Number 1, October 2002



The University of Michigan
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Q&A with Pamela Farley Short, Ph.D.

Health economist Pamela Farley Short, Ph.D., dispels commonly held myths about the uninsured and talks about who comprises the uninsured. A professor of Health Policy and Administration at Pennsylvania State University, Dr. Short has spent the last 20 years studying why people lose their health insurance.

Q: What are the biggest myths about the uninsured?

A: While there are about 40 million uninsured people in the U.S., very few people know what that really means, or the importance to attach to that number. That figure references the number of people at any point in time without health insurance. But because there is so much coming and going in the uninsured population, there are a lot more than 40 million people who experience a gap in coverage.

The number of uninsured over just two years is anywhere from 23.5 million to 80 million, depending on whether you ask people if they were uninsured throughout that entire two-year period, or at some point over that time. Another myth is that many people think being uninsured is something that will happen to someone else. Certainly for the middle class, it's something they think they don't have to worry about.

Q: So who are the uninsured? How long are these people uninsured usually?

A: There are two significant pieces to the problem - the long-term uninsured and the short-term uninsured. About half of uninsured spells last for six months or less. Think of the uninsured as being a pool or reservoir that contains 40 million people, but where there is a constant flow in and out of the reservoir. Those without insurance for short spells flow in and out quickly, and they are constantly replacing one another in the reservoir. At the same time, a good deal of the 40 million in the reservoir are uninsured for longer than that. They accumulate in the reservoir instead of draining out.

Overall, a lot of the uninsured are relatively low income, and are disproportionately racial and ethnic minorities. But it's easy to be tricked. A lot of the uninsured are workers and their families, simply because most people in the U.S. are workers and their families. Even though a relatively small proportion of this entire group is uninsured, that still represents millions of people without health insurance.

Q: What percentage is considered chronically uninsured?

A: Out of the 80 million people who were ever uninsured over a two-year period, 23.5 million were uninsured throughout that entire period. Of those uninsured in an average month or at a point in time, about half were uninsured throughout the period. On the whole, the long-term uninsured tend to be a lower-income, more socio-economically disadvantaged group.

Q: Who tends to be the short-term uninsured?

A: The shorter-term uninsured are higher-income and a more advantaged group. When counting the uninsured over time, there's a lot more people at risk than the 40 million, and a lot more higher-income people at risk than we typically think.

Q: Is there a point of no return where it becomes much harder for a person to get insurance?

A: There is definitely a phenomenon where the probability of getting coverage goes down as time goes on. As you go longer and longer without coverage it's less likely you'll get it.

Q: Why don't policymakers have a good understanding of who the uninsured really are?

A: It comes down to how we count the uninsured. At least six different surveys produce information on the uninsured. Different surveys focus on different time frames so the statistics coming from them have very different interpretations.

Q: What's the problem with looking at the number of uninsured at a point-in-time?

A: It significantly understates the number of people in the U.S. who are going to lose their health insurance over a period of time, and it overstates the number of people who are really long-term uninsured.

Q: Why isn't the Current Population Survey (CPS) a very reliable measure of the uninsured? And how does that impact policymakers?

A: The real beauty of the CPS is that the Census Bureau has been incredibly reliable and quick about doing the survey and getting the data out. But the biggest difficulty is the questions that are asked in CPS. People are asked in March to think back 15 months and forget about the coverage they have today. Think about how well you could answer questions like that, if your insurance had changed. It's a very difficult task. CPS is giving us numbers, but we don't know what the numbers mean.

Q: So what is the best questionnaire or survey to get the real picture of the uninsured?

A: What we need is good cross-sectional surveys that can be turned around very quickly. People answer best about their coverage today, not months ago. We also need to follow people over time so we actually understand how long people are uninsured and how they go from one type of coverage to another when their circumstances change.

Q: What's the impact of this on health care policy?

A: In these times as we focus on incremental strategies to cover the uninsured, policymakers are trying to 'paint' coverage on certain groups of uninsured, such as poor kids or the parents of poor kids by expanding income eligibility for Medicaid or SCHIP. Because people's jobs and income status change, the people you paint with coverage today with these programs may no longer qualify tomorrow, even if they remain uninsured.

Q: What about extending tax credits so the uninsured can buy coverage?

A: Tax credit proposals by definition piggyback on the income tax system, which is based on a calendar year, and very few uninsured spells neatly line up with the calendar year. People who need coverage at the beginning of the year may not be able to get the tax credit until the end of the year. If you're interested in targeting what would have been uninsured spells or gaps, tax credits don't really coincide with what the uninsured spells would have been.

Q: So policymakers would be better off focusing on keeping people from becoming uninsured and shortening the time until people can regain coverage, instead of how do we cover the uninsured?

A: Yes. Once you begin to think of the uninsured as gaps in time instead of people, then it leads you to ask some questions like, "How many of the uninsured would be covered if we got people onto coverage faster and kept them on longer? How many gaps can we eliminate?" Stopping short of universal coverage, we need to think about providing people with a stable source of coverage, and not create programs that will continue to cause gaps. Instead of moving the people around, move the dollars around. That way we can pull in as much private employer financing as possible and get the best mix of state and federal dollars to address this problem.

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Funded by The Robert Wood Johnson Foundation, ERIU is a five-year program shedding new light on the causes and consequences of lack of coverage, and the crucial role that health insurance plays in shaping the U.S. labor market. The Foundation does not endorse the findings of this or other independent research projects.