Health Insurance: An Overview

Nearly 45 million Americans do not have health insurance, and an estimated 16 million more are considered "underinsured" because they have high out-of-pocket expenses relative to their incomes. Lack of adequate coverage makes it difficult for people to get the health care that they need and burdens them with large medical bills when they do get care.

Who Are the Uninsured?
The number of uninsured people in the United States has risen by about 7 million since 2000, driven by declines in employer-sponsored coverage. Already-strained public programs are picking up some of this slack. The percentage of the population covered by Medicaid, Medicare, or the State Children's Health Insurance Program rose to 26.6 percent in 2004, from 24.1 percent in 2000.

Employer-sponsored health insurance has long formed the backbone of the American health insurance system, covering about 60 percent of all Americans. People without access to coverage through their own or a family member's job are at great risk of being uninsured, since there are few affordable coverage options outside of the employer group market. Indeed, most people who are uninsured are members of working families. Yet, rapid growth in health costs over the last few years has forced employers, particularly small employers, to share more of their costs with employees or drop coverage altogether. About two of five Americans—insured and uninsured alike—have trouble paying their medical bills or have accrued medical debt.

Recent research has found that, while many people remain uninsured for long periods of time, others cycle on and off coverage. People with gaps in insurance coverage are as likely to experience health care access problems and difficulty paying medical bills as those who are continuously uninsured. Such churning also drives up the costs of administering private and public insurance programs and undermines efforts to provide effective care.

Strategies to Expand and Improve Coverage
Policymakers and researchers continue to develop innovative strategies for expanding and improving health coverage. Current approaches include:

• expanding eligibility or allowing people to buy-in to existing federal and state public programs;
• expanding private group coverage through employers or federal or state employee insurance programs;
• establishing tax credits or other subsidies for individuals and employers to defray the cost of health insurance; and
• lowering the cost of coverage for employers through reinsurance.

While the costs of expanding coverage are significant, so are the costs of leaving so many people without health insurance. The Institute of Medicine estimates that lack of health insurance leads to 18,000 excess deaths each year. And a recent Fund study shows that health problems among working-age Americans and their families cost an estimated $260 billion in lost productivity each year.