In a ground-breaking analysis, the Institute of Medicine (IOM) has calculated what the United States loses each year due to poorer health and early deaths among the 41 million uninsured people in the United States. The Institute says the loss, estimated between $65 billion and $130 billion, is a hidden cost that could be recouped by extending health coverage to all.
The group did not project the cost of a health insurance plan to cover everyone. The report did say the estimated aggregate value of improved health if everyone had coverage exceeds the cost — estimated at $34 billion to $69 billion — of providing the uninsured the additional health services they would use if they gained coverage and used the same amount and kinds of services as the insured.
In releasing the report, Mary Sue Coleman, president of the University of Michigan and co-chair of the Institute of Medicine Committee on the Consequences of Uninsurance, said the society-wide costs of leaving 41 million Americans uninsured each year are not primarily due to the expense of providing free health services to those without coverage. Rather, she said, most of the cost of uninsurance reflects the poorer health and shorter lives of uninsured individuals who frequently receive too little health care and receive it too late. Societal costs, as documented in previous IOM reports, include:
- Uninsured children lose the opportunity for normal development and educational achievement when preventable health conditions go untreated. Likewise, uninsured adults with chronic health conditions are less likely to receive routine care.
- Families lose peace of mind because they live with uncertainty and anxiety about the medical and financial consequences of a serious illness or injury.
- Communities with high rates of uninsurance can face reductions in primary care and hospital services. They also often have to divert resources from public health activities to pay for care for the uninsured, adversely affecting everyone, not just the uninsured.
- The economic vitality of the country is diminished by productivity lost as a result of poorer health, disabilities, and premature deaths among uninsured workers.
- Medicare, Social Security Disability Insurance, and the criminal justice system probably cost taxpayers more than they would if everyone had health insurance up to age 65 and if the chronic and disabling conditions of those who now lack coverage were better treated.
To arrive at its estimate of a health loss worth between $1,600 and $3,300 for each individual without insurance each year (aggregating to between $65 billion and $130 billion), the IOM committee relied on the concept of "health capital." In her statement, Ms. Coleman said health "is like other investments. It gives us a stream of future returns in the form of enjoyment of life, productivity, and developmental potential. Individuals in better health obtain higher returns. Those who die prematurely lose all returns. The dividends from higher levels of health capital include higher expected lifetime earnings, the value we individually place on being alive and healthy, and improved educational and developmental outcomes in children."
The committee cautions that its analysis is for benefits that could be realized if extensions of coverage reduced the morbidity and mortality of uninsured Americans to the levels for individuals who are comparable on measured characteristics and who have private health insurance. The estimate does not include spillover losses to society as a whole of the poorer health of the uninsured population. It accounts for the value only to those experiencing poorer health and subsumes the losses to productivity that accrue to uninsured individuals themselves.
The committee’s approach to analysis relies on strategies used by federal agencies such as the U.S. Environmental Protection Agency, the Food and Drug Administration, and the Department of Transportation in calculating the costs and benefits of regulatory interventions.
"When these agencies regulate health and safety risks, for example, by setting fuel emissions standards and requiring seat belts and air bags in cars, they estimate the value of these interventions in terms of improved health and extended lives throughout society," Ms. Coleman said. "Similarly, the lack of health insurance across the United States can be thought of as imposing a risk to the health and longevity of the American population. As many as 60 million Americans lack coverage for at least a month over a year’s time, and the number who experience a gap without coverage during a two-year period is about 80 million. Many more of us are at risk of being uninsured at some point in our lives than we tend to think."
Ms. Coleman says the committee’s estimate of the health capital lost by the American population because of uninsurance is based on conservative assumptions, and the losses could be even greater.
The committee’s report differs from many others in that it does not focus on uncompensated care or expensive hospitalizations because of delayed treatment as the majority of the costs due to being uninsured. Rather, it concentrates on the costs that result from poorer health outcomes of uninsured individuals.
Families with uninsured members, the report says, bear costs resulting from the financial burdens and risks of out-of-pocket health care spending. Because children’s receipt of health care depends on their parents’ coverage status, children in families with uninsured parents are less likely to receive adequate services. The spillover costs of uninsurance experienced within communities result from both the poorer health of uninsured populations and the demands made on local public budgets and providers to support care for those without coverage.
In its analysis of the costs of health care now used by those who lack health coverage, the committee determined that:
- Uninsured children and adults are less likely to incur any health care expenses in a year and, on average, incur health care costs well below half of average spending for services by all those under age 65.
- People who lack health insurance for an entire year have out-of-pocket expenditures comparable, in absolute dollar amounts, to those of people with private coverage. Uninsured individuals pay for a higher proportion of the total costs of care rendered to them out of pocket, however, compared to insured individuals under age 65 (35% compared to 20%). They also have much lower family incomes. Out-of-pocket spending for health care by the uninsured is more likely to consume a substantial portion of family income than out-of-pocket spending by those with any kind of insurance coverage.
- The total cost of health care services used by individuals who are uninsured for all or part of a year was estimated to be $98.9 billion for 2001.
- The best available estimate of the value of uncompensated health care services provided to people who lack health insurance for some or all of a year is roughly $35 billion annually, about 2.8% of total national spending for personal health care services.
The committee also notes a quality-of-life and security issue for those who are uninsured, saying they bear the burden of increased financial risk and uncertainty. "Although the estimated monetary value of the potential financial losses that those without coverage bear is relatively small (compared to the full cost of their services) because of uncompensated care, the psychological and behavioral implications of living with financial and health risks and uncertainty may be significant," the report says.
In her statement, Ms. Coleman said that compared to the annual growth in national health spending, about $100 billion between 2000 and 2001, the cost of additional services for the uninsured is about half of that one-year increase.
She said the committee examined the "ethical costs of leaving 15% of the nation uninsured." In the absence of action to expand coverage, she said, "we can expect the existing gap in health outcomes between insured and uninsured Americans to widen. As health care interventions become ever more effective in improving health and extending life, the disparity in access to effective health care will become more inequitable and socially divisive.
"Today our health care system has resources it lacked a generation ago to detect disease earlier and ameliorate the effects of chronic conditions such as hypertension, diabetes, asthma, and depression. Deeply ingrained American cultural and political values of equality of opportunity, mutual concern, and equal respect among members of our national community are betrayed when we afford some members — but not everyone — the ability to achieve a longer, more productive and healthier life through public support of health insurance."
Ms. Collins said the committee concluded that (1) as a society we would be better off if the uninsured had health coverage, (2) we would gain peace of mind if no one lacked or was at risk of losing coverage, and (3) insuring everyone would strengthen health care services for all.
[Access information about the report at www.nationalacademies.org.]
In a ground-breaking analysis, the Institute of Medicine has calculated what the United States loses each year due to poorer health and early deaths among the 41 million uninsured people in the United States.
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content