From Foresight, No. 43
published 2005
Health insurance has become increasingly unaffordable for a substantial portion of Kentuckians, most on hand for a series of public forums held by the Kentucky Health Insurance Research Project asserted. Held in each of the state’s 15 Area Development Districts (ADDs), the forums are part of a federally funded initiative being conducted by the University of Kentucky (UK), the Kentucky Long-Term Policy Research Center, and the University of Louisville (UL). They were designed to gather information about the scope of the problem and the underlying causes of uninsurance in the Commonwealth and inform the larger project.
A common theme emerged from the forums: cost and access to health care are huge problems in our state as in the nation as a whole. The sentiments echo those found in a series of national polls which have found health care at the top of a long list of issues of critical concern. A November 2004 Employee Benefit Research Institute poll, for example, found that Americans are as concerned about health care as they are about national security and terrorism. Similarly, Gallup has long found that two thirds of Americans view the U.S. system as having major problems or being in crisis.
Those in attendance cited low earnings and the rising cost of health insurance as the main reasons why more than half a million Kentuckians are estimated to be without health insurance. That gap, research consistently shows, often deters people from getting the health care they need when they need it, a situation that many in attendance reported as being all too commonplace.
Health care providers consistently observed that the county-level estimates of the uninsured population presented in the forums were too low to capture the magnitude of the problem. Estimates presented were based on county-level data from the Lewin Group, a national health care research organization, and on population projections from the State Data Center.
In the majority of forums, providers in attendance reported that the number of uninsured is growing, and only “Band-aids” exist to help with their care. As a result, many are going without the care they need, having to choose basic necessities over life-sustaining medications or treatments, and, in too many instances, dying or becoming disabled as a consequence of their inability to afford needed health care.
Just behind them, others testified, are the underinsured or what social scientist Rose Weitz terms the “precariously insured,” those whose financial well-being will be devastated by a health incident or who will not be able to sustain coverage over the long term. This population, these forums suggest, could be as large as or larger than those who are completely without health insurance. With coinsurance costs or deductibles as high as 25 percent, a single high-tech test leaves low-wage earners struggling financially for months. An insured western Kentucky woman recounted the financial strain one unnecessary CAT scan had placed on her and her family. Many do not recover.
A Harvard University study recently found the results are too often “medical bankruptcy”; that is, a precipitating medical event ultimately leads to the loss of health insurance, followed by unmanageable medical expenses, the loss of savings and assets, and, ultimately, bankruptcy. A bankruptcy attorney at a central Kentucky public health forum reported that as many as 70 percent of his clients had become bankrupt due to health care expenses, losing virtually everything they had worked for all their lives in the process.
Perhaps at greatest risk are older Kentuckians who are not yet old enough to qualify for Medicare. Some retired early, often for health reasons; others lost jobs in industries that have moved offshore and were forced to take marginal jobs. Due to their ages and health conditions, some of which are treatable, many are being priced out of the insurance market, or the coverage they can afford leaves them exposed to considerable financial risk.
Input from the forums also suggests that the high cost of health insurance is taking a toll on community institutions. Officials of small cities, hospitals, nonprofit, and charitable organizations, small and mid-sized businesses, some health departments, and other community institutions reported a succession of double-digit premium hikes. As a result, employers and officials in attendance reported that they would soon have to cut employees, reduce current health care benefit levels, or both.
In the case of those small cities opting to buy insurance on the private market, officials reported that quality benefit packages help them retain employees. Fire and police protection, in particular, were cited by some small city mayors and officials as areas where employee losses can be particularly costly, given the extent of investment in training. If health insurance costs continue to escalate, a range of public services could be undermined, particularly in communities adjoining border states that offer higher entry-level wages.
Hospitals report being in a double bind. They not only face rising costs for insuring their own employees but continue to absorb higher and higher costs for charity or uncompensated care. One Appalachian hospital official said that charity care costs had doubled at the hospital she represented in the first half of the past fiscal year. Hospital officials openly acknowledged that the costs of that care are being shifted to the privately insured and to Medicare. Medicaid reimbursements, it was generally agreed among these officials, fails to meet actual costs, presenting yet another financial problem for these community institutions.
In the absence of readily available community health centers or free clinics, both of which are woefully inadequate in number to meet needs in Kentucky, uninsured people often turn to an emergency department (ED) where they cannot be turned away for care. But EDs are the least efficient means of providing primary care, a key cost driver identified by a number of those in attendance at the forums. What’s more, by the time many reach the ED, their conditions have become far more advanced, more debilitating, and more costly to treat.
On a brighter side, hospital officials often reported that they offer uninsured and low-income patients sliding-scale fees for care, but acknowledged that the uninsured had to seek such assistance in order to become aware of it. Only one individual out of more than 215 in attendance reported having negotiated his own fees for needed medical tests while being uninsured. More typically, the uninsured tend to be financially stressed, undereducated, often isolated and without transportation, wary of seeking treatment for fear of the burden it would pose for them and their families, and generally ill-equipped to negotiate the “system.”
Providers in attendance also reported that insurers in the state routinely delay reimbursement; deny certain diagnostic tests outright, regardless of the reason for the test; and routinely delay credentialing for six months. As a result, newly hired doctors—some in underserved areas—cannot be reimbursed for work that otherwise would be covered until the insurer satisfies its own credentialing requirements.
Providers at every forum reported that the administrative costs associated with navigating the varying health insurance plans are high and quite burdensome. One London physician quipped that he would make more money if he only treated uninsured people and charged them $25 for an office visit.
And input at these forums suggests that some of the protections intended to shield people from becoming uninsured or being hurt as a consequence are not working. COBRA benefits are reportedly too costly for the unemployed, the displaced worker, or the individual who develops an illness after leaving the security of a job. Kentucky Access, the state’s high-risk pool designed to extend insurance to individuals with certain conditions whose insurance has been cancelled, was cited as an unaffordable avenue for many by those in attendance. A Lexington woman, who acknowledged that she numbered among those lucky enough to be able to afford monthly premiums that rose fourfold after she developed cancer, asked rhetorically how a family or individual of modest means could hope to meet such costs.
Some providers reported that Medicaid’s safety net has become frayed in Kentucky; the provider network is inadequate, and eligibility requirements more cumbersome. For the undereducated and the poor, who often live with relatives or friends out of necessity and do not have access to dependable transportation, requiring recipients to provide receipts on a monthly basis presents an obstacle to coverage. These individuals, providers report, are clearly eligible; they simply cannot prove it. And, even if they could, many who attended the forums reported that few physicians in their area were willing to take Medicaid patients.
Programs run by pharmaceutical companies to provide low-income individuals with needed medications are not readily accessible to the poor and uneducated. Many are simply unaware of them. And, without advocates or ready access to a computer, others cannot meet what are reportedly constantly changing eligibility requirements. One Hazard-based charitable organization reported dedicating significant staff time to negotiating these programs to get medications for the uninsured people they help.
Finally, these forums suggest that issues related to under- and uninsurance clearly affect the state’s economic well-being, inhibiting labor participation and worker productivity, and raising societal costs for carrying a large uninsured population. Further, the monthly premiums for health insurance reported in these forums were so substantial, even for relatively healthy people, that the costs likely cut deeply into the disposable incomes of many, given the state’s comparatively low wages and salaries, the continued movement of jobs offshore, and persistent pockets of high unemployment. Ironically, the choice to buy health insurance, these forums suggest, leaves many Kentuckians without the economic capacity to buy the very goods and services that drive our economy and, in turn, generate tax revenues.
The Kentucky Health Insurance Research Project is funded by a federal state planning grant from the Federal Health Resources and Services Administration, which facilitates state-level responses to the problems of the uninsured. The UK Center for Rural Health is spearheading the work in partnership with the Kentucky Long-Term Policy Research Center, a state agency, and the UL Center for Excellence in Urban Health. A multidisciplinary team from these institutions is studying the scope of the problem through large- and small-group meetings; statewide surveys of the general population and small businesses, which are far less likely to provide health insurance; and an analysis of the economic cost of uninsurance. Importantly, the project will analyze policy options available to the state and propose strategies for increasing the insured population.
* Ms. Smith-Mello is a Senior Policy Analyst with the Center and Project Director for the Kentucky Health Insurance Research Project. Return to text.