A conceptual model of health insurance stability in the United States health care system

Environment and system levels

The environmental context of where a person lives may be associated with losing or regaining insurance. Local economic characteristics may influence insurance stability. Unemployment rates at the county level can influence the likelihood of securing employer-sponsored coverage. ²⁶

The social environment may also be associated with insurance stability. Neighborhood socioeconomic disadvantage could be associated with insurance instability because disadvantaged areas also tend to have less access to stable job opportunities,^33,34 reducing access to employer-provided health insurance. Disadvantaged areas also have limited access to the health care and community resources that residents could leverage to avoid coverage loss or regain insurance.^35,36

Another dimension of the social environment is social capital, which may also be associated with insurance stability. County-level social capital refers to the social connections among county residents that can provide material, affective and informational resources to address individual needs.^37–39 Places with well-established social networks may offer residents access to health-promoting activities and services, which may reduce their risks of losing coverage or, if uninsured, increase the likelihood of regaining coverage. Areas with high social capital could also facilitate employment, given that social networks have been found to be important resources for individuals hearing about, applying to, and being offered employment.^40,41

Similarly, residential racial/ethnic isolation, or the percentage of individuals from racial/ethnic minority groups in a neighborhood, is a cause of racial/ethnic differences in socioeconomic status because predominantly minority areas are more likely to experience business and government disinvestment and receive less educational funding, which may also limit access to employer-sponsored health insurance.^42,43

Geographic factors may be associated with insurance stability because access to private insurance is greater in urban than rural areas. In 2010–2019 the uninsured rates were 2–3 percentage points higher in rural than urban areas. ⁴⁴ Health policy may change this pattern: under the American Rescue Plan, 65% of the 1.9 million rural uninsured individuals who live in HealthCare.gov states have access to at least one zero-premium plan in the insurance exchange. ⁴⁴

Health policy may influence access to health insurance and insurance stability. Federal, state and local governments are the largest payers and major providers of health care through Medicare, Medicaid, health insurance for public employees, the Veterans Health Administration, the Indian Health Service, state-sponsored health plans, local health departments, community health centers, and other public mechanisms. Governments have an important role in shaping health policy to improve access to health insurance through their legislative and regulatory authority and substantial financial clout: in 2019 governments accounted for almost half (45%) of the $3.8 trillion in U.S. health care spending. ⁴⁵

Historically, governments have improved access to health insurance through incremental policies rather than universal policies covering everyone.^46,47 For example, most states took advantage of the Affordable Care Act to extend Medicaid coverage to adults below 138% of the federal poverty level. Recent findings indicate that Medicaid expansion has decreased coverage disruption in low-income adults.^48,49 However, 12 states did not extend Medicaid coverage. If those states extend Medicaid in the future, 2.2 million uninsured adults aged 19 to 64 would gain coverage. ⁵⁰

Another example is health policy that buffers the loss of employer-sponsored coverage. In 2020 the COVID-19 pandemic shutdown of the economy increased unemployment to almost 15% and threatened widespread loss of employer-sponsored health insurance.^7,10,51 In response, Congress passed the American Rescue Plan, which offered premium tax credits to subsidize purchasing coverage from insurance exchanges, mainly for adults under age 65 who are income-ineligible for Medicaid. ⁴⁷ Congress continues to debate various forms of universal health insurance, such as Medicare for All. ⁵² In the meantime, Colorado, Nevada and Washington are expanding coverage through their respective state-run health plans. ⁵³ By reducing the percentage of U.S. residents with unstable coverage through these and other policies, the personal characteristics in the conceptual model would become less important as coverage becomes more equitable in the U.S. population.^54,55

The care delivery system may influence access to health insurance. When continuous coverage is a goal of the delivery system, health plans and health care organizations have more incentive to invest in their members’ long-term health. For example, when coverage is long-lasting, payers may be more likely to invest in preventive services and reap the health benefits of those investments. ⁵⁶ From a system perspective, payers benefit from long-term continuous coverage through lower administrative costs of enrollment and disenrollment. ⁵⁶ If people who lose and regain coverage return to the same source of commercial coverage or delivery system, commercial insurers and systems may have more incentives to invest in preventive services that have long-term benefits. ⁵⁷ In commercial plans, 12–14% of members in individual and group plans who left their insurer reenrolled after 1 year, 32–34% reenrolled after 5 years, and 47% reenrolled after 10 years. ⁵⁸

The mix of product types in local markets may influence coverage stability. ⁵⁹ As managed care penetration increases in areas, market competition for enrollees may increase, with coverage instability as a byproduct, although the effect appears to be small. ²⁵ In areas with high penetration of health maintenance organization (HMO) and point-of-service (POS) plans, people are more likely to switch to HMO plans, which have lower costs, while low-penetration areas have higher disenrollment from HMO plans. ²⁵

Similarly, health insurance exchanges and market competition among managed care plans may contribute to insurance instability. In the ACA Medicaid expansion and the federal and state health insurance exchanges, health plans compete for enrollees under age 65 who are ineligible for Medicaid and not covered by employer-sponsored insurance. ⁶⁰ On one hand, market competition is a key approach for improving value through lower prices and higher quality. ⁶¹ On the other hand, market competition and the exchanges may increase plan switching and instability among private plans in exchanges, including among those private managed care plans competing to enroll Medicaid beneficiaries, and can contribute to individuals churning between Medicaid and private exchange plans due to different eligibility criteria, cost-sharing and premiums, and other factors. ⁵⁷

Geographic areas with low access to health insurance can be offset by ‘safety net’ community health clinics and public health hospitals offering free or low-cost care to people without insurance. The Veterans Health Administration plays the same role for eligible veterans.

Person level

Returning to the person (left) side of Figure 1, social position anchors the individual side of the model. Socioeconomic status (SES), race/ethnicity, and gender hierarchically organize the social world and are persistent “fundamental causes” of disease, because people with higher social positions have better access to flexible resources – such as health insurance -- that can be used to avoid risks or minimize the consequences of disease once it occurs, whatever those risks are in time.^35,41,62 However, social position has nuanced relationships with plan characteristics and coverage loss, partly due to system factors on the right side of the model.

Income, which is determined partly by education and occupation, may influence an individual’s point-in-time plan characteristics through income-related eligibility requirements. Income changes over time cause “churning,” or insurance instability from transitions in-and-out of Medicaid or between Medicaid and private insurance offered through insurance exchanges or an employer.^63,64 For gender, women with private insurance were less likely to lose coverage than men, but women with public coverage were more likely to lose and regain coverage. ⁶ Race/ethnicity could also play a role; coverage varies by racial/ethnic group, with Whites most likely to have coverage (95%) and have private coverage (75%) and Hispanics least likely (82% and 50%), respectively. ⁶⁵ Between 2017 and 2018, coverage for Hispanics declined by 1.6 percentage points, but the changes for other groups were not significant.

Immigrant status also defines social position and is associated with health coverage, which is much lower in the foreign-born population (81%) than the native-born population (93%). ⁶⁵ Areas with greater immigrant populations may be associated with less coverage because of different cultural norms of health care, less knowledge of the U.S. health system, and greater language and economic barriers.^13,66 In the ACA era, undocumented immigrants are less likely to be covered partly because they are ineligible for public insurance and plans offered through ACA exchanges. ⁶⁷ About 42% of undocumented, nonelderly immigrants are uninsured. ⁶⁸

Person characteristics are shaped by a person’s social position and may influence the stability and type of health coverage over time. Age is included because almost everyone over age 64 has stable coverage through Medicare. In contrast, at least 25% of adults younger than age 65 lost insurance coverage in the years preceding eligibility for Medicare, indicating the important role of Medicare as a safety net for limiting the number of uninsured individuals age 65 and older. ⁶⁹

For working adults, employment may influence an individual’s point-in-time plan characteristics through whether the employer offers insurance, which is more likely with larger employers. ²⁷ In some cases, however, families decline offers of private insurance, due to the high cost of purchasing employment-related insurance and weak preferences for coverage, relying instead on local community clinics for care. ⁷⁰ For workers with employer-sponsored insurance, job loss causes coverage loss.^7–10,27 Ample opportunity exists for the loss and regain of employer-sponsored insurance because U.S. workers change jobs frequently, not all employers offer insurance, and the prevalence of contract, seasonal and gig work jobs, which are less likely to offer insurance, has increased dramatically in recent years and may contribute to Medicaid and insurance exchange churning. ⁷¹ In a national longitudinal survey, individuals who were born in 1957–1964 were followed for 39 years, revealing that adults held an average of 12.4 jobs from ages 18 to 54. ⁷² Changes in employment create risks for losing or changing employer-sponsored insurance, and these risks accumulate over the course of a lifetime.

A person’s family position (employee, spouse, child) and size determine whether a private health plan offers single or family coverage and may shape the risks of losing/gaining insurance if a change in marital status, such as divorce, occurs, because some adults obtain coverage through their spouse.^26,65

Health status may play a role: less healthy individuals are more likely to lose insurance, but the association is complex.^6,12 One explanation for this association is that the relationship may be spurious—social position is strongly related to both health and insurance coverage as indicated in Figure 1.^12,27 However, in their national study, Cutler and Gelber ⁶ report that adults with worse health were more likely to lose coverage, controlling statistically for educational attainment, indicating that social position may not entirely explain the association. A second possibility is that two-way causation may exist between health status and insurance status: people are unhealthy because they lost insurance.^12,27 Third, people purchasing individual health insurance may be denied coverage due to pre-existing conditions. ²⁷ However, because the ACA prohibits insurers from denying coverage to people with pre-existing conditions, this explanation may be inapplicable in the post-ACA era. Fourth, people with low incomes and worse health may be uninsured if they cannot afford the premiums of individually purchased health insurance, or if they do not satisfy Medicaid disability or income eligibility requirements. ¹² Countervailing forces also complicate the health status – insurance status relationship. For example, people with a disability are more likely to have public than private coverage (due to Medicaid eligibility for disability), which may improve, rather than reduce, stability. ⁶⁵ Few studies have examined these relationships in the post-ACA era, and therefore, it is unclear the extent to which health status and insurance status have influenced one another in recent years.

Health status is also related to health care utilization and costs: less healthy individuals have greater utilization and costs. ³⁰ People with more chronic conditions may be more motivated to retain coverage to assure access to health care and protect their economic security.^12,27 Few studies have examined whether past utilization or costs predict future loss of coverage, which may be confounded by health status, social position, or other factors in the conceptual model (Figure 1). In contrast, the reverse relationship is well-studied: breaks in coverage are related strongly to reduced utilization. ¹² The relationship includes preventive services: in a national sample of adults in the U.S. Health and Retirement Survey, intermittent lack of insurance coverage was associated with less use of preventive services, which can have negative health consequences. ⁷³

Plan characteristics also may influence coverage stability, even after accounting for personal, environmental, and health system factors. Several studies report that public versus private coverage influences insurance loss/regain. Wray and colleagues examined people’s perceptions of the instability of their insurance coverage. ⁷⁴ Compared to those covered by Medicare, people covered by employer-sponsored plans were more likely to report instability. Compared to those covered by Medicaid, people covered by employer-sponsored insurance were less likely to report coverage instability.

Medicaid has a “built-in source of instability” as people’s incomes shift above and below Medicaid’s income eligibility threshold, ⁷⁵ although individuals in Medicaid expansion states may have less discontinuous coverage than individuals in non-expansion states. ⁴⁸ Ideally, individuals who are above the income threshold for Medicaid can qualify for subsidized exchange plans, which can reduce breaks in coverage. However, a low-income individual may be unable to purchase an exchange plan because those plans have higher cost-sharing than Medicaid, which can lead to a break in coverage. Another factor is that the Medicaid provider network may not overlap with the provider networks in the exchange plans, which undermines continuity of care.^64,76–78

Product type (such as health maintenance organization, point-of-service plan, preferred provider organization, and fee-for-service plan) may be associated with insurance stability. For instance, group and staff model HMOs typically offer generous coverage of preventive services, with the goal of retaining enrollees for many years, which would increase the payoff of their investments in prevention and possibly attract healthier, more preventive-oriented enrollees. ⁵⁹

Almost all employer-sponsored plans, Medicare, and exchange plans have premiums and cost-sharing (copayments, coinsurance, and deductibles). ⁷⁹ Prior to the coronavirus pandemic, 22 of the 39 Medicaid-expansion states have obtained federal waivers to impose premiums or cost-sharing for selected services and populations. ⁸⁰ Premiums and cost-sharing are intended to control health care utilization and expenditures but can have unintended consequences for insurance stability in low-income populations. ⁸¹ For adults and children with low-incomes and enrolled in Medicaid, studies consistently find that premiums and cost-sharing are associated with increased financial burden and disenrollment.^82,83

Individuals with dual coverage from multiple plans may be less likely to experience breaks in coverage if an individual losses one plan but retains the second plan. For employer-sponsored insurance, employer size is related to insurance instability: compared to large private and government employers, small employers are more likely to drop coverage, and also are more likely to offer fewer insurance options with less generous coverage and higher premiums that employees cannot afford.^84,85

Returning to Figure 1, individuals may experience coverage losses and changes more than once, which accumulate over time and define an individual’s (in)stability of coverage since birth (see bottom of Figure 1). Given evidence that being uninsured is associated with worse health, the framework implies that as insurance instability accumulates over the life course, a person’s health may decline, which is captured by the two-way arrow between insurance stability and health status in the conceptual model.