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3
Eliminating Uninsurance:
Lessons from the Past and
Present
Despite nearly a century of efforts and incremental reforms to extend cover-
age, the nation’s multiple sources of coverage leave 15 percent of the total popu-
lation uninsured. This chapter develops the historical context of national reform
efforts to reduce or eliminate uninsurance in the United States. It then looks at
relatively recent federal initiatives to broaden coverage substantially and extension
of coverage by some states and counties that have taken leadership roles. Past
efforts offer useful lessons for reforming health care financing today.
Federal, state, and county reforms have not eliminated uninsurance, although
some initiatives have improved access to health services or resulted in better health
outcomes for populations who had lacked coverage. Some reforms have affected
the basic structure of health care finance, while others have had a more limited
focus, building on existing public programs or private insurance. The Committee’s
principles for assessing coverage proposals derive from the historical record as well
as from its examination of the consequences of uninsurance.
NATIONAL EFFORTS TO BROADEN COVERAGE,
1916–1984
The lack of universal health insurance in the United States is in part a legacy
of early twentieth-century precedents in the organization and financing of health
services in the United States. It also reflects the absence of political leadership
strong, broad, and sustained enough to forge a consensus in favor of universal
coverage, despite public support, in the face of opposition from overlapping yet at
times incompatible economic interests forged within the constraints of American
political institutions and processes (Oberlander, 2003). Our government’s federal
66
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LESSONS FROM THE PAST AND PRESENT
structure and the independence of the legislative and executive branches place a
relatively great burden on proponents of change.
Coverage reform first became a national issue in the early 1900s, when
relatively few people had health insurance and most health care was purchased out
of pocket or provided charitably. Over the next 70 years, a series of campaigns
attempted to bring about greater coverage nationally. Early campaigns to create
mandatory coverage were opposed by the medical profession, commercial insur-
ers, and the business community. From the 1930s through the 1970s, the House
Ways and Means Committee of the U.S. Congress determined the fate of most
federal legislation to extend coverage, and most proposed reforms were prevented
from coming before the full House for a vote.
In the context of the lack of federal legislation for more widespread public
coverage, consumer demand fueled the rapid growth of private-sector coverage,
starting in the mid-1930s. The nonprofit Blue Cross and Blue Shield plans, and
subsequent plans from commercial insurers, enrolled millions of subscribers and by
the early 1960s most Americans were insured through employment-based cover-
age. The enactment of the Medicare and Medicaid amendments to the Social
Security Act in 1965 filled some of the gaps left by the emerging employment-
based approach to financing care. Medicare extended coverage to most of the
population over age 65 as well as to smaller groups of eligible persons (the perma-
nently disabled). State implementation of the Medicaid program increased cover-
age significantly among categories of the low-income population. By the 1970s,
the growth in total health care spending facilitated by the creation of Medicare
made the issue of controlling health care spending and inflation central to universal
coverage reform proposals. The early 1980s marked a high point for coverage
levels nationally. Since that time, there has been a gradual increase in the number,
and in most years the proportion, of uninsured persons under age 65. See Box 3.1
for a timeline of these efforts.
The sections that follow briefly review this history in order to illustrate
important issues and basic tensions in the political sphere that have shaped more
recent reform efforts. It is organized roughly chronologically, with diversions from
the timeline to allow focus on specific topics.
Early Efforts: From Protecting the Income of Industrial
Workers to Social Insurance for Improving Access to Care
Social insurance programs in late nineteenth-century Europe (for example,
Germany, 1883) and Great Britain (1911) that included health insurance, and
experience with the limited prepaid medical services available to fraternal or
mutual benefit society members, spurred interest in universal coverage in the
United States (Numbers, 1978). Initial organized efforts to extend coverage broadly
occurred during the years around World War I (Starr, 1982). Early twentieth-
century America was in the throes of rapid industrial and urban growth, with a
booming population of low-income working families. With an eye toward allevi-
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68 INSURING AMERICA’S HEALTH
BOX 3.1
Landmarks in the History of Coverage
1916–1920 American Association for Labor Legislation campaigns for publicly
administered, private-sector sickness insurance to protect the lost
income of workers and their families
1932 Committee on the Costs of Medical Care final report calls for group
organization and payment of health services on voluntary basis
1935 Social Security Act
1939 First of series of Wagner-Murray-Dingell bills in U.S. Congress that
propose universal health insurance as social insurance
1942 War Labor Board ruling permits employers to exclude employment-
based coverage from taxable income
1945 President Truman’s “Fair Deal” proposal includes publicly financed
and administered universal coverage
1948 U.S. Supreme Court ruling (Inland Steel) permits collective bar-
gaining for employment-based coverage
1960 Social Security Act Amendments including Kerr-Mills program cre-
ating federal grants to the states to finance health services for poor
persons at least 65 years of age (seniors)
1965 Social Security Act Amendments that create Medicare and Medic-
aid, nearly universal publicly and privately financed coverage for
seniors and federally guaranteed eligibility for public coverage for
specific categories of the poor
1971–1974 President Nixon and U.S. Congress introduce and debate propos-
als for universal coverage through a mix of public and private sourc-
es, fail to reach a vote in Congress
ating the economic burden of illness, a relatively small group of elite reformers,
organized as the American Association for Labor Legislation (AALL), campaigned
for mandatory workplace-based “sickness insurance.” Sickness insurance, often
called health insurance after the English precedent, was modeled after recently
created state workmen’s compensation programs (Numbers, 1978).1 It targeted
1For example, former President Theodore Roosevelt made sickness insurance one of the planks in
his ultimately unsuccessful campaign against Woodrow Wilson in 1912 on the Progressive ticket
(Numbers, 1985).
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LESSONS FROM THE PAST AND PRESENT
1974 Employee Retirement Income Security Act, prohibiting state regu-
lation of self-insured employer health plans.
1981 President Reagan’s proposals to turn Medicaid into block grants to
the states, in the Omnibus Budget Reconciliation Act of 1981
1984–1990 Expansions of Medicaid to pregnant women, infants, and children
at higher income levels and delinking from eligibility for (state) in-
come support
1985 Consolidated Omnibus Budget Reconciliation Act of 1985, with pro-
vision to improve continuity of employment-based coverage.
1993–1994 President Clinton’s Health Security Act proposal for universal cov-
erage through publicly administered, publicly and privately
financed regional purchasing alliances created and debated, fails
to reach a vote in Congress
1996 Federal welfare reform delinks Medicaid from income support pro-
grams, bars legal immigrants from Medicaid eligibility for first five
years of residency
1996 Health Insurance Portabilitiy and Accountability Act, with provisions
to improve continuity of coverage
1997 State Children’s Health Insurance Program, extending public insur-
ance eligibility to children in families earning between 100 and 200
percent of federal poverty level, expansions to their parents
2002 Trade Act, with provision for health insurance premium tax credit
for groups of workers displaced by international commerce and
retirees
industrial workers and their families and included a cash benefit to replace lost
income, access to free health care, and a death benefit; premiums would be paid by
employers, workers, and the state (Starr, 1982; Hoffman, 2001). The plan was not
universal, for it excluded most African Americans and other ethnic minorities by
not including agricultural, domestic, and temporary workers. In addition, it re-
stricted eligibility to employed men and women earning less than $1,200 annually
(low income but not poor), assuming that the poor could rely on charity and that
the middle class could afford to purchase their own care (Hoffman, 2001).
Between 1916 and 1920, the AALL’s model sickness insurance bill was de-
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70 INSURING AMERICA’S HEALTH
bated in a number of state legislatures in more urban and industrial parts of the
United States, most notably California and New York, with support from many
governors and state-level fact-finding commissions (Numbers, 1978; Hoffman,
2001). Ultimately, these bills were defeated. Key opponents included:
• the American Medical Association (AMA), an early supporter that became
an outspoken opponent as rank-and-file members (county medical societies),
gaining experience with contract practice under the new workmen’s compensa-
tion programs, grew concerned that insurance would interfere with the practice of
medicine and threaten the economic viability of solo practice;
• employers who did not welcome broadened financial responsibility for the
health of their workforce and who predicted higher costs passed along to consum-
ers and the loss of jobs;
• commercial insurers who stood to lose their lucrative business selling death
benefits (industrial insurance) to low-income workers and who were excluded
from the proposed state-level administration of sickness insurance; and
• organized labor, principally Samuel Gompers of the American Federation
of Labor, to whom mandatory coverage was a threat to the organizing ability of
unions (Numbers, 1978; Starr, 1982; Hoffman, 2001).
Proposals for state sickness insurance programs were abandoned by
1920, felled by the lack of political leadership, the difficulties of enacting
mandatory policies on a state-by-state basis, and the AALL’s inability to
build coalitions and fashion workable political compromises with the
economic interests that opposed its model for expanding health insur-
ance (Numbers, 1985). In addition, a harmful legacy of this first political
battle was the framing of mandated coverage as counter to American
values, with coverage proposals attacked in newspapers and speeches as
fundamentally Germanic, and, after the close of World War One and the
onset of the Red Scare, as expressions of Bolshevism (Hoffman, 2001).
Starting in the 1920s, demand for health care services by the middle class, fed
by the improved effectiveness of hospital-based care and the increasing risk of
high-cost medical expenses, reinvigorated public debate about extending coverage
(Starr, 1982; Stevens, 1989). Unlike the sickness insurance proposals of the 1910s,
the goals of reform were to increase utilization, and health care spending, by
making care and coverage more affordable to all Americans universally, not only
low-income workers and their dependents (Starr, 1982; Derickson, 2002).
During the 1930s and into the 1940s, proposals to extend public coverage
significantly took the form of social insurance for all Americans, resembling the
system of federal pensions created by the Social Security Act of 1935. Proposed
reforms drew on the work of an independent group of scholars and physicians, the
Committee on the Costs of Medical Care, that advocated both group practice and
financing for care, to rationalize health services delivery and make health care
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LESSONS FROM THE PAST AND PRESENT
more affordable (Starr, 1982). Because much domestic policy making for the
nation now took place at the federal rather than the state level, health finance
reformers faced a number of new challenges, including the separation of powers
(so that Presidential support would not necessarily be matched by congressional
support); a lack of party discipline within the two houses of Congress; powerful
regional voting blocks and interest group lobbies; and the ideological constraints
of single-party reform efforts (Marmor, 1973; Maioni, 1998).
In the 1930s, organized labor supported a publicly mandated extension of
coverage, but the medical profession, insurance industry, and business interests
continued to resist such proposals. The AMA in particular was a strong political
presence in Washington, and its vigorous lobbying of Congress and the public in
favor of voluntary rather than mandatory coverage threatened the passage of New
Deal legislation, and the President’s bid for reelection. In response, President
Franklin Roosevelt’s Administration cut a provision for health insurance from
what became the Social Security Act of 1935 (Marmor, 1973; Starr, 1982; Maioni,
1998). In an effort to revive universal coverage proposals, which many perceived
as the “missing piece” of the New Deal, in 1939 reform-minded members of
Congress began introducing universal coverage bills each year (labeled Wagner-
Murray-Dingell bills, after their key sponsors) that framed coverage as a means to
lower financial barriers, made eligibility universal (not only for persons in the
Social Security system), and included grants-in-aid to the states to support indigent
care (Maioni, 1998). None of these bills was reported out of the Ways and Means
Committee, undone by the lack of leadership by President Roosevelt and the slim
voting majority of the Democrats in Congress that was insufficient to pass contro-
versial reform (Marmor, 1973; Maioni, 1998).
Universal coverage bills stalled in Congress, but consumer demand for health
insurance grew. While commercial insurers were slow to enter the market for
group policies organized through the workplace, nonprofit and independent orga-
nizations created prepayment plans for hospital services, indemnity and service
benefit plans for physician care, and sites for the direct delivery of services that
gave fundamental shape to the organization and financing of health services in
subsequent decades. The locally organized and directed Blue Cross hospitalization
plans and Blue Shield physician plans expanded rapidly from their origins in the
early 1930s to become the single largest source of coverage by the 1950s
(Cunningham and Cunningham, 1997). Community organizations such as Group
Health Cooperative of Puget Sound, consumer cooperatives and private clinics,
and health plans organized around industries, such as Kaiser Permanente, extended
both coverage and services (Somers and Somers, 1961; Starr, 1982). Enrollment of
workers and their dependents in private coverage soared: between 1940 and 1960,
the proportion of the general population with private coverage grew from 9.1
percent (about 12 million people) to 67.8 percent (about 122 million people)
(Etheredge, 1990; Bovbjerg et al., 1993). Offering health insurance as a benefit
was attractive to employers, given the exemption from federal taxes of the em-
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72 INSURING AMERICA’S HEALTH
ployers’ contributions to health insurance premiums (codified in the Internal
Review Code of 1954) (Starr, 1982).2
Although private-sector coverage grew quickly, there was continued public
and legislative interest in universal health insurance. After World War II, the
federal government’s role in many aspects of health policy expanded, for example,
in the funding of biomedical research and hospital construction, but congressional
resistance, bolstered by the lobbying of reform opponents, blocked public man-
dates for coverage (Marmor, 1973; Fox, 1986). The first president to champion
universal coverage, Harry Truman revisited this issue in the late 1940s, fighting a
contentious political battle against the AMA, commercial insurers, and the busi-
ness community in a failed bid to convince the 80th and 81st Congresses to enact
Wagner-Murray-Dingell legislation (Starr, 1982).3 President Truman added the
key ingredient of political leadership but lacked sufficient votes in Congress, facing
a hostile reception in Congress from Southern Democrats committed to reversing
New Deal policies and opposed to his Administration’s civil rights policies (Poen,
1979; Maioni, 1998). The only public coverage to be expanded would be federal
grants-in-aid to the states to support indigent care, in the 1950 Amendments to
the Social Security Act (Stevens, 1989).
In the 1950s enrollment in commercial policies outgrew that of nonprofits
(Somers and Somers, 1961; Starr, 1982; Cunningham and Cunningham 1997).
One advantage that commercial insurers could offer purchasers of group policies
was a less expensive alternative to nonprofit “community rating” (where actuarial
risk was spread broadly through uniform premiums) in the form of “experience-
rating,” or charging premiums according to the claims experience of the employer’s
workforce. Experience rating made policies less expensive for healthier employee
groups and more expensive or unavailable for individuals, particularly ill or dis-
abled persons, who tried to purchase coverage outside the workplace (Starr, 1982).
The growing centrality of health insurance revenue to the fiscal health of the
health care system created interest on the part of providers (physicians, hospitals)
in seeing greater numbers of the general population covered by insurance, albeit
on a voluntary basis (IOM, 2003a). For persons without coverage, the price of
being uninsured was growing, as the increasingly widespread coverage fueled
higher costs for health care and doubled hospital prices during the 1950s (Starr,
1982).
Following the defeat of President Truman’s campaign for universal coverage
2In 1942, a War Labor Board ruling made health coverage an attractive fringe benefit for employ-
ers to offer workers, whose salaries were restricted due to wartime wage controls; between 1942 and
1945, there was more than a fourfold increase in group hospitalization enrollment (Starr, 1982). A
1948 U.S. Supreme Court decision allowed unions to collectively bargain for health insurance, and
enrollment jumped (Starr, 1982; Gabel, 1999).
3The Truman Administration’s proposal included medical and hospital benefits and federal grants-
in-aid to the states to finance premiums for the poor, with national administration and financing
through a 3 percent payroll tax split between firms and workers (Marmor, 1973).
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LESSONS FROM THE PAST AND PRESENT
in the late 1940s, proposals to extend health insurance by means of public policies
focused on incremental change. In 1951, the handful of public officials who had
worked for universal coverage shifted tactics, proposing a new 60-day hospitaliza-
tion benefit for Social Security beneficiaries. This benefit would be funded off-
budget, using Social Security trust dollars to lessen the economic burden of health
services already used by the over-65 population (rather than to increase access to
care) who were less likely to carry private insurance (Maioni, 1998). Their pro-
posal aided the perception that the middle class (i.e., those who had paid Social
Security taxes) had earned such coverage. They sidestepped AMA criticism by not
including physician services (Marmor, 1973).4 The proposed reform brought out
traditional allies and opponents of mandatory coverage extensions, pitting the
AMA against organized labor (the AFL-CIO) (Starr, 1982). Annual hearings on
hospitalization proposals failed to advance reform, although the 1960 Kerr-Mills
Act amending Social Security did acknowledge the interest in financing care for
low-income seniors, increasing grants-in-aid to the states that raised sufficient
matching funds (Marmor, 1973).
An Incremental Compromise for Universal Coverage:
Medicare and Medicaid
In the late 1950s, the level of health insurance coverage was at an all-time
high, although only about 8 percent of the population had coverage that could be
called comprehensive (i.e., insurance that covered hospital stays and physician
services) (Somers and Somers, 1961). Employment-based coverage was becoming
the norm, with gaps of uninsured populations growing among those who did not
or could not receive an employer’s offer of group coverage.
A crescendo of political and legislative activity on hospital insurance in the
early 1960s led to the first significant extension of publicly mandated coverage
(Medicare and Medicaid) after the 1964 elections returned President Lyndon B.
Johnson to the White House and brought large Democratic majorities favoring
passage to Congress. In the years immediately before, President John F. Kennedy
had campaigned for a Social Security hospitalization benefit, a scaled-down ap-
proach compared with President Truman’s universal coverage proposals.
Despite annual hearings, the garnering of public support by the Administra-
tion, and the strategic building of votes on the Hill, House Ways and Means Chair
Wilbur Mills released a coverage bill only after legislative developments in 1964
and the elections threatened his continued leadership on health insurance (Marmor,
1973; Maioni, 1998). When the 89th Congress convened in 1965, Medicare was
4Proposals tied to the Social Security system were not for universal coverage; in 1952, only 7
million of the roughly 12.5 million persons over age 65 would have been covered by the proposed
reform (Marmor, 1973).
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74 INSURING AMERICA’S HEALTH
at the top of the agenda and was signed into law later that year, together with
Medicaid, as amendments to the Social Security Act (Fox, 1986; Hacker, 1997).
Medicare and Medicaid passed because of the unique legislative alignments of
1965 and also because of Chairman Mills’ leadership in crafting a political com-
promise acceptable to interest groups, especially the AMA, which continued to
lobby against the Administration’s plans (Marmor, 1973; Maioni, 1998). He de-
scribed the amendments as a “three-layer cake” with something for everyone:
• Medicare—consisting of Part A, hospitalization, for which there is auto-
matic and permanent enrollment and financing through Social Security, and Part
B, coverage for physician visits, with voluntary one-time enrollment and a monthly
premium payment—provided nearly universal coverage for persons ages 65 and
older.5 Part A achieved the goal of social insurance advocates and the Johnson
Administration, while Part B accommodated the AMA’s objections to a manda-
tory program.
• Medicaid, the third layer of the cake, covers certain categories of low-
income persons and makes existing grants-in-aid to state programs more uniform
in terms of eligibility and benefits (Marmor, 1973).6 Medicaid addressed the
interest of the hospital industry in alleviating the burden of uncompensated care.
To win support for passage from provider groups, the new law essentially adopted
the reimbursement approaches of Blue Shield (for physicians) and Blue Cross (for
hospitals), including few limits on reimbursement for physicians, and added favor-
able provisions to pay hospitals for capital depreciation. However, these two
aspects of the 1965 statute laid the groundwork for significant growth in health
care inflation and spending (Starr, 1982).7
The Medicare and Medicaid Amendments represented a limited extension of
health insurance coverage. Medicare also augured for improved access to care for
African Americans, as certification for a hospital to participate in the program was
conditioned on its desegregated status (Reynolds, 1997). While social insurance
advocates saw the amendments as an opening wedge for future growth in coverage
levels, more pragmatic observers interpreted their design as a way to fend off
5Amendments have added Medicare coverage for persons certified to be permanently and totally
disabled and persons with end-stage renal disease (IOM, 2001a).
6Eligibility to enroll in Medicaid involves fulfilling requirements related to income and assets
(making it a so-called means-tested program) and being a member of a specific group or category that
is eligible for benefits, for example, a minor child. Those who meet economic and categorical criteria
must also meet immigration status and state residency requirements. Eligibility standards vary by state
and have changed from year to year, with general oversight provided by the federal government
(IOM, 2001a).
7The Hill Burton Act of 1946 substantially expanded hospital capacity across the nation in the years
before implementation of Medicare, contributing to the availability and utilization of health services
nationally.
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LESSONS FROM THE PAST AND PRESENT
further broadening of the public mandate. For example, financing Medicare phy-
sician services with general tax revenues and beneficiary contributions, and using
Medicaid to fill coverage gaps for persons under age 65, extended coverage while
reinforcing existing approaches (i.e., voluntary coverage for the services most
often used, and means-testing for benefits for the poor) (Marmor, 1973).
Implementation of Medicare and Medicaid introduced tens of millions of
newly insured persons, and billions of new public dollars, into the health care
system. By 1970, 20.5 million people were enrolled in Medicare and 18 million
people in Medicaid (Bovbjerg et al., 1993). Between 1965 and 1975, annual
federal spending on health care jumped from less than $10 billion to more than
$40 billion (Hacker, 1997). There was a dramatic increase in utilization; within a
year of implementation, 20 percent of all persons 65 years and older had used
Medicare for hospital services and 12 million had used Part B coverage for physi-
cian services (Marmor, 1973). Nevertheless, gaps in coverage and financial protec-
tion remained. Medicaid covered only an estimated one-third of those considered
poor, and Medicare reimbursed less than half of seniors’ spending on health and
long-term care services (Starr, 1982).
Paying for Reform: Cost Containment Joins Access as a Focus
for Reform in the Years Since 1965
With federal taxes supporting coverage for a large segment of the population,
and with the country in an economic recession, the rapidly increasing costs of
health care to society overall and interest in improving the efficiency (including
financing) of the health care system motivated reform (Starr, 1982; Lewis, 1983;
Steinmo and Watts, 1995; Hacker, 1997). Public officials, insurers, and employers
were united in the widely shared belief that a poorly organized and inefficient
health care system fueled health care inflation and that universally mandated
coverage could bring cost savings (Starr, 1982).8 A combination of factors defeated
efforts to extend coverage further. Some were unique to the political circum-
stances of the day (i.e., the impeachment proceedings against President Nixon and
Wilbur Mills’ fall from power in 1974). Others, such as the inability to fashion a
workable consensus on a congressional bill and opposition from commercial insur-
ers and employers, were familiar from earlier efforts to achieve broad-based re-
forms. As analyst Stuart Altman has observed of the era, which leads up to the
present, many policy actors who previously opposed reform altogether have joined
the call for change, but they have often been unwilling to compromise their own
vision of reform and the absence of change has been the second-best or fallback
option (Kahn and Pollack, 2001).
During the early 1970s, members of Congress and the Nixon Administration
8Such interest in improving the design and efficiency of the health care system was reflected in the
Health Maintenance Organization Act of 1973, for example.
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76 INSURING AMERICA’S HEALTH
generated a number of bills to extend coverage and constrain costs, either by filling
gaps in the existing mix of public and private coverage (the Nixon Administration’s
proposed employer mandate funded by a payroll tax, paired with expanded public
coverage and regulation of payment rates) or by replacing privately purchased
policies with a federally administered system under a national budget (e.g., Senator
Edward Kennedy’s Health Security Act of 1970) (Starr, 1982; Etheredge, 1990;
Hacker, 1997; Maioni, 1998). Despite the resistance of providers, employers
(especially small businesses), insurers, and the states to the regulatory aspects of
proposed reform, passage of a universal coverage bill came close in 1974 (Starr,
1982; Etheredge, 1990; Steinmo and Watts, 1995; Hacker, 1997). President
Nixon’s February message to Congress laid out a Comprehensive Health Insur-
ance Plan that combined Medicare, Medicaid, and an employer mandate (Davis,
2001). The lack of political leadership to forge a consensus on one of the many
proposed plans in Congress by the summer of 1974, however, combined with the
turmoil of President Nixon’s August resignation and the decision of organized
labor to withhold its support from reform until after the November elections,
resulted in the disintegration of what bipartisan agreement existed (Starr, 1982;
Maioni, 1998). After 1974, ongoing economic recession and price inflation, par-
ticularly in health care, sank any further serious debate about reforming health care
financing to extend coverage. Cost controls became the key emphasis during the
Ford and Carter Administrations.9
By the late 1970s, health insurance coverage reached its highest level yet; in
1980, roughly 15 percent of the general population under age 65 was uninsured,
about 29.6 million people (Bovbjerg et al., 1993). From 1970 to 1980, aggregate
spending on health care had continued to grow, from $69 billion to $230 billion
and from 7.2 percent to 9.4 percent of the gross domestic product (Starr, 1982).
For employers, health insurance premiums were becoming more expensive, lead-
ing them to increase deductibles, decrease dependent coverage, and, as the 1980s
wore on, turn to commercial managed care contracting to restrain health care cost
increases (Hacker, 1997). In an effort to restrain the continued growth of health
care spending under Medicare, federal officials replaced fee-for-service reimburse-
ment with capitation. During the 1980s, there would be incremental public
expansions, particularly through the Medicaid program, which will be discussed
later in this chapter. Absent major reforms of health care financing to extend
coverage in the future, the stage was set for the major increases in the number of
uninsured seen during the 1980s (Lewis, 1983; Hacker, 1997).
Interest in comprehensive national reform of health care financing surfaced
again in the early 1990s. Economic recession and continuing health care inflation
renewed interest among middle-class voters (Hacker, 1997). During President
9The Carter Administration did develop a universal coverage proposal, never introduced in Con-
gress, called the National Health Plan, which divided coverage between private sources (employer
mandate) and public sources (a federal program to replace Medicare and Medicaid and expand eligi-
bility to all lower income persons) (Congressional Quarterly, 1977; Davis, 2001).
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LESSONS FROM THE PAST AND PRESENT
In the first two years of the waiver, there was a 14 percentage point increase
in public coverage and greater than a 7 percentage point drop in the uninsured
rate for low-income children; for low-income adults, there was an 8 percentage
point increase in public coverage and an 11 percentage point drop in the unin-
sured rate (Bovbjerg and Ullman, 2002). Three years into the waiver, enrollment
in public coverage had grown from about 700,000 to 926,000 (Bovbjerg and
Ullman, 2002).
MassHealth consists of two programs that offer eligibility to the disabled and
Medicare-eligible persons and four programs that extend coverage to the
noninstitutionalized, nondisabled population (Bovbjerg and Ullman, 2002). These
programs extend eligibility to
• pregnant women and infants in families earning up to twice the poverty
level;
• children up to 150 percent of FPL, and parents up to 133 percent of FPL
(Standard);
• unemployed low-income adults and their families earning up to four times
the poverty level (Basic);
• children in families earning between 150 and 200 percent of poverty,
adults earning up to 200 percent of poverty through an employer premium
subsidy, and persons living with HIV (but not with active AIDS) earning less than
200 percent of poverty (Family Assistance); and
• emergency services (through MassHealth Limited) for low-income per-
sons ineligible for other programs (e.g., undocumented immigrants) (Rosenbaum
et al., 2002).
MassHealth is funded by state revenues and from federal matching funds from
both Medicaid and SCHIP.
Massachusetts’ uninsured rate of 11.3 percent (2002) is lower than the na-
tional average for the population under age 65. Nonetheless, there are approxi-
mately 637,000 uninsured under age 65 in the state (U.S. Census Bureau, 2003d).
High levels of both employment-based and public coverage contribute to the
relatively low uninsured rate (Bovbjerg and Ullman, 2002). Six percent of the
state’s children under age 18 are uninsured (approximately 88,000 uninsured
children), and the rest of the uninsured are adults under age 65 (U.S. Census
Bureau, 2003d).
Minnesota
A total of about 4.9 million people live in Minnesota, and 22 percent of them
live in households that earn less than 200 percent of FPL (KCMU, 2003f). Min-
nesota has extended public coverage gradually, through a step-by-step or phased-
in incremental approach of filling in private coverage gaps using the availability of
federal matching funds through Medicaid to maximize the eligibility levels it can
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100 INSURING AMERICA’S HEALTH
offer state residents (Chollet and Achman, 2003). In 1994, Minnesota inaugurated
its own public coverage program, MinnesotaCare, intended to achieve universal
coverage in ten years by expanding eligibility to all members of low- and moder-
ate-income families ineligible for Medicaid (Gold et al., 2001). A year later, the
state folded MinnesotaCare into a Section 1115 Medicaid waiver, together with
the state’s Medicaid program and other state-supported public coverage (Gold et
al., 2001).
Minnesota’s public coverage programs extend eligibility through a small group
purchasing pool for county, town, and school district employees and their families;
to childless adults earning less than 70 percent of FPL who are ineligible for
Medicaid (e.g., noncitizen immigrants, persons in mental institutions) (General
Assistance Medical Care); pregnant women and infants under two years at nearly
three times the poverty level, families with children earning less than 275 percent
of FPL, and childless adults earning less than 175 percent of FPL (Medical Assis-
tance, MinnesotaCare); and a high-risk pool (Chollet and Achman, 2003). Be-
cause the state’s public programs made children eligible well above 200 percent of
FPL before the enactment of SCHIP and SCHIP funds can be used only to extend
coverage to newly eligible populations, Minnesota’s SCHIP program covers only
a few hundred children (Chollet and Achman, 2003). Public coverage is financed
with a mix of federal, state, county, and private dollars, including enrollee premi-
ums and a tax on health care providers; about half of the state’s spending is
matched by federal dollars, for the most part Medicaid (Chollet and Achman,
2003). The state is at a relative disadvantage financially compared with other states
because it cannot reap the full benefit of new federal funds for SCHIP that are
matched at a higher rate than is Medicaid spending.
Changes in enrollment have reflected welfare reform and growth in earnings
among the poor, for example, a dip in public programs (Medical Assistance and
General Assistance Medical Care) after the delinking of welfare from Medicaid
(Chollet and Achman, 2003). Over the decade from 1991 to 2001, both of these
programs have declined somewhat in enrollment overall (although the numbers of
enrollees outside of the welfare system grew), while there has been steady growth
for MinnesotaCare (Chollet and Achman, 2003).
The state’s low uninsured rate of 8.8 percent (2002) for the population under
age 65 reflects high levels of both employment-based and public coverage (U.S.
Census Bureau, 2003d). In 2000, public programs enrolled nearly all uninsured
low-income persons under age 65 in the state (Chollet and Achman, 2003). Yet
there are still an estimated 397,000 uninsured persons under age 65 (U.S. Census
Bureau, 2003d). Most (325,000) are adults. About two-thirds of this uninsured
population (including 91 percent of uninsured children) are believed to be eligible
for but not enrolled in some type of coverage. If all eligible persons were enrolled,
the state’s uninsured rate, it is estimated, would stand at 2.7 percent (Chollet and
Achman, 2003).
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LESSONS FROM THE PAST AND PRESENT
Oregon
There are approximately 3.4 million persons of all ages in Oregon, one-third
of whom live in households earning less than twice the poverty line (KCMU,
2003g). Since the 1980s, health reformers have attempted to implement universal
coverage in the state in coordinated phases. The most widely known of these
reforms is the Oregon Health Plan, enacted in 1994, which expanded Medicaid
(through a Section 1115 Medicaid waiver), imposed an employer mandate (never
implemented because the state did not receive the exemption it sought from
ERISA), provided a public subsidy for workers to purchase employment-based
coverage, and created a state high-risk pool (Gold et al., 2001). The Medicaid
expansion received national attention for its innovative benefits package (initially
intended to be applicable to the employer mandate and other parts of the Oregon
Health Plan), which ranked conditions by priority for coverage, given the budget-
ary constraints imposed by the Medicaid waiver obtained to implement the ex-
pansion (Conviser, n.d.; Skeels, 1994; Jacobs et al., 1999). Conditions for which
treatment would be covered under the expansion have been ranked in order of
priority (reflecting cost effectiveness, the number of people potentially affected,
and other factors) and funding decisions made on the basis of the prioritized list. A
series of working groups and meetings across the state engaged, and continue to
engage in, public and legislative discussion about the scope of health insurance
benefits.
Currently, the Oregon Health Plan extends Medicaid eligibility to pregnant
women and children under age 12 with incomes up to 170 percent of FPL and
other residents earning up to the poverty line (Gold et al., 2001). Through the
Family Health Insurance Assistance Program, subsidized coverage is available for
persons ineligible for Medicaid who earn up to 170 percent of FPL (Gold et al.,
2001).
The Health Plan is financed by cost savings achieved through mandatory
managed care participation by enrollees and state revenues including income taxes
and a sales tax on cigarettes, a funding base vulnerable to change with the changing
economic fortunes of the state. As a result, enrollment barriers have been raised to
slow growth of the public expansion, through income and assets tests and premi-
ums (Gold et al., 2001).
In 1993, before the Oregon Health Plan was implemented, the state’s unin-
sured rate was 14.7 percent, or about 453,000 persons under age 65 (Gold et al.,
2001). In the first year, there was an unanticipated groundswell of participation,
with approximately 100,000 persons newly enrolled (the initial goal was to extend
coverage to an additional 130,000 persons), of whom roughly 75,000 were new to
public coverage (Leichter, 1999; Gold et al., 2001). Since the first year, growth in
public coverage has been more modest, covering in total an estimated additional
130,000 low-income persons who would otherwise be uninsured (Leichter, 1999).
Four years into the Health Plan, roughly two-thirds of the 1993 low-income
uninsured population was enrolled (Gold et al., 2001).
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102 INSURING AMERICA’S HEALTH
Current coverage gaps include uninsured adults earning more than 100 per-
cent of FPL, including those with incomes below 170 percent of FPL who, while
eligible for the public subsidy, either may not be able to enroll because of fiscal
limits on the coverage programs or may be unable to find affordable coverage
(Gold et al., 2001). The state’s uninsured rate of 16.5 percent (2002) for the
population under age 65 is barely lower than the national average, and an esti-
mated 511,000 persons under age 65 lack coverage (U.S. Census Bureau, 2003d).
More than eleven percent of the state’s children under age 18 are uninsured
(roughly 95,000 uninsured children) (U.S. Census Bureau, 2003d).
Tennessee
Tennessee is home to about 5.6 million people of all ages, nearly 40 percent
of whom live in households earning less than twice the poverty level (KCMU,
2003h). Although the state’s insurance expansion was not expected to bring about
universal coverage, it did broaden public coverage dramatically and significantly in
1994, through reform of its Medicaid program (Gold et al., 2001). A few years
earlier, Congress had restricted the use of provider taxes to raise state matching
funds for Medicaid, throwing Tennessee’s publicly financed health care into fiscal
crisis. State officials responded by obtaining a Section 1115 waiver that allowed
the state to extend public coverage to greater numbers of uninsured persons and
recapture federal Medicaid dollars that would no longer be available through the
DSH program. The waiver created a new program, TennCare, that implemented
mandatory managed care for all enrollees and doubled the number of enrollees
within its first year.
TennCare extends eligibility for coverage to 400 percent of FPL. However,
since January 1995, enrollment has been capped at 1.3 million persons because of
limited public dollars to support further enrollment. Although TennCare is funded
by federal, state, and local funds, including Medicaid DSH payments to hospitals
and annual insurer assessments, support has been insufficient to cover all who are
eligible to enroll and has also constrained provider reimbursements. One study
estimates that, during TennCare’s first five years, the federal and state governments
spent about $700 million less than would have been predicted for the Medicaid
program without the waiver. At the same time, TennCare’s expansion of eligibil-
ity cost approximately $3.8 billion more (net new costs of $3.1 billion) from all
payers than would have been predicted when anticipated changes in charity care,
patients’ cost sharing, and local government spending were considered (Conover
and Davies, 2000).
At present, no new eligible persons may enroll unless they are members of
groups required to be covered by Medicaid, dislocated workers, children in fami-
lies earning less than 200 percent of FPL, and children in families earning between
twice and four times the poverty limit who do not have access to employment-
based coverage (Conover and Davies, 2000; Gold et al., 2001). In the year before
TennCare (1993), Tennessee’s uninsured rate was 13.2 percent (about 673,000
persons under age 65) (Gold et al., 2001). In the first year after TennCare began,
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LESSONS FROM THE PAST AND PRESENT
the state’s uninsured rate shrank by one-third to one-half, putting the state well
below the national average uninsured rate. Four years into the program, nearly
400,000 persons have left the ranks of the uninsured and enrolled (Gold et al.,
2001).
Currently about 12.0 percent (606,000 persons) of the state’s residents under
age 65 are uninsured (2002) (U.S. Census Bureau, 2003d). Most are adults, al-
though nearly one in six are children under age 18 (U.S. Census Bureau, 2003d).
LOCAL INITIATIVES TO EXTEND COVERAGE
In many states across the country, counties are the providers of last resort for
the underserved and uninsured (IOM, 2003a). Counties have responded to this
charge in a variety of ways. The three counties reviewed in this section are among
the few jurisdictions that have programs devoted explicitly to increasing the level
of insurance coverage significantly and reducing uninsurance. Each takes a differ-
ent approach, tailored to the characteristics of the local population, the resources
available to deliver and pay for care that would otherwise go uncompensated or
not be received at all, and local leadership. At each site, state or local conversion
foundations, created as part of changes in the ownership status of health plans or
hospitals, have contributed financing for coverage initiatives. From the following
discussion of local extensions, the Committee draws the following observation.
Finding: Extensions of public or private coverage at the county level
have focused on increasing coverage among targeted populations
rather than the entire uninsured population locally. Despite the
potential of local programs to address targeted gaps, the lack of a
reliable funding source limits their scope and effectiveness.
San Diego, CA
In 2001, there were nearly 365,000 uninsured children and adults under age
65 in San Diego County, or about 15.1 percent of the county’s 2.4 million
residents (Brown et al., 2002).23 There is a sizable coverage gap among low-
income workers. In 1997, two local organizations—the Sharp Health Plan (a
nonprofit insurer) and the Alliance Healthcare Foundation (a conversion founda-
tion)—created a small-scale demonstration program to reduce uninsured rates
23This is a point-in-time estimate (e.g., the survey respondent reported his or her coverage status at
the time of participation in the survey). Analysts evaluating the county’s uninsured problem devel-
oped a much higher estimate of the number of uninsured in the county, 537,000 persons, based on a
three-year moving average of national Census data (the March Current Population Survey 1998–
2000) that estimates uninsured status over a one-year period of time (the calendar year preceding the
year of the survey) rather than a point-in-time estimate (Kronick, 2002). This higher estimate of the
number of uninsured persons yields a higher county uninsured rate of 21.7 percent.
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104 INSURING AMERICA’S HEALTH
among low-income workers by offering employer premium assistance to small
firms that do not offer employment-based coverage (Silow-Carroll et al., 2001).
The program, abbreviated FOCUS (for Financially Obtainable Coverage for Un-
insured San Diegans), targeted firms with 50 or fewer workers and formally began
in April 1999.
Firms are eligible to participate if they have not offered coverage in the
previous year, and they are given a two-year commitment of support (Silow-
Carroll et al., 2000). Employees may enroll if they work full-time, earn up to 300
percent of FPL, and have been uninsured for the past year, with the requirement
that all dependents be enrolled as well; however, dependents may also be eligible
for public coverage (Silow-Carroll et al., 2000). Both employers and employees
contribute to the premium, which is subsidized by private dollars from Sharp
Health and two foundations (the California Endowment and the California Health
Care Foundation) established when Blue Cross of California converted to for-
profit ownership status (personal communication, Jeffrey Lazenby, Sharp Health
Care, April 29, 2003). Providers are paid on a fee-for-service basis, and the benefit
package is comparable to that of other local commercial benefits, with copayments
but no deductibles (Silow-Carroll et al., 2001; personal communication, Jeffrey
Lazenby, Sharp Health Care, April 29, 2003).
Although outreach has been an important part of FOCUS and the business
community has offered much interest and support, enrollment has been limited by
the availability of funding. To date, FOCUS has obtained roughly $3 million in
private support (personal communication, Jeffrey Lazenby, Sharp Health Care,
April 29, 2003). The target population initially identified was the approximately
49,000 adult workers employed by firms that did not offer coverage and the initial
goal of FOCUS was to enroll 1,000 workers. As of mid-2000, nearly 2,000
workers and dependents were estimated to be enrolled, representing 232 busi-
nesses; participating employers are more likely than average to have uninsured
owners who are also more likely to be foreign born and to have a very low-waged
workforce (Kronick, 2002). An estimated 55,000 to 80,000 uninsured workers
and dependents would be eligible to enroll if the program were expanded (per-
sonal communication, Jeffrey Lazenby, Sharp Health Care, April 29, 2003). At
present, enrollment is closed to new firms but open to new employees and their
dependents that join firms already participating in FOCUS.
Alameda County, CA
About 1.3 million people live in Alameda County, situated in the Bay Area
and including the cities of Oakland, Berkeley, and Hayward. The county has an
uninsured rate of about 8.4 percent, or roughly 109,000 uninsured under age 65
(Brown et al., 2002).24 More than half of the uninsured adults are in the workforce,
24In 2000, the county supported its own survey of sources of coverage status over a 3-month
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LESSONS FROM THE PAST AND PRESENT
with 28 percent earning less than the poverty level and another 37 percent earning
between 100 and 250 percent of FPL (Ponce et al., 2001). In 1996, the county
health department began a collaboration with local providers, screening low-
income people for Medi-Cal (the state’s Medicaid program) for enrollment in a
managed care plan (personal communication, Nina Maruyama, Alameda Alliance,
May 29, 2003). The program, known as the Alameda Alliance for Health, has
evolved into a private, nonprofit managed care health plan that receives a core of
public funding and builds programming around its private-sector and foundation
fundraising. Its goal has been to provide or coordinate seamless, continuous cov-
erage for all members of families earning up to 300 percent of FPL who are county
residents, considered as a unit rather than as individually eligible, regardless of
eligibility for other public programs or immigration status (Ibarra, 2002). The
Alliance’s strategy has been to gather stakeholders and to participate in coalitions
devoted to improving access to care.
Alliance coverage programs emphasize primary and preventive services while
offering a comprehensive benefit package. Care is provided by a network of
providers. Enrollees pay part of their premiums, with the Alliance supporting
premiums that are not covered through public programs such as Medi-Cal or
SCHIP. Copayments are tied to the type of service, with none for primary and
preventive services to encourage utilization and a copay for emergency depart-
ment visits to discourage nonurgent use. In addition, the Alliance takes a culturally
sensitive approach to outreach among the county’s diverse population, translating
materials into a number of languages and working with community-based groups.
More than half of the enrollees in its Family Care program are Spanish speaking
and 19 percent speak Cantonese.
The Alliance offers subsidized coverage to all members of families earning no
more than 300 percent of FPL (Medi-Cal, an SCHIP program called Healthy
Families, and Family Care) and unsubsidized coverage (through the First Care
program) for those with higher incomes (Ibarra, 2002). For Family Care, which
has nearly 5,200 enrollees, family members may qualify under different programs,
for example, Family Care program eligibility is extended to family members
(parents, siblings) of those who qualify for Medi-Cal or Healthy Families. As of
spring 2002, approximately 81,000 persons were enrolled through the Alliance,
most of whom (68,000) received coverage through Medi-Cal. In addition, the
Alliance Group Care program begun in 2002 offers subsidized coverage to full-
time home supportive services workers (about half of whom were previously
uninsured).
Financing comes from a combination of public and private sources. The
period, arriving at an estimate that roughly 16 percent of the county’s adults, or 140,000 persons,
were uninsured (Ponce et al., 2001). While this survey’s estimated uninsured rate is about double the
estimate given by a statewide survey that included a sample of county residents questioned about their
coverage status over the course of a year, both surveys arrive at estimated numbers of uninsured
persons that are surprisingly similar (Brown et al., 2002).
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106 INSURING AMERICA’S HEALTH
nonprofit’s endowment is supported by grants from the California Endowment,
the California Health Care Foundation, and tobacco settlement dollars from the
county. Coverage programs have been added as new funding streams have be-
come available, for example, through the federal SCHIP program (1998).
Hillsborough County, FL
In 2000, roughly 40,000 of the county’s 1 million residents were uninsured
and living below the poverty line (personal communication, Toni Beddingfield,
Hillsborough Health Plan, April 30, 2003).25 Like other Florida counties,
Hillsborough (which includes the city of Tampa) serves as a provider or payer of
last resort for the county’s medically indigent population. In the early 1990s, rising
health care costs, especially uncompensated care costs at the county public hospital’s
emergency department, motivated county officials to devise a health care plan for
the portion of its uninsured population below the poverty line. The Hillsborough
Health Plan is intended to promote the use of primary and preventive services,
targeting low-income families and coordinating the provision of coverage with
other public services in the county (personal communication, Toni Beddingfield,
Hillsborough Health Plan, April 30, 2003).
Eligibility is restricted to persons earning no more than 100 percent of FPL;
for persons earning up to 125 percent of FPL, catastrophic coverage is available
with an income-based sliding scale premium (Hillsborough County, 2003). En-
rollees obtain care on a fee-for-service basis through one of four networks of
providers that have contracts with the county (personal communication, Toni
Beddingfield, Hillsborough Health Plan, April 30, 2003). Since its inception, the
plan has been supported by county revenues from property and a dedicated sales
tax, as well as premiums for the catastrophic care plan (Hillsborough County,
2003).
The county made a concerted outreach effort through its neighborhood
service centers and with assistance from local community-based groups, reaching
an initial enrollment of 15,000 out of the 40,000 eligible (personal communica-
tion, Toni Beddingfield, Hillsborough Health Plan, April 30, 2003). In 2002,
nearly 28,000 persons were enrolled in the Health Plan, divided between indi-
vidual members (61 percent) and families (39 percent) (personal communication,
Toni Beddingfield, Hillsborough Health Plan, April 30, 2003). In addition to
extending coverage, the Health Plan has been estimated to have saved more than
$11 million in hospital emergency department costs (personal communication,
Toni Beddingfield, Hillsborough Health Plan, April 30, 2003). Like many other
states and counties, however, Hillsborough has faced budget shortfalls over the
past few years that have led County Commissioners to make difficult decisions. In
25A state-level survey in 2000 estimated the county’s uninsured rate at 14 percent, with 117,000
uninsured persons under age 65 out of a general population of 839,000 (Lazarus et al., 2000).
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LESSONS FROM THE PAST AND PRESENT
2003, cost-saving measures have been geared toward decreasing enrollment (by
requiring more frequent reenrollment).
SUMMARY
None of the reform campaigns or public initiatives discussed in this chapter
has achieved universal health insurance coverage. Economic and demographic
changes over time have influenced the level of private coverage (employment-
based coverage), with larger public insurance programs such as Medicaid and
SCHIP modestly lowering the proportion of uninsured persons by filling in some
of the many gaps in coverage created by the employment-based system. As illus-
trated in Figure 3.1, however, given the absence of major federal reform targeting
the general population since the mid-1960s, there has been little variation in the
sources of coverage and in the uninsured rate over the past 25 years.
Those pursuing extended coverage in recent years have grappled with con-
cerns and obstacles shared by reformers before them. During the era before Medi-
care and Medicaid, reformers sought health care financing arrangements that
would apply universally (covering all members of society), be affordable to those
seeking coverage, and be adequate in benefits to sustain health and well-being
(making accessible the demonstrated and perceived advantages of medical care).
The boom in private coverage between the mid-1930s and the 1960s, through
Blue Cross and Blue Shield and independent plans initially, then by commercial
insurers in the group market, made employment-based coverage the norm for
most Americans.
Implementation of Medicare and Medicaid in the 1960s filled in some of the
gaps left open by employment-based coverage, for persons aged 65 and over and
for categories of the poor and medically indigent. The two programs, which today
cover nearly a quarter of the U.S. population, grew to be much more expensive
than initially anticipated. After the federal government became a major insurer and
purchaser of health care, reform campaigns shifted their focus to controlling costs,
stressing the need for insurance schemes to be affordable to society, administra-
tively efficient, and transparent to political stakeholders. Over the decades, there
has been moderate public sympathy for the general idea of universal coverage, yet
no groundswell of public interest in a particular strategy to reach this goal (indeed,
polls report a drop in support for universal coverage when couched in terms of
specific provisions or financing requirements) (Marmor, 1973), and the spillover
effects of a large uninsured population on persons other than the uninsured them-
selves have gone largely unacknowledged by the public (IOM, 2003a).
Even though most uninsured persons are members of families with at least
one worker, government efforts to reduce uninsurance since Medicare and Med-
icaid continue to focus on public coverage to fill gaps. Since the mid-1980s, major
federal initiatives to extend both public and private coverage have lowered unin-
sured rates among children and raised the numbers with public coverage, although
the number of uninsured overall has continued to grow. Between 1984 and 1990,
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108 INSURING AMERICA’S HEALTH
Congress gradually expanded Medicaid eligibility for pregnant women, infants,
and young children, delinking coverage from welfare eligibility. These Medicaid
expansions were followed in 1997 by the creation of SCHIP grants-in-aid to the
states. SCHIP appears to have reduced the number of uninsured children recently,
but millions of children remain uncovered, more than half of whom are eligible
(Broaddus and Ku, 2000; Dubay et al., 2002a,c; Kenney et al., 2003). Federal
initiatives to extend employment-based coverage have targeted improved port-
ability and continuity of coverage through the COBRA, HIPAA, and TA statutes,
yet the lack of authority or resources under COBRA and HIPAA to make
insurance premiums affordable has seriously limited their usefulness and impact.
With the exception of Tennessee, the states discussed in this chapter have
relied on relatively high levels of employment-based coverage, plus generous
public coverage for their low-income populations using Medicaid waivers and
additional state funds to keep uninsured rates below the national average. Con-
straints on federal dollars, for example, due to the budget-neutrality requirement
of Medicaid waivers, and the shortcomings of the federal matching formula
(FMAP) to compensate adequately for the effects of economic recessions, contrib-
ute to the difficulties experienced by the states in extending coverage (Corrigan et
al., 2003; IOM, 2003a). The federal ERISA also narrows state options to reform
their private insurance markets, through which most of their residents obtain
coverage. However, it is mainly the lack of sufficient or sufficiently stable public
dollars that has checked broad access reforms, despite the willingness, albeit lim-
ited, of taxpayers in these states and others to tax themselves in order to raise funds
to extend coverage, for example, through tobacco taxes (Marquis and Long, 1997;
IOM, 2003a). Hawaii’s inability to update provisions of its employer mandate to
meet newer needs for coverage and failure to enforce the mandate contribute to
an ongoing population of uninsured low-income workers, while limited resources
have constrained public programs intended to fill coverage gaps. The breadth of
Massachusetts’ reforms is comprehensive, yet implementation of its “pay or play”
law for employment-based coverage was delayed and eventually repealed due to
waning political support, limiting the state’s ability to boost private-sector cover-
age. Budget shortfalls have limited public coverage programs (MassHealth). In
Minnesota, the uninsured rate is nearly the lowest in the nation, but gaps in
coverage remain, jeopardizing its goal of universal coverage. The inability to
obtain an ERISA exemption kept Oregon from using its innovative Medicaid
expansion to broaden employment-based coverage in the state, and reliance on tax
revenues has left the Oregon Health Plan underfunded. Finally, Tennessee’s am-
bitious efforts to use existing Medicaid dollars and managed care contracting to
markedly extend the program to its uninsured population with low and moderate
incomes resulted in increased enrollment among the poorest segment of this group
in the first year, followed by closed enrollments to all but those required under law
to be covered. Localities, whose economic resources are more limited than those
of the states (which can cross-subsidize among communities), may come close to
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LESSONS FROM THE PAST AND PRESENT
filling a particular local gap in coverage but remain even more constrained than are
the states by a lack of sustainable revenues for public coverage.
Despite gradual extensions of public programs at the federal, state, and local
levels and isolated efforts around the country to move toward the goal of universal
coverage, the lack of national political consensus has hindered a substantial reduc-
tion, if not elimination, of the problem of uninsurance in the United States.
Laudable state- and county-level efforts to extend coverage have been constrained
by a lack of resources. The circumscribed nature of these past and present initia-
tives suggests that attempts to provide universal coverage through state or local
efforts without a substantial infusion of additional federal funds, and federal lead-
ership, are unrealistic.
Conclusion: The persistence of uninsurance in the United States
requires a national and coherent strategy aimed at covering the
entire population. Federal leadership and federal dollars are neces-
sary to eliminate uninsurance, although not necessarily federal ad-
ministration or a uniform approach throughout the country. Uni-
versal health insurance coverage will only be achieved when the
principle of universality is embodied in federal public policy.
In the chapters that follow, the Committee builds on this base of knowledge
about past and present efforts to reduce uninsurance to formulate its set of prin-
ciples to guide a universal approach to insuring all Americans. These principles
will be used to assess comprehensive models that describe “pure” or ideal ap-
proaches to universal coverage (for example, an employer mandate) in order to
reach conclusions and recommendations about how the United States can defi-
nitely and successfully eliminate uninsurance among its population.
Representative terms from entire chapter:
health insurance
