Editor’s note: For more on variations in uninsurance patterns and related policy issues, see “Understanding State Variation In Health Insurance Dynamics Can Help Tailor Enrollment Strategies For ACA Expansion,” a Health Affairs Web First article released today and written by the author of this post, John Graves of Vanderbilt, and Katherine Swartz of the Harvard School of Public Health. 

Plano, Texas is an affluent Dallas suburb ranked as the wealthiest American city with at least 250,000 residents.  Between 2007 and 2011, the median income in Plano was $83,901, well above the national figure of $52,762.  As corporate home to several Fortune 500 companies, Plano has a workforce that is largely white-collar, with most employed adults working in management and professional occupations.

If Plano is the prototypical white-collar town then Revere, Massachusetts may well be its blue-collar opposite.  A working-class suburb north of Boston, Revere has a workforce employed primarily in service and sales occupations.  Between 2007 and 2011 the median household income in Revere was $50,592, ranking in the bottom half of U.S. communities.  While 90 percent of Revere’s labor force is employed, one in six people there live below the poverty line.

Plano and Revere also offer an illustrative juxtaposition when it comes to health insurance coverage.  According to the 2009-2011 American Community Survey, the wealthiest area of Plano had the lowest uninsured rate in Texas — the state with the highest rate in the country (24 percent).  Revere had the opposite distinction:  its rate was highest in the only state with an uninsured rate below 5 percent.  Most striking is a statistic these two communities shared: between 2009 and 2011, both had an uninsured rate of 10 percent.

Describing The Long-Term And Short-Term Uninsured

Plano and Revere nicely illustrate that because the uninsured are a group defined simply by something they lack, there are myriad factors that explain why and for how long people go without coverage. As health care providers, policymakers, and other stakeholders anticipate changes to the health care system that will accompany coverage of up to 30 million otherwise uninsured people under the Affordable Care Act (ACA), a broader appreciation of these factors is needed.

Past research has found that long periods without coverage are more prevalent among populations with moderate and low socio-economic status, racial and ethnic minority groups, and people with a high school degree or less.  The long-term uninsured are also substantially more likely to report not having a usual source for health care that is not an emergency room.  Shorter periods, by comparison, are frequently experienced by young adults and by workers moving in-between jobs.  It is estimated that 38 percent of uninsured adults experience spells of 4 months or less, while nearly 60 percent are insured again within a year (Table 1).

Table 1


It is worth keeping these facts in mind as the ACA’s coverage reforms take shape.  For example, Plano’s wealthy demographic profile suggests that the uninsured there may be more likely to experience the temporary gaps in coverage that attend life’s transitions (e.g., job changes, marital changes, etc.). As such, those seeking to obtain insurance in Plano may be among the nearly 60 percent of shorter-term uninsured adults with an established care relationship. Covering the uninsured in Plano may also simply mean providing access to a low-cost health plan that insures against major medical expenses for a few months at a time.

The ten percent uninsured in Revere, by comparison, lack coverage in a state with a strong public safety net, an individual mandate already in place, and insurance subsidies available up to 300 percent of the poverty line.  Revere’s uninsured, in other words, remain without coverage despite a set of reforms that closely resemble what the ACA will soon offer nationwide.  Covering the 10 percent uninsured in Revere may therefore require a reassessment of whether existing subsidy levels and eligibility policies ensure adequate access to affordable health plans for the working-class uninsured.

To shed further light on how insurance dynamics might affect our thinking on the ACA, Table 1 offers estimates from a sample of uninsured adults in the 2012 National Health Interview Survey.  The columns stratify this sample based on the duration of time since the respondent’s uninsured spell began.  The rows correspond to answers to questions on the reasons why the individual lacked coverage. As the table illustrates, among adults uninsured for 12 months or more (42 percent of spells) the high cost of coverage ranked as the most cited reason (48 percent), followed by a job change (23 percent) and lack of eligibility for employer-based insurance (13 percent).

But for the shorter-term uninsured the situation was the reverse: a loss or change of jobs outpaced the high cost of coverage as a reason by a factor of over two-to-one. In addition, being no longer eligible for public insurance (22 percent) ranked higher than cost (19 percent) among those without coverage for a year or less.  Notably, these estimates likely understate differences since some people in spells of 12 months or less at the time of the survey ultimately end up in spells that last over a year.

These findings are important because they highlight the tremendous amount of turnover that characterizes the U.S. health insurance system.  The widely-cited statistic that there are 50 million uninsured people, in other words, offers a snapshot portrait of a constantly changing group of people moving in and out of coverage over time.

Lessons For Policymakers

To date, the debate over coverage expansion has tended to characterize the uninsured as a static group that, when covered, could place substantial new demands on the health care delivery system.  As shown by the recent Oregon Health Insurance Experiment (which randomized Medicaid coverage to long-term uninsured adults) that is likely true for some populations –- in particular, low-income childless adults, many of whom are currently ineligible for public coverage and employer-sponsored insurance.  However, it is also true that a large percentage of today’s uninsured will have already regained insurance by the time the ACA’s coverage reforms begin in January 2014.

Given these dynamics, a fundamental question is whether the ACA can work for both the short- and long-term uninsured. That is, can the ACA’s coverage reforms appeal in both Plano and Revere?  Expansion of coverage alone cannot improve the health care system.  But by adopting reforms that enable guaranteed access and continuity in coverage, policymakers can help realign the incentives of the insurance market so that they work more synergistically with broader efforts to improve the delivery system.

The goal, in other words, is not just to cover today’s uninsured. Rather, reform must also address an insurance system characterized by frequent, disruptive, and administratively costly turnover.  In the current system, individuals seeking coverage as their circumstances change are faced with a private insurance market incentivized to avoid those with health care needs.  By offering affordable plans that appeal to the uninsured in all circumstances, the ACA can instead move us towards a private insurance system in which plans are better incentivized to compete based how well they manage and coordinate people with health care needs, rather than simply avoid them.