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Literature Review

Health Insurance Enrollment
Healthcare reform has been a topic of discussion in American Politics since the early 20th century due to the existence of disparities in health and healthcare access amongst the poor. By the 1920’s, progressives and reformers emphasized the benefits of healthcare to reduce lost work time/wages to employers; however, throughout the 1930’s the social and political emphasis turned to unemployment insurance and creating a safety net for the elderly. FDR tried to include healthcare as a part of the ―New Deal,but political conflicts over national priorities eventually lead lawmakers to eliminate healthcare reform from Social Security.

It is important to note that the majority of peer reviewed studies have been designed with the assumption that the reasons for the health disparities experienced by the poor are primarily due a lack of access to healthcare that is a direct result of the lack of insurance coverage and the prohibitive costs incurred when uninsured individuals must seek healthcare (as cited in (Ross & Mirowsky, 2000) (Cousineau, Stevens, & Farias, 2011)). This school of thought believes that the best way to improve the health of the poor is by creating greater access to both private and public healthcare insurance; however past legislative efforts aimed at closing the gap through voluntary enrollment programs have been met with a less than enthusiastic response by the groups being targeted (Monheit & JP, 2008).

Few researchers have explored the how personal beliefs regarding the value of insurance coverage, current health status, and the preference for additional income (not spent on a health insurance premium) effect the individual and household decisions to enroll (or not) in employer sponsored healthcare insurance benefit programs (Polsky, Stein, Nicholson, & Bundorf, 2005) (Monheit & JP, 2008) (Monheit, Cantor, DeLia, & Belloff, 5 November 2010). Most of the published research has assumed that all people place a high value on health insurance, so the reason for the number of persons in the US without health care insurance is due to the lack of access (including cost factors) to public or employer sponsored healthcare insurance benefits. However, additional influential factors must exist because evidence shows that there remains a percentage of individuals who have access and still choose to decline enrollment in the insurance program(s) offered by their employer (and also do not choose to enroll in an alternative public or private option) (Monheit & JP, 2008).

Socioeconomic Related Health Disparities
The unequal burden of poor health experienced by individuals and families with low socioeconomic status has been an important social concern in the United States for decades. However even today, the fact remains that those who are better off financially and have a higher level of education experience better overall health than those who do not. The reverse has also been documented to be true: individuals who have a low level of education and who are economically disadvantaged are at a higher risk for infectious diseases, chronic illness, disability and have a shorter life expectancy (cited in (Ross & Mirowsky, 2000)). These economically disadvantaged individuals with the most risk for health disparities are the same individuals with the least access to employer sponsored health insurance coverage, so many researchers have made the argument that the reason for the increased health risks is due to the lack of health care due to the lack of insurance coverage (cited in (Ross & Mirowsky, 2000).

There are two hypotheses that describe the reasons behind these the disparities in health experienced by individuals of low socioeconomic standing:


 * Health Commodity Hypothesis: ―Insurance provides the access to medical care that protects health, and it helps to explain socioeconomic differentials in health


 * Health Commodity Hypothesis: ―Insurance provides the access to medical care that protects health, and it helps to explain socioeconomic differentials in health

Even though the Health Commodity Hypothesis seems to be a very reasonable conclusion, research has shown several reasons why this hypothesis is built on incorrect assumptions. It has been shown in other research that the rises in life expectancy cannot be solely linked to advances in medicine because most of the decline in mortality happened prior to the discovery of effective treatments for many illnesses. This hypothesis loses further ground when examining countries such as Great Britain because it has also been shown that countries who have socialized medicine creating universal access continue to see health disparities in their populations with low socioeconomic. Those in the lower status groups were the same group that used the most medical services, yet morbidity and mortality rates remained stable—suggesting that health is not determined by access to care (referenced in (Ross & Mirowsky, 2000)).

Though the United States does not have a universal healthcare system, the same inverse relationship to healthcare utilization can be seen: as social status decreases, the use of healthcare services increases. The reason for the increase in use of healthcare services is the same problem that access to services was supposed to solve: low socioeconomic status equals increased health problems. It should also be noted that individuals in these low socioeconomic groups also have a tendency to see medical care more favorably—expecting greater results from use and treatment than those of higher social standing (Ross & Mirowsky, 2000). If increased access to healthcare services does not improve health for the poor, the problem of poor health must be caused by some other factor.

Parallel to the poor with access to insurance (public) are the poor without access. These individuals’ employers do not offer insurance coverage or the coverage offered is not affordable, yet based their earned income is too high to qualify for Medicaid and private insurance is cost prohibitive. According to Ross and Mirowsky (2000), these 35 million individuals use the least medical services of all groups; yet in surveys across all groups, those with publically funded insurance self-reported experiencing worse health and feeling unhealthier than those who had no insurance. This study also noted that after adjustments were made for baseline health, hazard of attrition, demographics, and economic conditions (including measures of hardship); they concluded (based on self-reported outcome data) that: ―public insurance is not associated with good health outcomes‖ and that ―persons with private insurance (including employee sponsored insurance) do not have significantly better or worse health outcomes than the uninsured.‖ The only positive effect that was noted in their research was that health care insurance helped to prevent some economic hardship.

Costs and Efficiency of Care
The percentage of uninsured individuals in the US has been relatively constant at 16-18 percent since 1990, however it is important to note that in 2007 16.6 percent of individuals under age 65 were uninsured—5 percent higher than the percent of uninsured persons in 1978 (National Center for Health Statistics, 2009), and recent reports on the uninsured show that a significant number consciously chose to go without (Stephens & Ledlow, 2010).

Even though the percentage of uninsured individuals has remained relatively constant, the costs associated with healthcare in the US (as a share of the GDP) have increased significantly, especially when compared with other allied nations (see Table 1). In terms of value based on GDP, expenditures on healthcare have grown significantly but one must question the value per dollar when compared with spending and outcomes of other countries.

A rough measure used to measure the effectiveness of national healthcare systems is the infant mortality rate. Though actions taken during the 1960’s ―War on Poverty‖ were able to cut the infant mortality rate in half by 1980 (Berki, 1983), the US continued to have a higher rate than other industrialized countries; today it continues to be twice the rate of Germany or Japan (Stephens & Ledlow, 2010). In a value comparison with other nations, the United States spends a great deal more on healthcare, while offering fewer services to individuals and resulting in a lower life expectancy than comparative countries. (Stephens & Ledlow, 2010)

It is reasonable to assume that the reasons for these differences in healthcare outcomes may be due to the cultural emphasis other countries place on promoting prevention, public health and primary care. In the US system of rationed care, uninsured individuals will often wait to access services until he/she feel the situation is ―bad enough‖ to necessitate the care of a physician, often resulting in a more severely acute situation that results in a trip to the emergency room and/or will cost more and take longer to resolve than it would have if the patient had accessed appropriate care sooner (Stephens & Ledlow, 2010). Many times, hospitals that see these uninsured patients in their emergency rooms must ―write-off‖ the expense due to the individual’s inability to pay—further driving the rising costs of healthcare because that cost must be made-up through increased charges to others.

The current system leaves hospitals to bare the severe financial burden of the significant emergency room visits from the 45 million Americans without insurance, and the trend continues to grow as the number of uninsured persons in the US grows. ―In 1999, ―nationally, an estimated 150,000 people owed $50,000 or more in unpaid medical bills and an estimated 20% of the 1.4 million bankruptcies each year are due at least in part to high medical expenses‖ (cited in (Stephens & Ledlow, 2010)). This financial environment has caused hospitals to close their ERs in order to reduce growing financial losses.

Preference and the Merit Good Aspect of Policies to Expand Coverage

 * Preference: There is a strong tradition, particularly in economics, to equate preference with choice. Preference is considered to be hypothetical choice, and choice to be revealed preference.


 * Merit Good: Those Goods and Services (such as education and vaccinations) provided or encouraged by a government through subsidies, because they would because they would be under-provided if left to the market forces or private enterprise.

In the case of healthcare insurance, ideas about the value and need influenced preference for insurance but it was not the only driving factor that determined whether or not one chooses to trade income for health coverage. Rather, it seems that a weak or diminished preference for health insurance is an important underlying factor in the decision process.

A reduced preference for health insurance is easily outweighed by other items that one possesses a stronger preference for, such as additional income that can be used in the consumption of other goods. Risk tolerance is an additional factor that contributes to the decision making process when choosing whether or not to ―buy-in‖ to employer offered healthcare benefits. Monheit noted that those who were more tolerant towards risky behaviors were also more willing to ―risk‖ the serious economic impact of a catastrophic illness by taking a job that did not offer healthcare insurance benefits.

Though the aforementioned factors seemed to have a strong influence on those who chose to go without insurance, it was not the only factor. For a great number of the uninsured, the determining factor was affordability. Monheit (2008) found that single persons who had an income that was less than or equal to 200% of the federal poverty line (FPL) were 13.6% less likely than those in the high income category to enroll in employer sponsored health insurance programs and single workers who were earning more than 200% but less than 400% of FPL were 3.9% less likely than those in the high income category to enroll.

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