Health Reform: The Cost of Failure

This Robert Wood Johnson Foundation (RWJF) report projects that—if federal reform efforts are not enacted—within 10 years the cost of health care for businesses could double, and the number of uninsured Americans could reach 65.7 million—with middle-income families hardest hit.   

Researchers from the Urban Institute prepared the analysis using the Institute's Health Insurance Policy Simulation Model, estimating how coverage and cost trends would change between now and 2019. The study examined three alternative scenarios:

  1. Worst case—slow growth in incomes and continuing high growth rates for health care costs;
  2. Intermediate case—somewhat faster growth in incomes, but a lower growth rate for health care costs;
  3. Best case—full employment, faster income growth and even slower growth in health care costs.

Under any economic scenario, the analysis shows a tremendous strain on business owners and their employees over the next decade if reform is not enacted. There would be a dramatic decline in the percentage of people insured through their employers, and millions more would become uninsured. There would be large growth in public programs, and major increases in health care spending and levels of uncompensated care. While all income levels would be affected, middle-class working families would be hardest hit.

Using national survey and other economic data, the Urban model examines three scenarios that each assume varying levels of income growth and increases in health care costs. The report shows that if health care reform is not enacted:

  • Individuals and families would see health care costs dramatically increase. Total individual and family spending on premiums and out-of-pocket costs could increase 68 percent by 2019 in the worst-case scenario. Even under the best case scenario, health care costs would likely increase at least 46 percent.     
  • Businesses could see their health care costs double within 10 years. The model shows that employer spending on premiums would more than double – from $429.8 billion in 2009 to $885.1 billion in 2019. Even under best-case economic conditions, employer spending on health insurance premiums would increase 72 percent. The result would likely be far fewer Americans being offered or accepting employer-sponsored health insurance (ESI). Estimates suggest a drop from 56.1 percent of Americans being covered by ESI in 2009, to as few as 49.2 percent by 2019.
  • Spending on government insurance programs could double. In the worst case scenario, spending on Medicaid and the Children’s Health Insurance Program could increase from $251.2 billion this year to $519.7 billion in 2019, as more people are priced out of private insurance and become eligible for government programs. Enrollment in these programs could increase to 20.3 percent in 2019 in the worst case, or one in every five Americans. That’s an increase of 13.3 million people from current figures. 
  • Millions more people would be uninsured. The model projects that without reform, 65.7 million people could be uninsured by 2019, compared to 62.2 million in the intermediate case and 53.1 million under the best case.
  • The amount of uncompensated care in the health system would increase. In the worst case scenario, totals for uncompensated care could more than double, from $62.1 billion in 2009 to $141.4 billion in 2019 in the worst case, and even $106.6 billion in the best case—putting a tremendous strain on health systems, hospitals, providers of clinical care and local municipalities.

The report makes clear that the biggest effects of not having health reform would be felt by families with moderate incomes, who have less access to public coverage. Under the model, the number of middle-income earners without insurance would increase sharply from 12.5 million in 2009 to as many as 18.2 million in 2019.

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