The Consequences of Uninsurance

Policymakers are increasingly interested in the health, financial, and societal consequences of being uninsured. Short of cost-benefit analyses of the long-term impact of covering the uninsured versus treating them on an episodic basis, several studies have explored the implications of uninsurance, both on an individual's health (e.g., cancer rates) and on finances (e.g., bankruptcy).

Health Consequences

Research shows that having health insurance positively affects the use of health services. Health insurance is associated with better health outcomes across a range of preventive, chronic, and acute services. A 2002 research synthesis¹ evaluates major findings in health outcomes over the past 25 years in an effort to determine what it would cost to not cover the uninsured. The report finds strong evidence to suggest that having health insurance leads to improved health and better access to care.

Some highlights of the synthesis include:

• The uninsured receive less preventive care, are diagnosed at more advanced disease stages, tend to receive less therapeutic care, and have higher mortality rates;
• Uninsured babies have poorer survival rates than privately insured babies;
• The uninsured are less likely to be admitted to the hospital after visiting the emergency room;
• Having health insurance increases medical care use by 50 percent; and
• Poor health reduces annual earnings from work and affects educational attainment.

With funding from The Robert Wood Johnson Foundation, the Institute of Medicine (IOM) conducted a three-year study as part of its project, "Consequences of Uninsurance,"² and produced a series of reports.

Some highlights of the IOM study include:

• Lack of health insurance leads to 18,000 unnecessary deaths each year;
• Uninsured adults are less likely to get recommended health screening services;
• Uninsured patients with cancer are more likely to die prematurely because of delayed diagnosis;
• Uninsured persons with chronic conditions are less likely to have regular check-ups or get medication that control their disease; and
• The financial, physical, and emotional well-being of all family members may be adversely affected if any member lacks coverage.

Financial Consequences

Uninsurance can result in serious financial costs and worsen an individual's or family's chance of attaining financial security. A 2005 Health Affairs article³ found that about half of families who filed for bankruptcy in 2001 - between 11.9 and 2.2 million people (filers plus dependents) - cited medical causes as contributing to bankruptcy. These families were 42 percent more likely than other filers to report a lapse in health insurance coverage.

An August 2005 issue brief from Commonwealth Fund⁴ found that an estimated 77 million Americans age 19 and older-nearly two of five adults-have difficulty paying medical bills, have accrued medical debt, or both. Working-age adults incur significantly higher rates of medical bill and debt problems than adults 65 and older, with rates highest among the uninsured.

Although the uninsured can receive care in various safety net locations, 46 percent of people surveyed through the Access Project's Community Access Monitoring Survey (CAMS) were in debt to the safety net facility that they used. In addition, 10 percent of all home equity line of credit loans were taken out to pay for medical expenses, with the average amount of debt for an individual at just over $5,000.

As detailed by the Access Project, uninsured or "self-pay" individuals were also often penalized for not having insurance by being charged higher fee-for-service rates for health care services and not given the discounts afforded to insured patients. An essay published in Health Affairs in 2000 based on an evaluation of the RWJF program Reach Out: Physician's Initiative to Expand Care to Underserved Americans found that an uninsured patient paid up to twice as much as an insured patient for care.

Employers also bear the costs of uninsurance though workers who miss work, leave their jobs, or retire early for health reasons. For example, a 2005 study from the Commonwealth Fund⁵ found that sixty-nine million workers reported missing days due to illness for a total of 407 million days of lost time at work. Further research is needed to better understand the costs of uninsurance to the business community.

Consequences to Society

Research has just begun to quantify the total financial cost of the uninsured to society. A 2004 Kaiser Commission on Medicaid and the Uninsured report found that federal, state, and local governments covered as much as 85 percent of the estimated $41 billion spent on uncompensated care using 2004 dollars.⁶ This cost is largely borne by taxpayers.

The IOM has estimated that the potential economic value to be gained in better health outcomes from continuous coverage for all Americans to be between $65 to $130 billion each year.⁷ This includes higher expected lifetime earnings due to improved productivity and educational and developmental outcomes.

The IOM also found that high rates of uninsurance place strain on health care providers and institutions that can lead to loss of health care capacity and redirection of funds away from public health programs that control communicable diseases and emergency preparedness. Research also shows that coverage expansions can reduce the costs of uncompensated care burdens for hospitals and physicians.  

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