This is Cover the Uninsured Week, a national program to bring awareness of and discussion of solutions to the US’ 45 million non-elderly without health insurance. While this elicits a big yawn from many with health insurance, that is a very naive response.
As a good friend put it, these are not the uninsured, they are the self-insured. Unfortunately, their self-insurance policy limits tend to be in the hundreds of dollars, therefore any claims in excess of that “retention” are not covered by the “claimant”. Instead, the funds required are paid via overt (federal and tax dollars go to health systems to cover uncompensated care) and covert (cost-shifting due to providers seeking to recoup lost income, claiming injuries are suffered at work, and therefore subject to workers’ compensation) taxation.
There is no question we are paying for the uninsured’s health care through subsidies and lost productivity (those without health insurance tend to miss work more, operate at a lower functional level, and suffer from more serious chronic conditions). What is also apparent is there is little political will to challenge this status quo.
However, rising premiums are forcing employers to drop health insurance and employees to stop purchasing it due to the high premium contributions. This will undoubtedly lead to more uninsureds. Large employers such as GM are suffering due to their high health care costs, as is the federal government. Sooner rather than later a Fortune 500 employer will declare bankruptcy, dragged down by the cost of retiree health care costs and union plans. And it will attract more attention than the demise of the coal miners’ union plans that went bust in the nineties
Perhaps when GM or a sister company goes under our politicians will get the backbone injection needed to tackle this issue. But since their health care coverage, paid for by the taxpayers, is one of the richest plans in the country, they’ll have little personal appreciation for the reality faced by the uninsureds.
The insurance industry has mostly ignored the problems of the uninsured, instead choosing to pass increased costs on to customers, negotiate better deals with providers, and hold forth at the occasional conference. Given the lack of any significant organic growth potential at any of the largest health plans, this is surprising. After all, their universe of potential policyholders is shrinking while the industry has rapidly consolidated, leaving little opportunity for the significant growth needed to please the equity markets.
The Week is sponsored by the Robert Wood Johnson Foundation.
What does this mean for you?
Health insurers are missing out on a big opportunity here. There are 45 million potential customers, many of whom have jobs and are earning decent money, money that could be used to buy some form of health insurance. Whether by lobbying, thru industry consortia, or innovative product development insurers would be well-advised to pursue this market.

Consumer Directed Health Plans, or CDHPs, are the new thing in health insurance – and may have a significant impact on liability and workers comp claims. For those who may not follow the latest trends, these are simply very high deductible health insurance programs, with tax-favored accounts set up to cover most of all of the deductible. Sounds pretty basic, and underneath the marketing hype, that is all there is to CDHP.
Nonetheless, they are getting a good deal of press, are generating high valuations for companies selling them, and are creating a flurry of mergers and acquisitions as companies such as UnitedHealthGroup jump into the fray.
If you are suppressing a yawn, hold on for a moment.
Tom Barrett of Choice Medical Management (a Health Strategy Associates client) has an interesting perspective on CDHPs. His take is they will actually cause an increase in liability and workers comp claims, as participants, faced with high medical bills, seek to have others cover the costs.
Here’s an example. An individual with a $3000 deductible slips on a neighbor’s sidewalk, sprains their ankle, and goes to the ER. After an MRI and soft cast put on by the orthopod, the bill comes to $2200. The individual looks at their CDHP “account” and sees they have only accumulated $300, but the various medical providers want their money now. Like many Americans, the individual does not have an extra $1900 laying around.
Concerned, he talks to his neighbor, finds out they have liability coverage, and tells the neighbor they will have to file a liability claim. It’s nothing personal, just business.
The liability carrier sends a field adjuster out to the site, interviews the individual and the neighbor, prepares a report, and either accepts or rejects the claim. The injured individual either gets paid, gets an attorney, or ponies up the extra $1900 himself.
Far-fetched? I don’t think so. There are plenty of attorneys looking for work, lots of liability, auto, and workers comp coverage out there, and CDHPs are exploding in popularity (despite their rather limited utility).
What does this mean for you?
If you are a property and casualty writer, watch your new claims carefully. You likely won’t see a sudden leap, but rather a steady increase as people figure out to “go where the money is”.
The law of unintended consequences strikes again. Or, more cynically, perhaps the CDHP developers actually considered this potential outcome

A new study on the uninsured provides a clearer picture of who they are, their employment status, and where they live. Minnesota has the lowest uninsured rate at 8.3%, followed by Hawaii at 9.8% and Delaware at 10.2%. At the other end of the scale, Texas once again claims the top spot for the highest percentage of people without health insurance at 30.7%, with Louisiana at 26.4% and New Mexico at 26%.
The study, released by the Robert Wood Johnson Foundation, also has some interesting statistics on the number of individuals who are employed yet lack coverage. According to Newsday,
“The study found that the states with the lowest rates of uninsured adults with jobs were Minnesota at 6.9% and Hawaii at 8.5%. The states with the highest rates of uninsured adults with jobs were Texas at 26.6%, Louisiana at 22.6% and New Mexico at 22.6%, according to the study

A number of Governors are considering working together on Medicaid reform in an effort to present a united front to the Bush Administration and Congress. As we have been reporting here, Medicaid reform, a major goal of Bush et al, has been stymied by the refusal of Governors to make major concessions, a refusal backed by their allies in the Senate.
This has led to a stalemate, as States are seeking to preserve the Federal dollars that fund a large part of their Medicaid programs in a time when their own budgets are under pressure. On the other end of the seesaw is the Bush Administration, which has made cutting the Federal deficit a primary goal of the second term.
The Governors in question are evidently circulating a “straw man” memorandum in an effort to gain consenseus and present a united front to the Administration. While the contents of the memorandum are closely held, the following details about the memo have been reported:
–it includes a proposal that would make it more difficult for seniors seeking to qualify for nursing home benefits to transfer their assets to family members or others.
–Another proposal would allow the state to investigate more thoroughly a beneficiary’s finances and seek repayment for government-provided care
— one section floats a “trial balloon” re the establishment or increase of deductibles and copayments for beneficiaries. The idea is this would require beneficiaries to contribute to the cost of the program and discourage overuse and abuse.
–“The proposals also would try to discourage businesses from eliminating retiree health benefits or otherwise shifting employees to Medicaid, by establishing incentives such as tax credits” (Tanner, AP/Long Island Newsday, 4/25).
The good news here is this represents a serious attempt on the part of state legislators to address the Medicaid crisis. It also reflects their power and influence, a strength that the Bush Administration appears to have seriously discounted in their early calculus.
Reforming Medicaid is a critical component of national health reform, and some of these measures make a lot of sense. However, as most states have frozen physician reimbursement levels, and there have been no reports re any increases in their compensation, it is highly likely that there will be fewer docs who will accept Medicaid, thereby reducing access and therefore quality of care.
What does this mean for you?
Freezing MD reimbursement is a blunt instrument, which will have serious consequences not only for the health of Medicaid and Medicaid recipients, but also lead those docs to seek higher reimbursement from commercial payers.
Cost shifting will increase, and so will pressure on commercial loss ratios.