Health Care Financing and Organization Grant Recipient Studies "Spells Without Insurance" and Emerging Insurance Issues

    • October 7, 2011

The problem. In the mid-1980s, Katherine Swartz, PhD, had a eureka moment about the uninsured population that was at once startling and elegant: a significant number of people cycle through periods with and without insurance. Swartz, a professor of health policy and management at the Harvard School of Public Health, coined the phrase "spells without insurance" to describe her hypothesis, which was an entirely new way to look at the problem. But Swartz needed research to back up her concept.

Launching a career, advancing knowledge—Swartz' background. Swartz earned her doctoral degree in economics from the University of Wisconsin at Madison in 1976; she quickly began building a research career, with stints at the University of Maryland, Brown University, and the Health Policy Center of the Urban Institute. She explored some of the nation's most vexing health care challenges, including the individual health insurance market and the opportunities for the public and private sectors to share risk for the costliest medical care. By 1991, the year before she landed at Harvard, her influence had been recognized with the David N. Kershaw Award, given by the Association for Public Policy and Management for research done before the age of 40 that has had a significant impact on public policy.

That same year, the Robert Wood Johnson Foundation (RWJF) gave Swartz the first in a series of awards through its Changes in Health Care Financing and Organization (HCFO) initiative, a program to support research and analysis into health care financing and organization changes and their effects on cost, access and quality. The HCFO award became the basis for Swartz' research documenting her "uninsured spells" concept.

A senior researcher at the Urban Institute when she received her first HCFO grant, Swartz had already done a significant amount of research on poverty issues. "I knew that income fluctuations occurred in the context of changes in employment status, especially for low-income people. A person may have a job, then lose it, or the person might drop out of the labor force and then go back in," she said. "Since health insurance is so tied to employment and income, I knew these dynamic fluctuations had to be there for insurance status, too."

The uninsured spells project. Drawing on the Survey of Income and Program Participation, a national survey conducted by the U.S. Census Bureau, Swartz was able to tell a story about people without health insurance that could not be told by relying exclusively on data drawn from a single point in time. In a series of three papers published by Inquiry, she and her co-authors (Timothy McBride and John Marcotte) reported that half the spells without insurance ended within four months while only 15 percent lingered for more than two years. Swartz's data also showed that the uninsured are a diverse group with varied needs, and that far more people are at risk of losing coverage than had generally been recognized. 

Highlighting the political nature of health care, critics seized on the short duration of some uninsured spells to claim that the problem was not significant. "I was angry at the misuse of that research," said Swartz. "It doesn't mean this is a small problem, it means people with shorter uninsured spells are uninsured for different reasons than people who are uninsured for long periods of time. Often people in short spells are younger and between jobs, and they need help of a different sort in getting coverage."

In a gentle retort published in the Journal of the Medical Association, Swartz emphasized the potential consequences of a spell without health insurance. She concluded that that in 1992, 3.5 million people might have been hospitalized while uninsured, incurring $7 billion in hospital expenses. Using additional research, Swartz argued that people without insurance receive fewer health care services and have a higher risk of dying when hospitalized. Swartz concluded, "Even a short uninsured spell does not have the benign implications many would ascribe to it."

From adverse selection to reinsurance for health. Swartz' findings pushed her to study the insurance market available to individuals who do not have access to employer or other group coverage. Insurance companies are typically leery of these people, believing many seek coverage only when they know they are likely to need it—a phenomena known as "adverse selection."

Well-intentioned strategies to avoid adverse selection do not always have predictable results, as Swartz discovered when she and co-author Deborah Garnick, MHS, ScD, used another HCFO grant to evaluate the impact of reforms in the individual health insurance market in New Jersey. Attracted by reimbursement incentives designed to limit their risk, small companies entered the market, sold policies with low premiums, and sustained losses that all insurance companies were obligated to share. To prevent future losses, these companies increased their premiums; as a result, many enrollees discontinued their coverage.

Seeking an alternative approach, Swartz began looking at how risk is shared and shifted in other markets, again with a HCFO grant. She plunged into the sometimes-arcane world of options and futures in Chicago, and immersed herself in the strategies used for secondary mortgages, natural disasters such as floods and hurricanes, and high-risk automobile insurance.

Building on her accumulated knowledge, she developed a model to involve government as a "reinsurer"—essentially, an insurer for insurers who would cover health care costs beyond a certain threshold. Swartz described her proposed strategy in Reinsuring Health: Why More Middle-Class People are Uninsured and What Government Can Do, a book funded in part by RWJF and published by Russell Sage Foundation in 2006. If government covered most of the costs of the people who have medical expenses that put them in the top 1 percent of the population, at an estimated cost of between $5 billion and $20 billion a year, Swartz estimated that premiums for the rest of the population would drop by 20 percent to 40 percent—and help at least 15 million uninsured people buy insurance. "Government would be the back stop that allowed markets to operate," she said.

The uninsured and the Affordable Care Act. Because good health policy depends so much on accurate and current data, Swartz has tracked many other characteristics of the uninsured over time. Her HCFO-financed research from 1999 to 2000 highlighted the growing number of children, young adults, and near retirees (55 to 64) without insurance; documented racial disparities; and found that 60 percent of the uninsured are working and 21 percent live in households with incomes above $55,000.

As the programmatic details of the Affordable Care Act are negotiated, it appears that the many strands of Swartz's expertise are coming together. In a May 2011 brief for the Commonwealth Fund (with Pamela Farley Short), Swartz hearkened back to her early research on spells without insurance when she predicted that changes in individual circumstances would complicate the structure of insurance subsidies and tax credits. "The new system must be designed to handle these life transitions effectively, or the instability and insecurity of the current system will persist," she warned.

To inform ongoing discussions, Swartz and her colleagues are using a 2011 RWJF grant (ID# 68845) to study the impact of cost-sharing on access to care in Massachusetts and Maine. "It's all part of trying to understand what goes on in the individual market and to think through who are these enrollees in subsidized insurance programs," she said.

Other activities. While Swartz continues her long engagement with insurance issues, she has recently turned her attention to the challenges that face an aging population. She is motivated partly by the illnesses of her own parents in the last year of their lives. As with insurance, she discovered that the need for assistance in activities of daily living is dynamic, and that cost issues loom large.

"I've gotten intrigued because most Americans underestimate the likelihood that they will need assistance and how much it can cost," she said. "We have this huge population bubble coming up and we are not prepared to pay for it. We really need to be coordinating the financial incentives in Medicare, Medicaid, and urban design and housing for elderly people so we can have good-quality care, provided efficiently."

Along with maintaining an ambitious research agenda, Swartz directs the RWJF Scholars in Health Policy Research Program at Harvard, which draws newly minted graduates of doctoral programs in economics, political science, and sociology to health policy research. She was elected to the Institute of Medicine in 2007, spent 11 years as editor of the health policy journal Inquiry, and served as president of the Association for Public Policy Analysis and Management in 2009.

Despite all of these commitments, she and her husband, MIT economist Frank Levy, PhD, (an RWJF Investigator in Health Policy Research awardee) head every summer to the Grand Tetons to hike, a reprieve that she says "keeps me grounded."

RWJF perspective. HCFO program supports investigator-initiated research, policy analysis, and evaluation projects that examine major changes in health care financing and organization, as well as their effects on cost, access, and quality. Launched by RWJF in 1989, HCFO strives to bridge the health policy and health services research communities by reaching two primary objectives: to provide public and private decision-makers with usable and timely information on health care policy, financing, and market developments; and to bring together the policy and research communities through significant convening, issues identification, research translation, and communication activities.

"HCFO provides the evidence we need to look at the impact of health care policy changes, as well as the impact of how these policies are implemented," said Nancy Barrand, HCFO program officer and special adviser for program development at RWJF. "HCFO projects help us understand whether or not health care policies are effective, whether or not they are cost-effective, and whether or not they are doing what they are supposed to do. Through HCFO projects, we can understand what works, we can measure the impact of changes in the health care market, and we can better understand how policies can be implemented and what those policies should be."