Assuring Health-Care Coverage

An employee benefit package offers many important features, including employer contributions to pensions and disability insurance. The lack of basic health-care coverage, however, is a major problem. Assuring such coverage not only affords protection but also fosters opportunity and productivity by improving health, reducing the amount of time away from work, and keeping workers financially solvent.

At present an estimated 31 million to 37 million Americans have no health insurance coverage. Many others have coverage, but their insurance does not provide protection against the major expenses of catastrophic illnesses. The large number of uninsured people in the United States results from significant gaps in the two major systems that cover the working-age and young population: Medicaid and employer-provided group health insurance. About 24 million people—or two-thirds of the uninsured—are either full-time workers or their dependents. Medicaid, a Federal-state program, now covers fewer than half of the poor. Thus, aside from the elderly, at least one in six Americans falls into a deep chasm between these two systems. Getting into the work-based health insurance system requires having the right kind of job. Jobs in certain industries or occupations do not typically provide coverage, nor does the part-time work that now accounts for one of every six jobs.

Eligibility for Medicaid varies from state to state. In general, families headed by a working adult find it very difficult to qualify, even when the worker earns the minimum wage and household income is well below the poverty line. These workers' incomes are too low to achieve a decent living standard, but too high to allow them to qualify for Medicaid in many areas of the country. Their jobs often do not provide private health insurance.

In the past, many of the people who were uninsured had their health-care costs paid for by the "hidden tax" of cost shifting. Doctors and hospitals increased their bills to paying patients to offset the costs of treating the uninsured. Today, this cost shifting to cover uncompensated care is becoming more difficult. Large employers are bargaining more aggressively with service providers, either indirectly through their insurance carriers or directly as self-insured purchasers. Meanwhile, cutbacks in government financial support for community health centers and the National Health Service Corps, as well as new limits on Medicaid services and eligibility, have further eroded health services to the indigent.

These changes affect the willingness of doctors, hospitals, and other providers to treat the uninsured—poor and nonpoor alike. To be uninsured in America today