Issue Paper

California’s Growing Uninsured and Underinsured Population and Government-Sponsored Patients
Issue Summary
March 2011

According to a recent report issued by UCLA’s Center for Health Policy Research, as many as 8.2 million Californians were uninsured for all or part of 2009, the highest number of any other state. Of this number, an alarming 1.1 million uninsured are children. The number of uninsured people in California has been rising over the past two decades as employer-sponsored health in-surance has declined. Being uninsured is a significant barrier to accessing necessary and cost-effective health care services, including preventive care and treatment for chronic conditions. 

Insuring more Californians will allow more people to get the care they need at the right time and in the right place, reduce health care costs, and preserve access to critical hospital services — including emergency room (ER) services — in communities throughout the state.

The Issue

Each year, California’s community hospitals provide more than $12 billion of uncompensated care, which is putting hospitals and access to critical services at risk. The cost for caring for California’s growing uninsured population totaled more than $2.4 billion in 2010. A significant portion of uncompensated care — more than $8.4 billion — also comes from payment shortfalls stemming from the federal Medicare and joint federal- and state-funded Medi-Cal programs. This significant and chronic underfunding of the health care system is being “shifted” to privately insured Californians, private contributors and local governments.

The rise and fall in employment-based coverage generally runs parallel with the state’s economy and unemployment rate. For example, 64.6 percent of Californians had employer-sponsored health coverage in 1987, yet that number declined to only 52.3 percent in 2009* as the economic recession caused employers to eliminate jobs and the health insurance coverage associated with them. By 2010, when California’s unemployment rate was as high as 12.5 percent, only 47 percent of insured Californians had employer-sponsored insurance, according to the Kaiser Family Foundation. Our state’s high unemployment rate, combined with the low insured rate, is putting increased pressure on hospitals and ERs throughout the state.
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The most immediate impact of California’s rising uninsured is access to timely health care services. People without health coverage are less likely to see a physician for preventive or routine care, less likely to have their young children immunized, less likely to receive adequate and timely prenatal care, and less likely to see a physician for serious symptoms. Studies have linked the lack of health coverage to a decline in health status, particularly among those with chronic health problems.

Statistics prove that the uninsured are less likely to visit doctors for preventive care. Minor illnesses go untreated and become larger health issues. Those without health care coverage are more likely to end up in a hospital ER once the medical condition has become more serious. ERs are the most expensive place for patients to receive ambulatory care, and the growing number of uninsured patients seeking care through hospital ERs creates inefficiencies for both patients and hospitals. As a result, the cost of health care is going up for everyone, and wait times in California’s hospital ERs are increasing. Average ER wait times in California now exceed four hours, and exceed 11 hours in one metropolitan area.

California recently received federal approval for a plan to cover approximately 500,000 individuals who are currently uninsured. However, the cost of providing that coverage will be the responsibility of individual counties throughout the state. As counties and other local governments continue to grapple with budget shortfalls, these interim coverage programs could be at risk. California hospitals are working closely with these county programs to help ensure their success. Universal, or near universal, coverage is an achievable goal that must be supported by shared responsibility by government, payers, providers and individuals.

In 2014, when the broad coverage goals of health care reform are implemented, an estimated 4.5* million people who are uninsured will have access to health care coverage. Two million of these newly insured will be covered through an expansion of the state’s Medi-Cal program. This will mean that one out of every three Californians will be eligible to enroll in Medi-Cal. Insuring more Californians will help to reduce rising health care costs, ease overcrowding in hospital ERs, and ensure Californians have access to safe and cost-effective care at the time they need it.

Recommendation

In the era of health care reform, California’s hospitals are working collaboratively with payers, purchasers, stakeholders and other providers to achieve greater cost savings in the delivery of health care services. How health care is delivered in the future must be altered to reflect the new reality of having to do more with less. 

Covering more Californians is also a necessity and is the cornerstone of health care reform. However, it is equally critical that hospitals and other providers be appropriately and adequately compensated for the services they provide to ensure ongoing access to care. A future expansion of California’s Medi-Cal program to include 2 million more beneficiaries could result in uncompensated care costs for hospitals in excess of $6 billion annually. 

*2009 California HealthCare Foundation, Snapshot: California’s Uninsured

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