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IOM Calls for Universal Health Care Coverage by 2010

Kate Traynor

The Institute of Medicine (IOM) recently capped a three-year study of the uninsured with a recommendation that universal health insurance coverage be available in the United States by 2010.

"The United States ranks first in health care spending," said Mary Sue Coleman, University of Michigan president and cochair of IOM's Committee on the Consequences of Uninsurance. "But we are unique among the wealthy, developed countries of the world because we do not assure that all of our citizens have health insurance."

About 43 million Americans currently lack health insurance, according to IOM. Of these, 80% are employed or are part of a family with at least one working member.

Coleman and other IOM committee members, joined by former U.S. Senator Robert Dole and former Representative Paul Rogers, on January 14 in Washington, D.C., presented the findings of IOM's sixth and final report in a series on the uninsured.

The report, Insuring America's Health: Principles and Recommendations, describes five guiding elements for health care coverage in this country:

  • Coverage should be extended to all Americans,
  • Coverage should be continuous,
  • Individuals and families should be able to afford coverage,
  • The strategy for attaining universal coverage should be sustainable and affordable for society, and
  • Coverage should enhance health overall by providing access to high-quality care.

Coleman noted that attaining universal coverage by 2010 is in line with the nation's current Healthy People goals, which call for all Americans to have health care coverage by 2010.

"I think we have what it takes to get it done," Dole said, adding that the issue of universal coverage has been debated in Congress for decades. "I think all that we lack is the will to get it done."

In its previous reports in the series, IOM concluded that health care systems in communities with a large number of uninsured people may be financially unstable, putting the uninsured and insured alike at risk for reduced access to health care. The lack of insurance is also a drain on families, who face financial ruin if even one member of the family is uninsured and becomes seriously ill.

IOM stated that the consequences of poor health and premature death among the uninsured cost the United States $65–$130 billion annually, a situation that Coleman said "saps the economic vitality of our nation." IOM estimated that 18,000 preventable deaths each year are directly attributable to a lack of health care coverage.

According to the report, uninsured Americans in 2001 received $35 billion in uncompensated medical care, all but $5 billion of which was ultimately paid for with tax dollars. The report estimates that providing coverage to those without insurance would cost $34–$69 billion in 2001 dollars, or up to 5.6% of total national spending on health care services in 2001.

"The achievement of universal coverage ought to be a national goal, and it ought to be pursued by the leaders of both political parties," Rogers said. "The longer we wait, the more it's going to cost to solve the problem."

The IOM report contains four basic "prototypes" for achieving universal coverage by the target date but leaves the details for policymakers to work out. One prototype calls for Medicaid and the State Children's Health Insurance Program (SCHIP) to be combined and Medicare benefits extended to those 55 years or older who pay a premium for the coverage. Other Americans would use tax credits to purchase private insurance.

A second prototype requires employers to offer health insurance to employees, with federal subsidies provided to employers of low-wage workers to offset premium costs. Medicaid and SCHIP would be merged and Medicare left unchanged. All Americans would be required to have insurance through work, public programs, or individual policies.

With a third prototype, individuals and families would be required to obtain private health insurance coverage, aided by an advance, refundable tax credit. Medicare would remain unchanged, but SCHIP and Medicaid would be eliminated.

The final prototype is a single-payer system administered by the federal government with claims and payment processing contracted out to the private sector. Medicaid and SCHIP would be eliminated and Medicare absorbed into the single-payer system.

The IOM report also emphasizes that steps must be taken now to prevent additional Americans from losing health benefits as the country works toward the 2010 goal.

Medicaid in Crisis?

A report released in January by the Kaiser Commission on Medicaid and the Uninsured found that states have turned to Medicaid cost containment to deal with the "difficult fiscal conditions" that have prevailed since 2000.

"Medicaid cost containment is never easy," said Vern Smith, principal for Health Management Associates, who presented the report's findings January 28 in Washington, D.C.

"It's never easy to take away benefits," Smith added. "Medicaid only covers medically necessary services. It is not easy to cut eligibility; Medicaid only covers persons who are low income and don't have another way of paying for their health care that they need. It's not easy cutting provider payments when providers are already serving the Medicaid population at discount rates. These are exactly the actions that states have undertaken over the past three years. I've been observing Medicaid budgets now for over 35 years. I have never seen more difficult times for Medicaid than 2003 and 2004."

The report was based on a survey of Medicaid officials in all 50 states. According to the report, 49 states and the District of Columbia plan to undertake Medicaid cost containment measures during fiscal year 2004. The report notes that state Medicaid spending is expected to increase by an average of 8.2% this year, down from an average of about 12% annually in 2000–2002, mostly attributable to a $20 billion federal Medicaid relief package for states that was enacted last May. That relief, which included an increase in the federal Medicaid matching rate, is scheduled to end this June.

"The temporary federal matching program was a godsend for states in 2004," Smith said, and the end of the funding "is going to have great consequences" for state Medicaid programs.

Smith said that one state Medicaid director who was surveyed described the looming loss of matching funds as "a crisis," and another lamented that the match was the only reason her program had stayed afloat.

"The Medicaid challenge continues for at least another year in '05, based on the results of this survey," Smith said.

"It's really critical that the federal and state governments provide resources sufficient for us not to be losing ground, so that the Medicaid and the SCHIP programs . . . can cover all persons currently eligible and prevent the erosion" of coverage, said Shoshanna Sofaer, professor of health care policy at New York's Baruch College and a member of the IOM Committee on Uninsurance (see sidebar).

Sofaer, during a January 16 congressional briefing on uninsurance, acknowledged that IOM did not produce detailed recommendations for tackling the problem of uninsurance.

"That's not what the Institute of Medicine does," she said. "That's something that needs to be the next step-that the political process, the policy analysis process needs to kick in at this point in order for us to get" to the goal of universal coverage.

The report does not define a universal set of benefits that all health plans should offer but recommends instead that, if core benefits are mandated, they be based on evidence that the benefits improve patient care. Sofaer noted that certain benefits seem to fall into that category: "We did see in the literature evidence that outpatient prescription medication, preventive screening services, and mental health treatment are three elements that do make a difference to health that need to be included in a package," she said.

Regardless of the process used to achieve universal coverage, Sofaer warned, there will be "winners and losers" in the system.

"Depending on the kind of reshuffling that takes place in the flow of health care dollars," she said, "there are going to be some groups that will get more and some groups that will get less."