Health Care and Medicaid — Weathering the Recession (New Eng Jour Med)

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Health Care and Medicaid — Weathering the Recession
Diane Rowland, Sc.D.

These are tough economic times. Since December 2007, the U.S. economy has shed 4.4 million jobs, and as of February, the unemployment rate had risen from 4.9% to 8.1%. Millions of Americans have seen their jobs disappear, incomes decline, and health care coverage become increasingly remote (see line graph). Many have sought public coverage from the states through Medicaid, but Medicaid's ability to fill the gap is becoming increasingly constrained, as state revenues decline and states turn to Washington for help in paying their share of the Medicaid bill. What are the implications of this cycle for families, for providers, and for state and federal policy? How does the recession jeopardize health care?

Perhaps most obviously, the recession jeopardizes health coverage for millions of Americans — both those who have Medicaid coverage today and those who are losing job-based coverage — and leaves more families uninsured. In 2007, before the recession began, 45 million Americans under 65 years of age were without health insurance. Eight in 10 of America's uninsured are from working families, and two thirds come from families with incomes below 200% of the poverty level ($44,000 for a family of four in 2009).1 Health insurance is generally not offered to these families through their jobs, nor is it affordable for them to purchase on their own, since the average health insurance plan for a family costs more than $12,000 a year. Families in this situation face an economic downturn with few resources. They postpone or forgo needed care, which often leads to more serious illness and more costly care, which puts an additional financial strain on health care providers as their uncompensated costs rise.2

When the economy is in recession, as it has been since December 2007, coverage quickly unravels further. When insured workers lose their jobs, they also lose their job-based health insurance coverage; without a job, few have the resources to use the option, under the Consolidated Omnibus Budget Reconciliation Act (COBRA), of extending their employer-sponsored coverage by paying the full health insurance premium themselves. As workers are laid off or have their hours and earnings reduced, more families become eligible for coverage through Medicaid and the State Children's Health Insurance Program. These programs reach more children than adults because most states have set the income-eligibility cutoff for children at or above 200% of the poverty level. For parents, coverage through Medicaid is far more limited, with a cutoff below 100% of the poverty level in 33 states — meaning that children are often covered while their parents remain uninsured. For adults without dependent children, no matter how poor, Medicaid coverage is largely unavailable unless they qualify on the basis of a severe disability.

Thus, though Medicaid is a safety net that will grow during this severe economic downturn, many low-income people will fall through the holes and become uninsured. For every increase of 1 percentage point in the national unemployment rate, it is estimated that an additional 1 million Americans turn to Medicaid for coverage and another 1.1 million go uninsured (see bar graph, Panel A), while revenues for financing the state's share of Medicaid costs and other state services fall by 3 to 4% as Medicaid expenditures are rising (Panel B).3 With a 3.2-percentage-point increase in the unemployment rate that has occurred since the end of 2007, the number of uninsured is probably approaching 50 million as we continue to weather this recession.

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Source Information

Dr. Rowland is the executive vice president of the Henry J. Kaiser Family Foundation and the executive director of the Kaiser Commission on Medicaid and the Uninsured, Washington, DC.

(the rest of this editorial at)

http://content.nejm.org/cgi/content/full/360/13/1273?query=TOC

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