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OCR for page 110
4
Principles to Guide the
Extension of Coverage
The Committee believes the United States should not be bound by the
limited successes and considerable difficulties encountered in past attempts to
significantly extend health insurance coverage. The problems caused by
uninsurance are too serious to be left unsolved. The overview of the Committee’s
previous reports and findings clearly shows that uninsured people have poorer
health and die prematurely, compared with their insured counterparts. Having an
uninsured family member can destabilize the whole family financially and threaten
its well-being. Communities and their health care providers are threatened, too,
when faced with large numbers of residents who do not have the financial means
to pay for the care they use or need but go without. Also, the economic costs to
society are large.
In Chapter 2 the Committee presents the key findings and evidence of its first
five reports. That and Chapter 3, with its historical review of efforts to extend
coverage and discussion of more recent federal and state efforts, provide the
foundation for the principles in Chapter 4. The earlier chapters describe and
analyze the evidence on uninsurance and previous attempts to reduce it. The
principles in this chapter rely on that evidence without repeating it here.
Clearly, many more than 43 million people experience periods without cov-
erage. There is constant movement into and out of insurance that results from the
current collection of insurance mechanisms and their lack of coordination. Any
solution that brings coverage to those without insurance cannot simply plug the
gaps in the current “non-system.” At a minimum, it must reform many aspects of
current health finance and will, inevitably, touch on aspects of health care delivery
as well. Optimally, reforms to increase coverage will improve both health insur-
110
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111
PRINCIPLES TO GUIDE THE EXTENSION OF COVERAGE
ance mechanisms and health care delivery. The first five reports of the Committee
point to the need for a coordinated system of coverage mechanisms.
In this chapter, the Committee prescribes its vision for reform and a set of
principles to guide efforts to expand coverage to those without health insurance
that are derived from its work in this and its previous reports. Each principle
relates to problems the Committee identified in the current non-system of financ-
ing care and outlines key aspects or criteria for our approach to health insurance in
the future. Taken together, the principles provide a standard against which options
to expand coverage should be measured.
The IOM standards require a conservative approach in assessing available
evidence and using it as a basis for policy recommendations. Because this study has
focused primarily on the effects of uninsurance, it does not have sufficient evi-
dence to address all aspects of extending coverage and does not attempt to set
specific criteria for all elements of financial access reform. For example, designing
effective cost containment mechanisms is critical. Controlling costs would benefit
efforts to expand coverage by making it more affordable. The Committee also
recognizes the need for reform of the health care delivery system, as discussed in
Chapter 1, but does not prescribe principles or criteria for all important changes.
The key goals of health care are to promote better health and well-being
among individuals and to reduce the burden of disease of the populace. Based on
the evidence reviewed and documented in previous reports, we posit a vision of
health insurance for the country that is essential for achieving these goals.
VISION STATEMENT
The Committee on the Consequences of Uninsurance envisions an
approach to health insurance coverage that will promote better
overall health for individuals, families, communities, and the nation
by providing financial access for everyone to necessary, appropriate,
and effective health services.
Although insurance coverage is critical, it is not the only element of any plan
to improve access to health care nationally. However, the independent and direct
effect of health insurance coverage on access to health services has been docu-
mented in the Committee’s previous reports. Insurance remains the key to open-
ing the door to needed services.
The Committee on the Consequences of Uninsurance has formulated five
principles to guide the creation of an insurance system that will help achieve its
vision. These principles are intended to:
• consolidate all the Committee’s evidence, findings, and conclusions into
clear, simple statements;
• provide useful guidelines for policy makers and the public as they assess
various proposals for extending health care coverage; and
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112 INSURING AMERICA’S HEALTH
• describe the characteristics of a better insurance system toward which we
should aim.
The principles are based primarily on the Committee’s first five reports; some
are supported by additional research presented in this report. The statement of
each principle below is followed by a brief description and rationale. The first
principle is the most important and basic. Each principle is a necessary component
for reform. The remaining principles are not ranked by priority. The Committee
recognizes that any particular strategy to achieve universal coverage will entail
choices to balance among these principles and choices to balance goals even
within a single principle. The principles are purposely presented at a general level
because the balancing of choices and the specific operational definitions of the
principles will be created through the political process.
PRINCIPLES
1. Health care coverage should be universal.
Coverage for individuals is important. The health, social, and economic costs
borne by the uninsured, others living in the same communities, and the nation as
a result of widespread uninsurance lead the Committee to conclude that everyone
should be covered by health insurance.
The Committee has documented the adverse impacts of being uninsured on
the health and economic well-being of uninsured persons and their family mem-
bers. Uninsured persons are less likely to get the timely and appropriate health care
that they need. Compared with insured persons, the uninsured are sicker and die
sooner.
The Committee finds that the adverse health and financial effects of
uninsurance on individuals and families can affect others in the communities in
which they live, and that the financial burden of uninsurance is spread broadly, if
unequally, across all American taxpayers. The quantifiable economic losses associ-
ated with being uninsured are substantial.
“Universal” means “everyone.” Everyone living in the United States should
have health insurance. The Committee’s analysis of the extensive body of litera-
ture concerning access to health services and health outcomes provides no evi-
dence to support the notion that coverage should be limited based on citizenship
or immigration status.
There are several reasons why it is advantageous to have universal coverage
include everyone in the community. Newcomers (immigrants) are substantially
more likely to be uninsured than are U.S.-born citizens (Hoffman and Wang,
2003). Because newcomer (immigrant) populations are often concentrated in
particular communities and geographic areas, their uninsured status can have a
more severe impact on health service providers there, particularly on emergency
departments, than might be expected from national averaged data (Associated
Press, 2001; Taylor, 2001; Gribbin, 2002; MGT of America, 2002). Also, com-
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PRINCIPLES TO GUIDE THE EXTENSION OF COVERAGE
munities with disproportionate levels of uninsurance have an added burden of
disease and disability because uninsured people are likely to have poorer access to
preventive care and worse health as a result. Vaccine-preventable and communi-
cable conditions are of particular concern because they may affect many others
regardless of insurance status if undetected and untreated (IOM, 2003a,c).
At the family level, U.S-born children of newcomer parents may be eligible
for coverage, but if their parents are ineligible, the children as well as the parents
are less likely to use health care (IOM, 2002b). At the individual level, many
newcomers are working, productive, taxpaying members of their communities. It
is only equitable that they also participate in the universal coverage strategy.
2. Health care coverage should be continuous.
There should be no breaks in insurance coverage or periods without coverage
because even healthy people can experience injuries or other unexpected health
events that necessitate the use of health services. In addition, continuity of cover-
age promotes continuity of care, which improves quality (Weinick et al., 2000;
Hargraves and Hadley, 2003). Having a regular provider of care, particularly for
primary care and care of chronic conditions, is a generally recognized predictor of
high-quality care and is also made more likely by continuous coverage. The
Committee’s first three reports describe how easy it is to lose insurance coverage,
as well as the frequency and negative effects of discontinuities in coverage for
individuals and families. About 80 million people were without health insurance
for at least a month during a recent two-year period (Short, 2001). Uninsured
spells can lead to poorer health, greater risk of premature death, and exposure to
significant financial risk.
Employees and their families risk discontinuities because of a lack of effective
portability of coverage when their job or work status or family relationships
change. Much discontinuity in public coverage results from changes in personal
circumstances as well as administrative difficulties related to enrollment and
reenrollment. Some State Children’s Health Insurance Program (SCHIP) require-
ments include having a prior period without coverage before becoming eligible to
enroll. To achieve universal coverage, strategies to increase outreach and simplify
enrollment and reenrollment will be necessary.
3. Health care coverage should be affordable to individuals and
families.
By “affordable,” the Committee means that no one should be expected to
make contributions to their health care coverage that are so costly that they cannot
pay for the other basic necessities of life or afford to access health services. Because
patient cost sharing at the point of service can deter use, no one should face a level
of cost sharing so high that it would interfere with obtaining timely, necessary
health services (Newhouse and The Insurance Experiment Group, 1993; IOM,
2002b). Criteria for affordability must be linked to income. For example, Con-
gress determined that families eligible for SCHIP should not have to pay more
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114 INSURING AMERICA’S HEALTH
than 5 percent of their income on medical costs, including premiums, copayments,
and deductibles (KCMU, 2002b).
The Committee finds that the main reason most people are uninsured is that
they perceive insurance to be unaffordable, regardless of whether the employer
makes a contribution or insurance is available through the individual (nongroup)
market. Uninsurance among families is strongly associated with relatively low
income. Lower income families do not have much leeway in their family budgets
to pay for insurance coverage and health services. Many experience hardships
covering their food and housing costs, and low-wage workers are less likely to be
offered health insurance on the job (IOM, 2001a, 2002b; Long, 2003). For ex-
ample, without an employer’s contribution, a family insurance policy comparable
to the average employment-based coverage would require an expenditure of
roughly 25 percent of pretax family income for a family at 200 percent of the
federal poverty level (approximately $36,800 annually for a family of four).
Although some individuals and families with low incomes manage to pur-
chase health insurance, the overwhelming majority would need a substantial em-
ployer contribution, government subsidy, or tax incentive to purchase private
insurance or would need access to a nearly free public program.
As a matter of equity as well as affordability, people who are at risk of using or
needing substantially more health care services than average should not have to
bear the full burden of an extremely high out-of-pocket premium to cover those
extra costs; the risks should be spread broadly. More than half the states have
recognized this issue of equity and affordability and created high-risk pools as an
alternative to community rating. The limited number of high-risk individuals in the
pools and the level of premiums offered them in the individual insurance market
indicate an affordability problem only partially ameliorated by the existing pools
and more than 20 states lack even that mechanism (U.S. General Accounting
Office, 1996; Achman and Chollet, 2001).
4. The health insurance strategy should be affordable and sustainable
for society.
There is no analytically derivable figure of what is affordable to society. While
people in Finland, for example, might be happy and healthy with total health
spending at 6.6 percent of gross domestic product, it does not mean that the 14
percent that the United States spends is too high or that more would be
unaffordable. Affordability will be determined through the political process and
economic decisions made by individuals, families, and employers, depending on
the coverage approach. The total costs of the benefit packages, subsidies, and
administrative structures needed to support the health insurance approach should
be affordable to society as a whole.
The sustainability of a given coverage strategy will depend, to a large extent,
on the inflation rates for health care and health insurance and the ability to keep
spending under control. During the past two years, high rates of increase in the
cost of health insurance have contributed to employers shifting costs to employees,
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PRINCIPLES TO GUIDE THE EXTENSION OF COVERAGE
employees dropping coverage that became too expensive, and states struggling to
maintain enrollment, service, and payment levels in the face of rapidly increasing
health budgets. A major reform to produce universal, continuous insurance cover-
age will need mechanisms to control inflation and utilization.
Sustainability also depends on a stable revenue source. The discussion of
various federal and state expansions of coverage in Chapter 3 highlights the
necessity of having sufficient and stable revenue to fund the expansion of coverage
that can withstand economic downswings. This issue is a serious problem cur-
rently in states such as Massachusetts, Tennessee, and Oregon, not just historically.
With increasing pressures on state budgets, many states are proposing, and some
are implementing cutbacks in eligibility and benefits. The revenue issue is beyond
this Committee’s charge and further discussion of it is limited.
The Committee has reported previously the range and substantial amount of
spending related to uninsurance, particularly by the public sector, and the dangers
posed to the health care system by instability in public and private funding streams.
Financing for the national health insurance strategy should be sustainable eco-
nomically and politically in order to avoid the risk of coverage gaps and cutbacks
in benefits.
Any new approach to health insurance should strive for cost effectiveness. To
promote affordability and sustainability, the benefit package should encourage the
use of cost-effective services and products through mechanisms such as variable
patient cost-sharing and provider payment levels. Services proven ineffective
should not be covered.
Because of the costliness of health care and because all members of society can
expect to benefit from health insurance coverage, all persons should contribute
affordable amounts through taxes, copayments, deductibles and premiums.
A new approach to health insurance should also strive for simplicity and
administrative efficiency. In its previous reports, the Committee has found that the
complexities of the current health insurance system make it difficult for people to
use the system appropriately and obtain needed care. Some aspects of the current
arrangements such as complex eligibility rules, underwriting, billing procedures,
and regulatory requirements impede efficient administration. A new, simplified
insurance strategy creates opportunities for efficiency and cost saving while main-
taining the necessary administrative structure and control.
5. Health insurance should enhance health and well-being by promot-
ing access to high-quality care that is effective, efficient, safe, timely,
patient-centered, and equitable.
The Committee endorses the recommendations of the Committee on Qual-
ity of Health Care in America that care and the health delivery system be designed
to enhance the six aims for care mentioned above: care that is high-quality,
effective, efficient, safe, timely, patient-centered, and equitable (Kohn et al., 1999;
IOM, 2001b; Corrigan et al., 2003). To the extent that care is delivered more
efficiently and effectively, the financing for it will become more affordable and
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116 INSURING AMERICA’S HEALTH
sustainable for society. Payers, insurers, and those covered all have an interest in
purchasing quality care, and the design of reforms in the insurance system should
consider the impact on safety and quality of care. To the extent that reform of the
insurance system affects health care delivery, it should promote those aims.
The best clinically relevant research evidence should play a role both in
defining the features of benefit packages and in the daily delivery of care. Al-
though definitive medical evidence and practice guidelines are not available for all
services generally covered by insurance, they should be used when available.
The Committee has found that benefit packages that include preventive and
screening services, outpatient prescription drugs, and specialty mental health treat-
ment in addition to outpatient medical and hospital care are more likely to
facilitate the receipt of appropriate care and better health than insurance that does
not include these features (IOM, 2002a). The elements of the benefit packages
should be updated as new clinical evidence becomes available.
Each of the five principles described represents an objective or goal for a more
rational and effective health insurance system. Maximizing each of the principles
concurrently may be difficult because of limited resources and political realities.
For example, creating coverage with an adequate benefit package that is readily
affordable to all individuals and families, yet affordable to society, will be difficult.
Also, increasing the effectiveness of care will not necessarily improve its efficiency
or make it more patient-centered. The degree to which the various goals are
achieved will depend largely on the values placed on them by the public and the
trade-offs made politically.
The Committee’s role is not to determine the particular balance of these
principles, endorse an existing proposal, or design a blueprint. The balance among
principles should be determined through the political process. We present these
principles to contribute to the public debate about insurance, enable informed
choices about policy alternatives, and promote major reform. We note that some
organizations concerned with uninsurance have developed principles for expand-
ing coverage, many of which are similar to those of this Committee. Other
organizations have gone beyond a statement of principles to design their own
proposals to expand coverage.1 The Committee recommends that the public and
policy makers use the Committee’s evidence-based principles to assess current
insurance arrangements, evaluate options to extend health coverage, and, most
importantly, overcome the present political stalemate to achieve coverage reform.
1The Healthcare Leadership Council, American Public Health Association, American College of
Physicians–American Society of Internal Medicine, Association of Academic Health Centers, AARP,
and Rekindling Reform Steering Group have each promulgated a set of principles to guide health
insurance reform policies. The American Medical Association, American Nurses Association, and
Service Employees International Union have each developed or endorsed specific proposals to achieve
health insurance reforms, and other organizations and stakeholder groups such as the American Hospi-
tal Association, Catholic Hospital Association, and U.S. Chamber of Commerce endorse general
strategies to extending health insurance coverage. See http://coveringtheuninsured.org/partners for
further information on the policy positions of 17 organizations that support coverage extension.
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PRINCIPLES TO GUIDE THE EXTENSION OF COVERAGE
The next chapter examines various prototypes of insurance systems that could
achieve the Committee’s vision of health insurance that will promote better
overall health for individuals, families, communities, and the nation by
providing financial access for everyone to necessary, appropriate, and
effective health services. It will assess each model against the principles pre-
sented in this chapter.
Representative terms from entire chapter:
insurance coverage
