McKinsey has found 30 percent of uninsured go without insurance because of noneconomic reasons, while 70 percent make an economic choice.

Feb. 14—The share of the U.S. population that was uninsured fell below 9 percent in the first nine months of 2016, while the percentage enrolled in high-deductible health plans (HDHPs) continued to rise, according to the Centers for Disease Control and Prevention (CDC).

The CDC report found 28.2 million people (8.8 percent) were uninsured at the time they were interviewed. That was 20.4 million fewer uninsured than in 2010 and 400,000 fewer—a “nonsignificant” difference—than in 2015.

Meanwhile, 39.1 percent of people under age 65 with private insurance were covered by an HDHP, up from 36.7 percent in 2015. Among those with private insurance, enrollment in HDHPs increased by more than 13 percentage points, from 25.3 percent in 2010 to 39.1 percent in 2016.

Among adults with coverage, 20.3 percent had public coverage and 69 percent had private health insurance coverage. Among children, 43.4 percent had public coverage and 53.5 percent had private coverage.

Who Are the Uninsured?

The estimates from the National Center for Health Statistics, based on the National Health Interview Survey, found adults ages 25 to 34 were almost twice as likely as adults ages 45 to 64 to lack health insurance (16.4 percent compared with 8.6 percent). The uninsured rate for adults ages 18 to 24 was 13.6 percent.

In Medicaid expansion states, the percentage of uninsured adults decreased from 18.4 percent in 2013 to 9.3 percent through the first nine months of 2016. In non-expansion states, the percentage decreased from 22.7 percent in 2013 to 17.5 percent in 2016.

Although proponents of the Affordable Care Act (ACA) have worried that Republican efforts to repeal and replace the law will reduce coverage among the 20 million newly insured, healthcare industry leaders also have been focused on ways to extend coverage to the 28 million remaining uninsured. For instance, 20 million have rejected ACA coverage by either claiming an exemption or paying the individual-mandate tax penalty, noted Jim Capretta, resident fellow at the American Enterprise Institute.

“There is some number of Americans out there who are buying insurance because they have to because they don’t want to pay this tax,” Capretta said at a recent Washington, D.C., health policy event.

Increasing coverage uptake among the persistently uninsured would improve the health insurance risk pools and lower premiums, noted a recent report from the McKinsey Center for U.S. Health System Reform.

McKinsey’s consumer research found that about 30 percent of the uninsured opt to forgo coverage for noneconomic reasons, while 70 percent base their choice on economic factors. Given that the latter group may enroll if insurance becomes more affordable or if the cost of being uninsured increases, McKinsey highlighted several possible changes to the individual market:

  • Instituting continuous-coverage protection with a transitional high-risk pool or late-enrollment fee
  • Establishing auto-enrollment in the lowest-price option
  • Implementing a larger age-rating curve
  • Allowing lower actuarial-value plans for individual coverage

McKinsey estimated that implementing such policies could increase enrollment by up to 20 percent and lower average per member per month (PMPM) claims costs by up to 5 percent.

Such changes were proposed recently to congressional leaders in a letter from the Blue Cross and Blue Shield Association (BCBSA). Among the legislative changes to ACA requirements sought in the letter were:

  • Establishing a 5:1 age band
  • Scaling back benefit mandates for plans
  • Establishing a waiting period or premium surcharge for lacking continuous coverage

Affordability Challenges

Healthcare industry observers have highlighted the growing rate of HDHP enrollment as an indicator of the growing affordability challenges facing consumers.

In the past decade, the average deductible for American workers enrolled in insurance offered through their employer has increased significantly, according to an employer health benefits survey conducted by the Kaiser Family Foundation/Health Research & Trust. Employee deductibles averaged $1,478 in 2016, a 12 percent increase since 2015 and a 49 percent increase since 2011.

Meanwhile, CDC data from December indicated that health care became less affordable for people with commercial health insurance in 2016. Among privately insured adults ages 18 to 64, 12.6 percent of those surveyed in 2016 had difficulty paying their medical bills over the past 12 months, compared with 12.4 percent in 2015—reversing a four-year downward trend.

Continuing affordability challenges also were seen in a recent Commonwealth Fund survey, in which 70 million people were estimated to have problems related to medical bills—including an inability to pay off medical bills—in 2016. That total was only a slight improvement from 2010, when 73 million faced such challenges.

The McKinsey report noted that “consumers are simultaneously over-insured (leading to inadequate personal responsibility for controlling costs) and under-insured (leading to insufficient financial protection).”

Among the steps McKinsey urged to improve affordability was the redesign of health benefits to spur a more consumer-driven retail market:

  • Removing routine and discretionary care from covered benefits
  • Adding a savings vehicle such as health savings accounts (HSAs)
  • Enabling use of value-based insurance design for chronic care
  • Fully covering (with low cost sharing) unforeseen catastrophic expenses
  • Encouraging the adoption of population-based payment models

Such changes could lower average PMPM costs by up to 35 percent and increase enrollment by up to 10 percent, according to McKinsey.

Some of those provisions also were reflected in legislative changes sought by insurers. For instance, BCBSA urged Congress to create a “health account” program that would help people cover out-of-pocket healthcare costs. Several Republican ACA replacement plans prominently feature HSAs to help patients afford premiums and out-of-pocket costs.

But some health policy experts have noted that the details of any HSA plan in a replacement bill will be critical. For instance, some proposals included subsidies for HSAs that were not dependent on income.

“That’s a bit of a problem if you are trying to make care affordable,” said Alice Rivlin, a fellow at the Brookings Institution. “If your subsidy is not dependent on income, it has to be pretty big to make care affordable to very-low-income people.”

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, February 15, 2017