Health insurance in the United States

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For details about the number of uninsured persons, see Health insurance coverage in the United States.

For broader coverage of this topic, see Health insuranceInsurance in the United States, and Health care in the United States.

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In the United States, health insurance helps pay for medical expenses through privately purchased insurancesocial insurance, or a social welfare program funded by the government.[1][2] Synonyms for this usage include “health coverage”, “health care coverage”, and “health benefits”. In a more technical sense, the term “health insurance” is used to describe any form of insurance providing protection against the costs of medical services. This usage includes both private insurance programs and social insurance programs such as Medicare, which pools resources and spreads the financial risk associated with major medical expenses across the entire population to protect everyone, as well as social welfare programs like Medicaid and the Children’s Health Insurance Program, which both provide assistance to people who cannot afford health coverage.

In addition to medical expense insurance, “health insurance” may also refer to insurance covering disability or long-term nursing or custodial care needs. Different health insurance provides different levels of financial protection and the scope of coverage can vary widely, with more than 40% of insured individuals reporting that their plans do not adequately meet their needs as of 2007.[3]

The share of Americans without health insurance has been cut in half since 2013. Many of the reforms instituted by the Affordable Care Act of 2010 were designed to extend health care coverage to those without it; however, high cost growth continues unabated.[4] National health expenditures are projected to grow 4.7% per person per year from 2016 to 2025. Public healthcare spending was 29% of federal mandated spending in 1990 and 35% of it in 2000. It is also projected to be roughly half in 2025.[5]

Enrollment and the uninsured[edit]

Main article: Health insurance coverage in the United States

Gallup issued a report in July 2014 stating that the uninsured rate for adults 18 and over declined from 18% in 2013 to 13.4% by in 2014, largely because there were new coverage options and market reforms under the Affordable Care Act.[6] Rand Corporation had similar findings.[7]

Trends in private coverage[edit]

The proportion of non-elderly individuals with employer-sponsored cover fell from 66% in 2000 to 56% in 2010, then stabilized following the passage of the Affordable Care Act. Employees who worked part-time (less than 30 hours a week) were less likely to be offered coverage by their employer than were employees who worked full-time (21% vs. 72%).[8]

A major trend in employer sponsored coverage has been increasing premiums, deductibles, and co-payments for medical services, and increasing the costs of using out-of-network health providers rather than in-network providers.[9]

Trends in public coverage[edit]

Public insurance cover increased from 2000–2010 in part because of an aging population and an economic downturn in the latter part of the decade. Funding for Medicaid and CHIP expanded significantly under the 2010 health reform bill.[10] The proportion of individuals covered by Medicaid increased from 10.5% in 2000 to 14.5% in 2010 and 20% in 2015. The proportion covered by Medicare increased from 13.5% in 2000 to 15.9% in 2010, then decreased to 14% in 2015.[4][11]

Status of the uninsured[edit]

The uninsured proportion was stable at 14–15% from 1990 to 2008, then rose to a peak of 18% in Q3 2013 and rapidly fell to 11% in 2015.[12] The proportion without insurance has stabilized at 9%.[5]

A 2011 study found that there were 2.1 million hospital stays for uninsured patients, accounting for 4.4% ($17.1 billion) of total aggregate inpatient hospital costs in the United States.[13] The costs of treating the uninsured must often be absorbed by providers as charity care, passed on to the insured via cost-shifting and higher health insurance premiums, or paid by taxpayers through higher taxes.[14]

The social safety net[edit]

The social safety net refers to those providers that organize and deliver a significant level of health care and other needed services to the uninsured, Medicaid, and other vulnerable patients.[15] This is important given that the uninsured rate for Americans is still high after the advent of the Affordable Care Act, with a rate of 10.9%, or 28.9 million people in 2019. Not only is this because the ACA does not address gaps for undocumented or homeless populations, but higher insurance premiums, political factors, failure to expand Medicaid in some states, and ineligibility for financial assistance for coverage are just some of the reasons that the social safety net is required for the uninsured.[16] Most people who are uninsured are non-elderly adults in working families, low income families, and minorities. Social safety net hospitals primarily provide services to these populations of uninsured. For example, California’s Public Health Care Systems are only 6% of the hospitals in the state, yet provide care for 38% of all hospital care of uninsured in California- 123,000 of which are homeless, and 3.6 million of which live below the federal poverty line.[17]

One way in which the US has been addressing this need for a social safety net (other than formally/state recognized safety net hospitals) is through the advent of Free Clinics, an example of a Federally Qualified Health Center. A free clinic (for example, the Haight-Asbury Free Clinic and the Berkeley Free Clinic) is a clinic that provides services for free and target the uninsured, typically relying on volunteers and lay health workers. The creation of the National Council of Free Clinics reflects not only a need for licensed staff, but serves as filling the gap in healthcare access for primarily uninsured or underinsured populations.[citation needed]

Death[edit]

Since people who lack health insurance are unable to obtain timely medical care, they have a 40% higher risk of death in any given year than those with health insurance, according to a study published in the American Journal of Public Health. The study estimated that in 2005 in the United States, there were 45,000 deaths associated with lack of health insurance.[18] A 2008 systematic review found consistent evidence that health insurance increased utilization of services and improved health.[19]Uninsured patients share their experience with the health care system in the United States.

A study at Johns Hopkins Hospital found that heart transplant complications occurred most often amongst the uninsured, and that patients who had private health plans fared better than those covered by Medicaid or Medicare.[20]

Reform[edit]

The Affordable Care Act of 2010 was designed primarily to extend health coverage to those without it by expanding Medicaid, creating financial incentives for employers to offer coverage, and requiring those without employer or public coverage to purchase insurance in newly created health insurance exchanges. This requirement for almost all individuals to maintain health insurance is often referred to as the “individual mandate.” The CBO has estimated that roughly 33 million who would have otherwise been uninsured will receive coverage because of the act by 2022.[21]

Repeal of the Individual Mandate

The Tax Cuts and Jobs Act of 2017 effectively repealed the individual mandate, meaning that individuals will no longer be penalized for failing to maintain health coverage starting in 2019.[22] The CBO projects that this change will result in four million more uninsured by 2019, 13 million more by 2027.[22]

Underinsurance[edit]

Main article: Health insurance coverage in the United States § Underinsured

Those who are insured may be underinsured such that they cannot afford full medical care, for example due to the exclusion of pre-existing conditions, or from high deductibles or co-payments. In 2019 Gallup found while only 11% reported being uninsured, 25% of U.S. adults said they or a family member had delayed treatment for a serious medical condition during the year because of cost, up from 12% in 2003 and 19% in 2015. For any condition, 33% reported delaying treatment, up from 24% in 2003 and 31% in 2015.[23]

History[edit]

See also: History of insurance

Accident insurance was first offered in the United States by the Franklin Health Assurance Company of Massachusetts. This firm, founded in 1850, offered insurance against injuries arising from railroad and steamboat accidents. Sixty organizations were offering accident insurance in the US by 1866, but the industry consolidated rapidly soon thereafter. While there were earlier experiments, sickness coverage in the US effectively dates from 1890. The first employer-sponsored group disability policy was issued in 1911, but this plan’s primary purpose was replacing wages lost because the worker was unable to work, not medical expenses.[24]

Before the development of medical expense insurance, patients were expected to pay all other health care costs out of their own pockets, under what is known as the fee-for-service business model. During the middle to late 20th century, traditional disability insurance evolved into modern health insurance programs. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and also most prescription drugs, but this was not always the case. The rise of private insurance was accompanied by the gradual expansion of public insurance programs for those who could not acquire coverage through the market.

Hospital and medical expense policies were introduced during the first half of the 20th century. During the 1920s, individual hospitals began offering services to individuals on a pre-paid basis, eventually leading to the development of Blue Cross organizations in the 1930s.[24] The first employer-sponsored hospitalization plan was created by teachers in Dallas, Texas in 1929.[25] Because the plan only covered members’ expenses at a single hospital (Baylor Hospital), it is also the forerunner of today’s health maintenance organizations (HMOs).[25][26][27]

In 1935 the decision was made by the Roosevelt Administration not to include a large-scale health insurance program as part of the new Social Security program. The problem was not an attack by any organized opposition, such as the opposition from the American Medical Association that derailed Truman’s proposals in 1949. Instead, there was a lack of active popular, congressional, or interest group support. Roosevelt’s strategy was to wait for a demand and a program to materialize, and then if he thought it popular enough to throw his support behind it. His Committee on Economic Security (CES) deliberately limited the health segment of Social Security to the expansion of medical care and facilities. It considered unemployment insurance to be the major priority. Roosevelt assured the medical community that medicine would be kept out of politics. Jaap Kooijman says he succeeded in “pacifying the opponents without discouraging the reformers.” The right moment never came for him to reintroduce the topic.[28][29]

The rise of employer-sponsored coverage[edit]

Some of the first evidence of compulsory health insurance in the United States was in 1915, through the progressive reform protecting workers against medical costs and sicknesses in industrial America.[30] Prior to this, within the Socialist and Progressive parties, health insurance and coverage was framed as not only an economic right for workers health, but also as an employer’s responsibility and liability- healthcare was in this context centered on working-class Americans and labor unions.[31]

Employer-sponsored health insurance plans dramatically expanded as a direct result of wage controls imposed by the federal government during World War II.[25] The labor market was tight because of the increased demand for goods and decreased supply of workers during the war. Federally imposed wage and price controls prohibited manufacturers and other employers from raising wages enough to attract workers. When the War Labor Board declared that fringe benefits, such as sick leave and health insurance, did not count as wages for the purpose of wage controls, employers responded with significantly increased offers of fringe benefits, especially health care coverage, to attract workers.[25] The tax deduction was later codified in the Revenue Act of 1954.[32]

President Harry S. Truman proposed a system of public health insurance in his November 19, 1945, address. He envisioned a national system that would be open to all Americans, but would remain optional. Participants would pay monthly fees into the plan, which would cover the cost of any and all medical expenses that arose in a time of need. The government would pay for the cost of services rendered by any doctor who chose to join the program. In addition, the insurance plan would give cash to the policy holder to replace wages lost because of illness or injury. The proposal was quite popular with the public, but it was fiercely opposed by the Chamber of Commerce, the American Hospital Association, and the AMA, which denounced it as “socialism”.[33]

Foreseeing a long and costly political battle, many labor unions chose to campaign for employer-sponsored coverage, which they saw as a less desirable but more achievable goal, and as coverage expanded the national insurance system lost political momentum and ultimately failed to pass. Using health care and other fringe benefits to attract the best employees, private sector, white-collar employers nationwide expanded the U.S. health care system. Public sector employers followed suit in an effort to compete. Between 1940 and 1960, the total number of people enrolled in health insurance plans grew seven-fold, from 20,662,000 to 142,334,000,[34] and by 1958, 75% of Americans had some form of health coverage.[35] By 1976 85.9% of the employed population 17-64 years of age had hospital insurance while 84.2% had surgical insurance.[36]

Kerr-Mills Act[edit]

Still, private insurance remained unaffordable or simply unavailable to many, including the poor, the unemployed, and the elderly. Before 1965, only half of seniors had health care coverage, and they paid three times as much as younger adults, while having lower incomes.[37] Consequently, interest persisted in creating public health insurance for those left out of the private marketplace.

The 1960 Kerr-Mills Act[38] provided matching funds to states assisting patients with their medical bills. In the early 1960s, Congress rejected a plan to subsidize private coverage for people with Social Security as unworkable, and an amendment to the Social Security Act creating a publicly run alternative was proposed. Finally, President Lyndon B. Johnson signed the Medicare and Medicaid programs into law in 1965, creating publicly run insurance for the elderly and the poor.[39] Medicare was later expanded to cover people with disabilities, end-stage renal disease, and ALS.

State risk pools[edit]

Prior to the Patient Protection and Affordable Care Act, effective from 2014, about 34 states offered guaranteed-issuance risk pools, which enabled individuals who are medically uninsurable through private health insurance to purchase a state-sponsored health insurance plan, usually at higher cost, with high deductibles and possibly lifetime maximums.[40] Plans varied greatly from state to state, both in their costs and benefits to consumers and in their methods of funding and operations. The first such plan was implemented In 1976.[40]

Efforts to pass a national pool were unsuccessful for many years. With the Patient Protection and Affordable Care Act, it became easier for people with pre-existing conditions to afford regular insurance, since all insurers are fully prohibited from discriminating against or charging higher rates for any individuals based on pre-existing medical conditions.[41][42] Therefore, most of the state-based pools shut down.[43] As of 2017, some remain due to statutes which have not been updated, but they also may cover people with gaps in coverage such as undocumented immigrants[43] or Medicare-eligible individuals under the age of 65.[43]

Towards universal coverage[edit]

Persistent lack of insurance among many working Americans continued to create pressure for a comprehensive national health insurance system. In the early 1970s, there was fierce debate between two alternative models for universal coverage. Senator Ted Kennedy proposed a universal single-payer system, while President Nixon countered with his own proposal based on mandates and incentives for employers to provide coverage while expanding publicly run coverage for low-wage workers and the unemployed. Compromise was never reached, and Nixon’s resignation and a series of economic problems later in the decade diverted Congress’s attention away from health reform.

The numbers of uninsured Americans and the uninsured rate from 1987 to 2008

Shortly after his inauguration, President Clinton offered a new proposal for a universal health insurance system. Like Nixon’s plan, Clinton’s relied on mandates, both for individuals and for insurers, along with subsidies for people who could not afford insurance. The bill would have also created “health-purchasing alliances” to pool risk among multiple businesses and large groups of individuals. The plan was staunchly opposed by the insurance industry and employers’ groups and received only mild support from liberal groups, particularly unions, which preferred a single payer system. Ultimately it failed after the Republican takeover of Congress in 1994.[44]

Finally achieving universal health coverage remained a top priority among Democrats, and passing a health reform bill was one of the Obama Administration’s top priorities. The Patient Protection and Affordable Care Act was similar to the Nixon and Clinton plans, mandating coverage, penalizing employers who failed to provide it, and creating mechanisms for people to pool risk and buy insurance collectively.[10] Earlier versions of the bill included a publicly run insurer that could compete to cover those without employer sponsored coverage (the so-called public option), but this was ultimately stripped to secure the support of moderates. The bill passed the Senate in December 2009 with all Democrats voting in favor and the House in March 2010 with the support of most Democrats. Not a single Republican voted in favor of it either time.

State and federal regulation[edit]

Main article: Insurance in the United States § Regulation

Historically, health insurance has been regulated by the states, consistent with the McCarran-Ferguson Act. Details for what health insurance could be sold were up to the states, with a variety of laws and regulations. Model acts and regulations promulgated by the National Association of Insurance Commissioners (NAIC) provide some degree of uniformity state to state. These models do not have the force of law and have no effect unless they are adopted by a state. They are, however, used as guides by most states, and some states adopt them with little or no change.

However, with the Patient Protection and Affordable Care Act, effective since 2014, federal laws have created some uniformity in partnership with the existing state-based system. Insurers are prohibited from discriminating against or charging higher rates for individuals based on pre-existing medical conditions and must offer a standard set of coverage.[41][42]

California[edit]

In 2007, 87% of Californians had some form of health insurance.[45] Services in California range from private offerings: HMOsPPOs to public programs: Medi-Cal, Medicare, and Healthy Families (SCHIP). Insurers can pay providers a capitation only in the case of HMOs.[46]

California developed a solution to assist people across the state and is one of the few states to have an office devoted to giving people tips and resources to get the best care possible. California’s Office of the Patient Advocate was established July 2000 to publish a yearly Health Care Quality Report Card[47] on the top HMOs, PPOs, and Medical Groups and to create and distribute helpful tips and resources to give Californians the tools needed to get the best care.[48]

Additionally, California has a Help Center that assists Californians when they have problems with their health insurance. The Help Center is run by the Department of Managed Health Care, the government department that oversees and regulates HMOs and some PPOs.

Massachusetts[edit]

The state passed healthcare reform in 2006 in order to decrease the uninsured rate among its citizens. The federal Patient Protection and Affordable Care Act (colloquially known as “Obamacare”) is largely based on Massachusetts’ health reform.[49] Due to that colloquialism, the Massachusetts reform has been nicknamed as “Romneycare” after then-Governor Mitt Romney.[50]

Public health care coverage[edit]

Public programs provide the primary source of coverage for most seniors and also low-income children and families who meet certain eligibility requirements. The primary public programs are Medicare, a federal social insurance program for seniors (generally persons aged 65 and over) and certain disabled individuals; Medicaid, funded jointly by the federal government and states but administered at the state level, which covers certain very low income children and their families; and CHIP, also a federal-state partnership that serves certain children and families who do not qualify for Medicaid but who cannot afford private coverage. Other public programs include military health benefits provided through TRICARE and the Veterans Health Administration and benefits provided through the Indian Health Service. Some states have additional programs for low-income individuals.[51] U.S. Census Bureau, “CPS Health Insurance Definitions” Archived May 5, 2010, at the Wayback Machine</ref> In 2011, approximately 60 percent of stays were billed to Medicare and Medicaid—up from 52 percent in 1997.[52]

Medicare[edit]

Main article: Medicare (United States)

In the United States, Medicare is a federal social insurance program that provides health insurance to people over the age of 65, individuals who become totally and permanently disabled, end stage renal disease (ESRD) patients, and people with ALS. Recent research has found that the health trends of previously uninsured adults, especially those with chronic health problems, improves once they enter the Medicare program.[53] Traditional Medicare requires considerable cost-sharing, but ninety percent of Medicare enrollees have some kind of supplemental insurance—either employer-sponsored or retiree coverage, Medicaid, or a private Medigap plan—that covers some or all of their cost-sharing.[54] With supplemental insurance, Medicare ensures that its enrollees have predictable, affordable health care costs regardless of unforeseen illness or injury.

As the population covered by Medicare grows, its costs are projected to rise from slightly over 3 percent of GDP to over 6 percent, contributing substantially to the federal budget deficit.[55] In 2011, Medicare was the primary payer for an estimated 15.3 million inpatient stays, representing 47.2 percent ($182.7 billion) of total aggregate inpatient hospital costs in the United States.[13] The Affordable Care Act took some steps to reduce Medicare spending, and various other proposals are circulating to reduce it further.

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