CLOSING THE INSURANCE GAP

Putting off going to the doctor because you can’t afford it, or holding your breath until that new job with medical coverage starts, amounts to balancing on a tightrope over an unknown abyss.

Some 1.7 million Illinoisans—about 14 percent of us—lack health insurance. Nearly half a million are children (18 and under); the majority of the remainder are working adults.

The social and economic costs are great. When people delay medical care until problems are critical, the result is unnecessary death and disability and costlier treatment. It’s been estimated that Illinois hospitals lose $1.6 billion in uncompensated medical payments each year, triggering higher costs for everyone else.

With several state partners, an SIUC team has been seeking to get a better picture of the gap in health insurance access and to find ways to narrow that gap. The project was funded by a grant from the Health Resources and Services Administration through the Illinois governor's office and the Illinois Department of Insurance. 

"This is applied research that's trying to make a difference," says Paul Sarvela, professor and chair of health care professions at SIUC and one of the grant's co-directors.

Researchers at the University of Illinois at Chicago (UIC) surveyed uninsured people in Illinois to get detailed information about employment patterns, income, and demographics. The Illinois Department of Public Health also analyzed data on insurance coverage, while the Illinois Department of Insurance reviewed programs in other states. 

Meanwhile, SIUC researchers were listening to people. 

To get different takes on the insurance problem, Sarvela and Dan Shannon, a researcher with the Office of Economic and Regional Development, interviewed state leaders in health care, insurance, government, and social services. And a team led by psychology professor Peggy Stockdale, educational psychologist Caryl Cox, and Shannon talked to groups of employers, insurance agents, doctors, health care administrators, social-service providers, and public officials around the state.

They also talked to the uninsured. "We wanted to hear their stories, to put a face on the problem," says Stockdale. 

The aim was to discuss barriers to coverage, the impacts of being uninsured, and ways to increase coverage.

Affordability is "the number-one problem," hitting all parties involved, Stockdale says—individuals, businesses, doctors, and the insurance industry itself, which loses customers when policies are so expensive. "Premiums have gone up sometimes 20 percent or more a year in recent years," she says.

The top reason that Illinoisans lack insurance is that their employer doesn’t offer it, she notes. Many of those who do have insurance available through their job can’t afford their share of the premium. Within families, coverage varies dramatically. Frequently, one parent has coverage but can’t afford dependent coverage; many people, because of job changes, find themselves in and out of coverage.

Another obstacle to broader coverage is lack of awareness. For instance, many uninsured Illinoisans don’t yet know about KidCare, the state’s free program to cover children in families earning up to 133 percent of the federal poverty level (up to 185 percent with some family cost-sharing). 

"The marketing and the infrastructure to get kids enrolled are better organized in some areas than in others," says Stockdale. "KidCare certainly hasn’t saturated its market yet." 

Likewise, few had heard of I-CHIP, which offers premium-based coverage to people who are uninsurable because of various health conditions.

Because coverage rates for adults ages 19-29 are lower than for other adults, some interviewees stressed that young people should be educated that getting health insurance is a civic responsibility. Although Stockdale agrees with that, her focus groups indicated that the chief reason young adults, like other adults, don’t have insurance is the cost. Some may gamble on their health, but only 13 percent of the uninsured people surveyed by UIC said they "didn’t need" insurance at the moment. 

The UIC researchers also asked the uninsured how much they’d be willing or able to pay for coverage. The average for those with families was $131. That leaves quite a shortfall to be picked up: the average family policy costs at least $450 per month, says Sarvela. 

About 16 percent said they couldn’t afford anything. But all of the uninsured in the focus groups stressed that they wanted to pay something, even if they could only afford a few dollars. They didn’t want the public stigma of a handout.

Any new or expanded state programs also must try to sidestep the pitfalls of crowd-out and adverse selection. SIUC psychology professor Jane Swanson became well-versed on these thorny problems while scouring economics and tax research for the project.

Adverse selection can occur when there is a choice of higher-option and lower-option insurance plans. People with more health problems disproportionately select the higher-option plan. That leads to higher premiums, causing many healthy people to drop out for less-expensive coverage. The pattern can sink a health plan.

Crowd-out refers to new or expanded public insurance programs enrolling people who formerly were covered by private insurance. Eligible people may switch to public insurance for better or more affordable coverage, or employers may drop insurance benefits because the new public program is available. 

Some crowd-out is inevitable, and it can result in better health care. But excessive crowd-out means that few new people are being insured. Policies to limit crowd-out can backfire if not carefully crafted.

"It’s a complicated picture, and there are always tradeoffs," says Swanson about health care economics.

To bring people together to work on solutions, the grant project hosted two assemblies at Springfield. In July some 100 leaders from the public and private sectors were briefed on the research, then met in small groups with facilitators to brainstorm strategies for increasing insurance access in Illinois. 

SIUC’s Public Policy Institute took the lead here. Associate director Mike Lawrence co-directed the grant project with Sarvela; he and former U.S. senator Paul Simon, the institute’s director, contacted people and helped organize the gathering.

"There was good discussion, and good ideas came out of it," says Lawrence. "Our main role was to help the group work toward consensus."

Topics addressed included children, young adults, the working uninsured, Hispanics and other minority groups (who lack insurance at disproportionately higher rates compared to whites), and small businesses.

Suggested strategies included purchasing pools, tax incentives for small businesses that offer health plans, government subsidies to individuals, expanded or new public insurance programs, special outreach efforts, and making insurance regulations more flexible to spur competition.

The assembly attendees later voted on their preferred solutions and reconvened in September (after this issue’s press date) to discuss final recommendations and ways of funding them. A report will go from the Illinois Department of Insurance to the governor and the federal government this fall.

"Hopefully this will be the catalyst to get the ball rolling," says Sarvela. "High stakes are involved."

Adds Lawrence, "It’s not just a matter of coming up with a road map for what we want to do, but how it’s going to be paid for and who’s going to pay for it. Those are three very difficult things. 

"It’s an extremely tough issue to resolve, but I think the potential is there to resolve it. This is a work in progress."

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