staff at the Institute of Medicine (IOM). This work is conducted under the guidance of Janet Corrigan, director, Board on Health Care Services, who planned and developed this project along with IOM leadership and the sponsor. The project team, directed by Wilhelmine Miller and Dianne Wolman, worked under a very tight schedule to produce this first report. Dianne managed the publication process and edited the report. Wilhelmine guided its substantive development. Program Officer Lynne Snyder was lead analyst and made sense out of an enormous body of information within a very short time. Research Assistant Tracy McKay served as sole support staff during the crucial startup period of the Committee and worked tirelessly and expertly to organize and prepare background materials for the December work- shop. She also prepared the manuscript for publication. Project Assistant Ryan Palugod provided support in the development of databases, managed meeting logistics, and conducted Web research. Funding for the project comes from The Robert Wood Johnson Foundation (RW}F). The committee extends special thanks to Steven Schroeder, president, and Anne Weiss, senior project officer, RWJF, for their support and thoughtful attention. Finally, the Committee would like to thank the chairs, Mary Sue Coleman and Arthur Kellermann, for their leadership and dedication to the project. The chairs, in turn, thank the committee members for their commitment and contri- butions of time and expertise to this report and to those that follow.

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Contents EXECUTIVE SUMMARY Myths and Realities, 2 Relating Health Insurance to Access to Health Services, 5 How Coverage Is Gained and Lost, 6 A Portrait of the Uninsured, 11 Analytic Plan for the Committee, 14 Summary, 15 WHY HEALTH INSURANCE MATTERS Objectives of Health Insurance Coverage, 20 Myths and Realities About Health Insurance, 21 The Committee's Analytic Strategy, 26 Insurance and Access to Health Care, 28 What Follows, 32 19 2 THE DYNAMICS OF HEALTH INSURANCE COVERAGE 35 No Guarantee of Coverage, 35 Opportunities for Obtaining Coverage, 37 How People Gain and Lose Coverage, 46 Constrained Coverage Options, 49 Insurance Trends, 53 Summary, 56 xv

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XVI 3 WHO GOES WITHOUT HEALTH INSURANCE? WHO IS MOST LIKELY TO BE UNINSURED? How Social and Economic Factors Affect Coverage, 60 How Coverage Varies Over a Person's Life, 70 Other Demographic Disparities in Coverage, 80 How Geographic Differences Affect Coverage, 90 What Influences an Uninsured Rate the Most?, 96 Summary, 98 4 ANALYTIC PLAN Future Committee Reports, 101 APPENDIXES A A Conceptual Framework for Evaluating the Consequences of Uninsurance: A Cascade of Effects B Measuring Insurance Coverage and Insurance Rates C Data Tables D Multivariate Analysis E Glossary F Biographical Sketches REFERENCES CONTENTS 59 101 109 113 119 135 143 149 157

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