Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

This paper examines churning across the United States, highlighting the difficulties Americans face in accessing a stable, consistent form of insurance coverage. Our research quantifies the incidence and length of periods when Americans lack coverage. We focus on movements in and out of employment-based coverage and the effects of these coverage losses on the growing likelihood of being uninsured. While employment based insurance is the predominant form of insurance for the non-elderly, those with lower wages or lower educational attainment, young adults, minorities, and those in small firms, have fragile health security. Because losses in employer coverage often translate into increases in the number of uninsured, our analysis will illuminate the causes behind the growing number of uninsured and the effects of churning.

Using the Survey of Income and Program Participation (SIPP), we follow all age groups from 2001-2003, measuring their stability of health coverage over time. Because of its valuable longitudinal design, the SIPP allows us to track individuals from one period to the next, evaluating how their insurance status changes. We examine transitions in and out of health insurance, attempting to uncover the characteristics that lead some to keep and others to lose their insurance. We measure the incidence and duration of each spell over time.

The 2001-2003 period was one of a peak economic year, followed by a recession and slow jobless recovery. While 3.6 million fewer Americans had coverage, two factors may have served to dampen the erosion during this period. First, older Americans, 55-64 years old, experienced higher rates of employment, perhaps due to their desire to hold on to or receive insurance through the workplace. Second, children displayed higher incidence of public health insurance, insulating many from becoming uninsured.

We analyze age groups separately as they have unique economic characteristics. For example, young adults are one of the most vulnerable populations at risk of lacking or losing coverage. At their transition to adulthood, young adults are likely to lose access to forms of public coverage including Medicaid and State Children's Health Insurance Program. Moreover, as these young adults transition away from being full-time students they often lose the security of employment-based coverage through their parents' policies. Even for those who enter into employment upon graduation, entry level jobs often lack important health coverage, if even for a brief probationary period. As a result, this population is likely to transition through various states of coverage, spending nontrivial amounts of time being uninsured.

Evidence on usage of health care among the sporadically insured suggests that they behave much like the uninsured. Americans with bouts of uninsurance, however short, are associated with lower access to health care, including not filling prescriptions, not seeing specialists when needed, skipping recommended tests, treatments, or follow-up appointments, or not visiting a doctor or clinic when medically indicated. As a result, the problems of uninsurance may be understated in the literature and in public policy debates. A better understanding of churning and the risks of uninsurance is vital to creating effective policy.