Why Health Insurance Is Important

 Why Health Insurance Is Important

Why Health Insurance Is Important

Having health insurance is important because coverage

helps people get timely medical care and
improves their lives and health. Some may believe that
people always have access to medical care because
they can always go to an emergency room. But even
areas with well supported safetynet
care do not remove barriers to
access to the same extent as does
having health insurance. “Coverage
matters,” concluded the Institute of
Medicine (IOM) during a recent
multiyear appraisal.1 Indeed, the prestigious IOM estimated
that lack of coverage was associated with about
18,000 extra deaths per year among uninsured adults.

Several points deserve emphasis.

1. Uninsured people receive less medical care

and less timely care.

Overall, uninsured people get about half as much

care as the privately insured, as measured in dollars

spent on their care—even taking into account free care

received from providers. This discrepancy holds true

even when spending is adjusted for age, income, health

status, and other factors. (This finding and most information

presented here do not come directly from

District sources, for which data are often lacking. But

most patterns are believed to be generally true of all

locations.)

Uninsured adults get fewer preventive and screening

services and on a less timely basis. Shortfalls are

documented for many types of illness or condition,

including screening for cervical and breast cancer as

well as testing for high blood pressure or cholesterol.

Cancers, for example, are more likely to be diagnosed

at a later stage of illness, when treatment is less successful.

Uninsured pregnant women use fewer prenatal

services, and uninsured children and adults are less

likely than their uninsured counterparts to report having

a regular source of care, to see medical providers,

or to receive all recommended treatment.

Shortfalls are particularly notable for chronic conditions.

For instance, uninsured adults with heart conditions

are less likely to stay on drug therapy for high

blood pressure Some uninsured people may decide not to obtain insurance

precisely because they expect not to need

medical care, so simple comparisons of the insured and

uninsured can be misleading. However, many studies

adjust for factors like age and health status that affect

need for care. One recent study

examined people who experienced

an unintentional injury or a new

chronic condition—times when

care is more clearly needed. Uninsured

individuals were less likely to

obtain any medical care, and if they did receive some

initial care, they were more likely to get none of the

recommended follow-up care

2. Uninsured people have worse health outcomes. 

The “bottom line” for uninsured people is that they

are sicker and more apt to die prematurely than their

insured counterparts. Conversely, having health coverage

is associated with better health-related outcomes.

Evidence comes from many studies using a variety of

data sources and different methods of analysis. Death

risk appears to be 25 percent or higher for people with

certain chronic conditions, which led to the IOM estimate

of some 18,000 extra deaths per year. farm bureau health insurance

Some complain that low health status may be a

cause of uninsured status, rather than the other way

around. (Note that this objection is the opposite of the

complaint noted above that good health may promote

uninsurance.) Again, however, as the IOM noted, several

studies use statistical methods to adjust for this

“reverse causation,” and still find that lack of health

insurance results in poorer health outcomes. The study

of unexpected accidents and new chronic conditions

also addressed this issue; its short-term follow-up

showed that uninsured accident victims were more

likely to have ended treatment without being fully recovered,

and that those with chronic conditions still

reported worse health status. farm bureau health insurance

3. Lack of insurance is a fiscal burden for uninsured

people and their families.

Uninsured people do not benefit from the discounted

medical prices that are routinely negotiated by private health plans or imposed by public programs.

Until recently, those without coverage were billed full

hospital charges, for example. The low incomes of

some patients qualify them for charity care, but others

have often been dunned for unpaid bills. Uninsured

families report medical bill problems at double or triple

the rate of insured families, and medical bills have

been found a contributing factor in a sixth or more of

bankruptcies, according to various surveys.

A recent movement to reduce charges for the uninsured

has gained strength among public officials and

from hospitals, and it may have alleviated this problem.

On the other hand, affordability problems have increased

along with rapid growth in the costs of care.

The IOM noted that low levels of insurance in an

area can also burden medical providers because of

higher demand for free or reduced-cost care. farm bureau health insurance

4. The benefits of expanding coverage outweigh

the costs for added services.

Expanding coverage would improve health,

lengthen lives, reduce disability, help control communicable

diseases, and raise productivity. Newly insured

people would get more services, above what they currently

pay out of pocket or receive from medical providers

in the form of uncompensated care. This can be

expected to raise medical spending, but by less than the

value of longevity and other benefits achieved.10 Such

estimates are complex to make and do not address political

issues concerning the sources for financing increases

in spending, especially the likelihood that expansions

would shift some spending from the private to

the public sector. farm bureau health insurance

5. Safety-net care from hospitals and clinics improves

access to care but does not fully substitute

for health insurance.

Proximity to safety-net hospitals or clinics increases

access to care, according to studies using various

methodologies.11 Better access presumably improves

health outcomes, although this effect appears less well

documented, and safety-net access may provide less

continuity of care than insurance. Comparison across states shows that access to care is better where governments

and private payors better support the safety

net, but that the improvement is less than that insurance

achieves.12 Similarly, communities that have high capacity

of community health clinics have better access

to care than communities with low capacity, but the

effect on access of higher insurance coverage rates is

even greater.13 Insurance likely costs more as well,

however, and it can be argued that public budgeting

can control public safety-net subsidies, whereas an

insurance entitlement like Medicaid is a more openended

commitment of public resources. farm bureau health insurance 

Support for safety-net care can be seen as complementary

to insurance expansion. Some people will always

remain uninsured, and community clinics add

capacity to otherwise underserved geographic areas.

Clinics may also be better for addressing access problems

attributable to cultural and language barriers. farm bureau health insurance

6. Cautions are appropriate in using these findings.

Most benefits of insurance coverage are estimated

for coverage in general, not for every type of insurance.

Medicaid has sometimes been separately analyzed and

achieves less on some measures than does private coverage.

14 One possible reason is that enrollees more often

go on and off coverage; another is that Medicaid

programs often pay lower rates to participating providers.

Private insurance coverage that differs from traditional

patterns—for instance, limited-benefit coverages

or plans with very high deductibles—might also achieve

lesser health improvements. Conversely, adding additional

benefits to existing conventional coverage will not

necessarily achieve improvements of proportionate

magnitude. Insurance and access to safety-net services

are far from the only influences on health and longevity.

Environmental and public health measures can have

major impacts as well, including promotion of vaccinations,

smoking cessation, and maintenance of healthy

weight. farm bureau health insurance