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Policy Area One—Insurance Coverage and Costs
Tracking Health Care Costs
Expanding Insurance Coverage
On a brighter note, SCHIP has nearly eliminated differences across communities in children's eligibility for health insurance. Yet, some communities continue to have a very high percentage of uninsured children, due in part to low participation in SCHIP and other public programs. HSC research pointed to the need for policy makers to eliminate enrollment barriers and profiled states that are turning to local communities, in partnership with health care organizations, schools, employers and community and religious groups, to help them reach children. Changing Face of Insurance
Related Publications by HSC Staff on Insurance Coverage and Costs Health Affairs, Vol. 21, No. 1, January/February 2002 |
y documenting that hospital costs once again are
the most important driver of health care inflation,
HSC demonstrated that rising costs are not just a
reflection of continuing rapid growth in prescription
drug spending but now are spread more widely
across the health care sector. HSC identified several
key factors feeding hospital cost growth, including
greater use of services because of loosening managed
care, higher prices due to hospital consolidation,
consumer demand for broader provider networks,
reductions in excess capacity and rising labor and
other costs. HSC research also detailed that health
plans were raising insurance premiums by more
than they expected costs to rise to recoup earlier
losses.
ederal and state policy makers once again began
focusing on ways to deal with the seemingly
intractable problem of the uninsured. Proposals
spanned the spectrum, from expanding such public
programs as Medicaid and the State Children's
Health Insurance Program (SCHIP) to providing
tax subsidies to individuals and small firms to
encourage purchase of coverage. HSC research
identified several critical challenges policy makers
face in implementing such strategies, including the
impact aggressive underwriting of individual policies
(e.g., denials of coverage, higher premiums
and/or restrictions on coverage) could have on
those with chronic conditions, the limited reach of
certain public programs and the potentially high
cost of subsidies. We also tracked state and local
efforts to subsidize worker contributions and offer
subsidies to small employers. So far, neither
employers nor employees have embraced these
programs with much enthusiasm. HSC research
suggests that very large subsidies would be needed
to increase coverage in small firms by even a modest
amount.
booming U.S. economy helped to shelter most consumers
from premium increases. Employers continued to offer coverage with broader networks
and less tightly managed care, but recently they have begun to shift some costs
to employees by increasing copayments and deductibles for medical services and
introducing three-tier pharmacy drug benefits that require consumers to pay
more out of pocket for higher-cost drugs. Concerned about the continuing rise
in premiums, employers have begun considering the concept of a defined contribution
to coverage. Due to its potential impact on markets and consumers, HSC is closely
tracking this issue, focusing in particular on the potential for splintering
employee risk pools and the need for more sophisticated information to help
consumers make the choices demanded of them. HSC researchers laid the foundation
for this work by studying worker sensitivity to out-of-pocket premiums. 
September
27, 2001