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More Than Half Of Uninsured Americans Cannot Afford Coverage And Are Not Eligible For Public Programs

Researchers Use Income Of Three Times Poverty Level As Affordability Threshold; Alternative Measures Show Coverage Out Of Reach For Even More Uninsured People

Bethesda, MD -- More than half of the nation’s uninsured residents are ineligible for public programs such as Medicaid but do not have enough resources to purchase coverage themselves, researchers from the Urban Institute report in a Health Affairs Web Exclusive published today. The report was funded by the Robert Wood Johnson Foundation.

Of the 44.6 million uninsured Americans, 56 percent are ineligible for public programs and have insufficient incomes to afford coverage on their own, the researchers report. Another 25 percent of the uninsured are eligible for public programs, and the remaining 20 percent have incomes high enough to afford coverage.

“Sometimes you hear arguments that all but a small minority of the uninsured could either purchase coverage or are already eligible for assistance,” said lead author Lisa Dubay, now a research scientist at the Johns Hopkins Bloomberg School of Public Health. “But our study shows that the affordability problem is far more serious than that.”

Affordability Barriers Loom Largest
For Childless Adults

Childless adults, who are generally not covered under Medicaid, the State Children’s Health Insurance Program (SCHIP), and other public programs, face the most severe affordability barriers. Of the 25.5 million uninsured childless adults in the United States, 69 percent are ineligible for public programs but cannot afford coverage on their own. The affordability barriers facing uninsured parents are only slightly less severe: Of 11.1 million uninsured parents, 56.9 percent cannot afford coverage and have no access to public assistance, according to Dubay and her coauthors, John Holahan, director of the Urban Institute Health Policy Center, and Allison Cook, an Urban Institute research assistant.

By contrast, only 11.3 percent of the country’s 8 million uninsured children can not afford private coverage and have no public options available. “The strikingly different landscapes facing children and childless adults testify to how important the establishment of SCHIP and other coverage expansions have been for the welfare of the nation’s children,” Dubay said.

To reduce the number of uninsured people who are eligible for public programs, the Urban Institute authors state that “extensive outreach efforts and simplified enrollment and redetermination procedures, including easing requirements for documentation of income, assets, and citizenship,” would be necessary. However, since most of the uninsured who cannot afford coverage are not covered by existing programs, the researchers say that much more will be needed. They suggest “sliding-scale subsidies or income-related tax credits,” as well as health insurance market reforms, as steps that could make coverage more affordable for the uninsured.

Defining ‘Affordability’

As a threshold to determine whether an uninsured person would be able to afford coverage without assistance, Dubay and coauthors used an income level of 300 percent of the federal poverty level (FPL); in 2004, 300 percent of the FPL amounted to $28,935 for a single person and $57,921 for a family of four. The researchers calculated that people at these income levels would pay 13.8 percent of their incomes for individual coverage and 17.2 percent of their incomes for family coverage. Because fewer than one in five uninsured workers were offered employer-sponsored coverage in 2005, the researchers assumed that most of the uninsured would be buying coverage in the private nongroup market, but they used small-group market premiums as a proxy in their calculations because reliable measures of nongroup premiums are unavailable.

“Because it is possible to define affordability in many different ways, we conducted a sensitivity analysis to see the effect of setting the affordability threshold at different levels,” Dubay and her colleagues write. Specifically, the researchers looked at the effect of raising the affordability threshold to 400 percent of the FPL. They also examined the effect of deeming coverage unaffordable for any uninsured person who would have to pay more than 10 percent -- or, alternatively. 15 percent -- of his or her income in premiums. Finally, in recognition of the fact that premiums might be lowered by decreasing benefits or increasing deductibles, the researchers reduced premiums by 20 percent, then looked at the effects of deeming coverage unaffordable for anyone who would have to use more than 10 percent of his or her income to pay even these reduced premiums.

Affordability: A Problem Under Any Measure

“Regardless of the affordability threshold used, the bulk of uninsured parents and childless adults are not eligible for public coverage and likely not able to afford private coverage,” the researchers state. In fact, using any of the four alternative thresholds described above increased the proportion of the uninsured population with no access to public assistance for whom coverage is unaffordable.

Moreover, the authors warn that the affordability problem is likely to be even greater than their research indicates. “We deemed coverage affordable for the 20 percent of the uninsured in families with incomes above 300 percent of the FPL,” Holahan said. “However, a large share of the uninsured would have to purchase coverage in the nongroup market, an arena where poor health can mean substantial premiums or complete rejection. Therefore, for some of the uninsured in our ‘affordable’ group, chronic disease or other health problems may in fact put coverage out of reach.”

The article by Dubay and her coauthors can be read at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.26.1.w22

 

ABOUT HEALTH AFFAIRS:

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org.

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©2006 Project HOPE–The People-to-People Health Foundation, Inc.