Why Do People Lack Health Insurance?

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Note: This report is available in its entirety in the Portable Document Format (PDF).

This brief is No. 14 in the Health Policy Online: Timely Analyses of Current Trends and Policy Options series.

The text below is a portion of the complete document.

This policy brief was prepared for Cover the Uninsured Week, a nonpartisan effort to promote health coverage for all Americans (covertheuninsured.org). It is included in "Shifting Ground: Changes in Employer-Sponsored Health Insurance," a Cover the Uninsured Week 2006 release.

Currently, 46 million people or nearly one in five nonelderly adults and children lack health insurance in the United States, an increase of 6 million since 2000.¹ The recent rise in uninsurance has been attributed to a number of factors, including rising health care costs, the economic downturn, an erosion of employer-based insurance, and public program cutbacks.² Developing effective strategies for reducing uninsurance requires understanding why people lack insurance coverage. This brief looks at the reasons people report being uninsured overall and by key population subgroups (defined by age, race/ethnicity, health status, and family and employment characteristics). We also examine how those reasons have changed over time.

Key Findings

The high cost of health insurance matters for uninsured nonelderly adults and children, whether old or young, healthy or disabled, with high incomes or well below the poverty line. Further, the importance of high costs as a reason for being uninsured has risen rapidly, growing steadily for both nonelderly adults and children.

Although cost is an important issue for all population subgroups studied, cost concerns were most prevalent among Hispanic individuals, noncitizens, and those likely to face the highest costs for coverage in the non-group market-the near-elderly and disabled adults. Over time, however, the importance of high insurance costs for adults and children in families with access to employer-sponsored insurance (ESI) coverage also has grown, likely reflecting the rising costs of ESI.

If policymakers want to increase insurance coverage they will need to address the fact that many of the uninsured view the cost of the coverage options available to them as "too high." Lowering the cost of coverage (for example, by expanding eligibility for public insurance or providing subsidies for private insurance coverage) and/or raising the cost of being uninsured (for example, by imposing penalties for those who do not purchase coverage), could reduce the perceived high cost of coverage relative to being uninsured.

1 J. Holahan and A. Cook (November 2005), "Changes in Economic Conditions and Health Insurance Coverage, 2000-2004," Health Affairs Web Exclusive http://content.healthaffairs.org/cgi/reprint/hlthaff.w5.498v1 (20 April, 2006).

2 Holahan and Cook (2005); T. Gilmer and R. Kronick (April 2005), "It's the Premiums, Stupid: Projections of the Uninsured through 2013," Health Affairs web exclusive, http://content.healthaffairs.org/cgi/reprint/hlthaff.w5.143v1; S. Long and J. Graves (January 2006), "What Happens When Public Coverage Is No Longer Available?" Kaiser Family Foundation Policy Brief, http://www.kff.org/medicaid/7449.cfm; The Kaiser Family Foundation and Health Research and Educational Trust (September 2005), Employer Health Benefits Survey, 2005 Summary of Findings, http://www.kff.org/insurance/7315/upload/7315.pdf.

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