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Death Spiral

by Emily Friedman

First published in the Winter 2003 issue of Health Forum Journal

The fact that more than 41 million Americans are uninsured provokes studies, commissions, debates, hand-wringing and buck-passing. Why don't we act?

It has become a rather sad autumn ritual. Every September, the Census Bureau announces how many Americans had no health insurance the previous year. In 1976, it was 26 million. By 2001, it had grown to 41.2 million (see figure 1), an increase of 1.4 million over 2000. This number represents 14.6 percent of the overall population, and 15.8 percent of the population younger than 65--a more accurate statistic, as virtually all of those 65 and older at least have Medicare.

The announcement produced the usual responses, ranging from a demand for a single-payer system from the Left to a shrug from the Right. Indeed, the National Center for Policy Analysis, a Texas-based conservative think tank, issued a statement alleging that most of the uninsured were middle- and upper-income people who simply chose not to acquire insurance. I guess that's one way of looking at it.

It's not like this is a recently discovered problem. The agency then known as the National Center for Health Services Research (now the Agency for Healthcare Research and Quality) in 1978 issued the pioneering report that counted 26 million people without coverage. That was followed up by study after study after study, each carefully documenting the rise in the number of uninsured Americans, often with detailed data about their race, gender, age and location.

Commissions (notably the excellent Kaiser Commission on Medicaid and the Uninsured) have been duly impaneled to study the matter. Reports have been issued. An incredibly diverse range of proposals for addressing all or part of the problem has been put forward. Hands have been wrung.

Meanwhile, according to the Institute of Medicine (IOM), 18,000 Americans die each year as a direct result of lacking insurance. And that figure does not include all those who die further down the line because of undiagnosed (or, worse yet, diagnosed but untreated) hypertension, diabetes, heart disease, AIDS, cancer and other serious conditions. And those physicians, hospitals and clinics that continue to provide care to as many of them as is feasible are drowning in oceans of red ink. In more than one instance, it has cost the hospital its life--or has led to a takeover by one for-profit firm or another, none of which has an exactly admirable record when it comes to indigent care.

A Few Actions

As for a meaningful response, a few--a very few--actions have been taken. The most notable was the passage in 1997 of the State Children's Health Insurance Program, which offered coverage to children who had not been previously eligible for Medicaid. As of December 2001, the program covered 3.5 million children, although there were huge variations from state to state in terms of how many kids had been signed up. Also, during the halcyon '90s, when there seemed to be money everywhere, many states expanded their criteria for Medicaid eligibility, thereby enfranchising more members of low-income families. Largely as a result of these moves, in the late 1990s there was a drop in the number of uninsured Americans for the first time since the Census Bureau started keeping track of them.

But 1997 was six years ago, and the current dreadful economic climate in most states has put a stop to expansions of Medicaid. Indeed, in some states, notably Oklahoma, Medicaid beneficiaries will be lucky if they are able to retain their eligibility: The income criteria there are being tightened unmercifully. The typical Medicaid benefit package is also being trimmed, which is likely to produce a state of "underinsurance," in which you technically have coverage, but not for what you need.

Employers, traditionally, have been the source of most private insurance, and for the most part they have tried to stay the course. But they are feeling the pressure from double-digit health care cost inflation, the rising prices of prescription drugs and hospital services and skyrocketing premiums.

This is particularly hard on smaller employers, who are disfavored in the marketplace and must pay much higher premiums--not to mention the fact that insurers often risk-rate their employees according to their chances of getting sick. And the inevitable has begun to happen: With virtually every cost containment avenue exhausted (including for-profit managed care, which in many cases turned out to be more of a gold mine for aggressive entrepreneurs than a means of reducing costs), small employers are starting to drop coverage (see figure 2). Larger employers are increasing co-pays and deductibles to the point that lower-income employees are electing not to accept coverage because they can't afford it.

You don't want to know what's happening in the individual market, where there is little regulation and few price controls and risk-rating is a fine art. Indeed, recently it came to light that some insurers, not content to cross-examine an applicant for a policy until they know more about her than her husband does, are now "reunderwriting" individuals every year, so that if you do get sick, your premiums are going to rise so high you can kiss your coverage goodbye. There has been much news coverage and comment about this, and everyone says it's a terrible shame; no one has put a stop to it.

The Excuses

I think it is safe to say that we have a problem here. So, at some point, the question has to be asked: Why don't we do something? The answers that come to mind are not pretty.

First, the uninsured are disproportionately poor, and minority groups are at much higher risk (see figure 3). To ignore the racial discrimination implicit in this whole matter is to be naïve. Indeed, opponents and advocates alike have demonstrated their acute awareness of this aspect of the issue. One conservative pundit told an audience that "if universal coverage is ever passed, the main beneficiaries will be blacks and Hispanics." In other words, it won't be us; it'll be them. And more than a few advocates for the uninsured have long used the argument that the majority of the uninsured are white (which is true)--hoping, perhaps, to prick the consciences of those who don't care about people whose skins are other colors. The problem, of course, is the implication that it would be OK if all the uninsured were nonwhite; then we wouldn't have to worry about them.

Second, we face a difficult ideological split. The Bush administration has proposed tax credits for the uninsured, an approach supported by most Republicans in both houses of Congress. Although it is an appealing approach theoretically, it is rooted more in a private-sector-above-all mentality than in reality. If, as the National Center for Policy Analysis claims, most of the uninsured are reasonably well off and are still willing to take the dreadful chance of having to pay the costs of a catastrophic health event, it's hard to believe that a tax credit of $1,000 or $2,000 for a $6,000 or $8,000 policy would inspire them to sign up. If--as all reliable statistics show--the uninsured are mostly low-income people, they still couldn't afford an individual policy, let alone family coverage, tax credits or no.

Meanwhile, those who want a public program, whether a single-payer or largely expanded Medicaid, Medicare, SCHIP or other initiative, seem to be blissfully ignorant of the fact that the amount of taxpayer money involved would be very large indeed. They are equally unaware, apparently, of the kind of battle this nation would get into if we decided to nationalize the private insurance industry. My godchildren's grandchildren would still be reading about the court fights as the next century arrived.

The only approach that has a prayer of working is some kind of hybrid involving public subsidy of private coverage in a market that is heavily regulated to prevent the picking off of good risks, the avoidance of bad risks and the penalizing of providers and plans that attract those who are sicker.

One way of approaching this would be for provider organizations to stop sitting on the sidelines and start creating their own insurance products--after learning how to configure, price and market them wisely. So far, there have not been many successes in this area of endeavor, but I'd sure rather see hospitals and physician groups providing the coverage than some of the sociopathic organizations that are in the market now.

Third, there are those who like the status quo just fine. There is no subtle way to say this. Even beyond the ideology, which is pretty fierce, there are proposals and policies that cannot be explained other than by assuming that there are interests who don't want the problem addressed; they just want it to go away. Perhaps the most sterling example of this is the new federal Health Insurance Flexibility and Accountability Initiative (HIFA), through which the Bush administration is granting waivers to states to provide "insurance" to those who are uninsured and ineligible for other programs. Of course, the expenditures must be budget-neutral, so states will have to rob Peter (Medicaid and SCHIP) to pay Paul (HIFA). And the "insurance" in question is allowed to consist of nothing more than primary care visits to physicians or clinics. No inpatient hospitalization. No mental health services. No outpatient pharmaceuticals.

In this way, we can move significant numbers of people from the "uninsured" column into the "insured" column. Their insurance won't be worth anything, but heck, in some states half the physicians won't accept Medicaid patients, and we ignore that, so why not just look the other way at this one?

On the state level, there have been astonishing examples of both preserving the status quo and challenging it big time. On the preservation side, the winner has to be the Idaho legislature, which for two years in a row zeroed out all funds for outreach for SCHIP and Medicaid, because, in the words of one legislator, "we are signing up too many children." Well, we can't have that.

On the other hand, there are states that, although strapped for cash and facing declining revenues, still stepped up to the plate. The winners here are the state and especially the city of New York, both of which had every excuse to go on an Idaho-style downsizing of public coverage after September 11th. To boil down a long story, among the things that were destroyed in New York City by the terrorist attacks was the computer system with the city's Medicaid records (in New York, the counties participate in funding Medicaid, which is not true in most states). Tens of thousands of people, eligible for Medicaid, newly uninsured and shell-shocked by the loss of a breadwinner, were at risk.

In eight days, the state and the city (with federal assistance) had up and running a program called Disaster Relief Medicaid (DRM), which involved a one-page paper application form ("radical simplification," in the words of the Washington Post), relaxed documentation of income (if they clean toilets for a living, they're probably not rich) and generous eligibility standards. In four months, the program signed up 342,000 people.

But that's not the end of the story. The New York City Health and Hospitals Corporation reported in August of 2002 on what its physicians had found in the 75,000 DRM patients they had treated. Among the highlights, according to the corporation's president, Benjamin Chu, M.D.: 1,587 people with malignant cancer, half of them women with cervical or breast cancer; and 16,000 people with chronic conditions, including heart disease, hypertension, diabetes, asthma and tuberculosis. More than 6,500 women sought gynecological services, and thousands of people saw a dentist for the first time in their lives.

All this because people of conscience realized that a calamity had also produced an opportunity to find out if people would seek coverage if they did not have to climb over boulders and jump through hoops in order to get what they were eligible for. As Elizabeth Benjamin of the New York Legal Aid Society said, "Unless we keep it simple, people will be left out." As they will be in Idaho.

But as long as policy-makers see the uninsured as powerless and therefore unlikely sources of campaign contributions (which is, unfortunately, largely true), as long as bigots see people of color as less deserving than themselves, as long as the insured are more worried about getting coverage for cosmetic surgery than about those who are dying of treatable cancers, as long as providers are just as glad not to have to bother with "those" people, and as long as the uninsured are "them" and not "us," then the status quo will hold. Until the dam breaks, as it did in Johnstown.

Fourth, few are willing to examine the moral and ethical aspects of the problem. Health policy in this country is not noted for its slavish adherence to the principles of ethics. On the other hand, most bioethics in this country is focused like a laser on the rights of the individual and not on social issues. Talking about concepts like "community" and "the health care commons" and "a right to access" has gone quite out of style.

As a result, many advocates for broader coverage have shifted to arguments based on economics and selfishness. These include: It's cheaper for people to have coverage because otherwise they wait until they're really sick and have to use expensive emergency rooms; or, we have to keep our hospitals and physicians financially sound or else they won't be around for any of us; or, if bioterrorism is used, the disease will spread most quickly among the uninsured and then it might be too late to stop it from infecting the rest of us.

What few seem willing to say is that allowing people to get sick and become disabled or die because they don't have insurance in a trillion-dollar-plus health care system is wrong. Yes, it's inadvisable economically, and it's risky epidemiologically. It's also undemocratic. And unfair. And dishonest. But most of all, it's wrong. And in a nation that often presents itself as the moral guardian of the world, it's the rankest form of hypocrisy. If you don't believe that, travel overseas, as I have the privilege to do on occasion, and tell me what to say to people living in other countries that have some form of universal coverage. They ask me what we are smoking over here, and how we can look ourselves in the mirror. As one European friend said to me, "It doesn't matter if you have such good care, if people cannot have access to it."

Sooner or later, of course, we will do something. But only after tens of thousands more people have died, and only after many good, conscientious health care organizations have gone up the flume because they cared, and only after insurance hyenas and providers who avoid the uninsured have gone home laughing with their millions.

That doesn't have to happen. We can force the issue. We can stop being polite, and being afraid to offend anyone, and being unwilling to make trouble, and being able to tolerate the slow torture and killing of our neighbors. We can stop this. The question, in the end, is whether we want to.

This column is dedicated to the memory of Minnesota Senator Paul Wellstone (1944-2002), who never stopped caring about the uninsured.

Figure 1

Number of Uninsured Americans, 1977-2001 (in millions)

1977 26,6
1988 33.6
1990 35.6
1992 38.3
1994 39.4
1996 41.1
1998 43.9
2000 38.7
2002 41.2

Source: U.S. Census Bureau, 2002

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Figure 2

Percentage of Employers Offering Health Care Coverage, 1996-2002

Large (200+ workers
1996 59% 99%
2000 67% 99%
2002 61% 99%

Source: Kaiser Family Foundation/HRET, 2002

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Figure 3

Uninsured by Major Racial/Ethnic Groups, 2001

Non-Latino White 9.7%
African-American 18.9%
Asian/Pacific Islander 17.7%
Latino 32.1%

Source: U.S. Census Bureau, 2002

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This article first appeared in the Winter 2003 issue of Health Forum Journal

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