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May 2007

A Steep Price for the Uninsured
Texas' Uninsured Residents Outpace the National Average

Texas is a national leader in many categories, from oil and natural gas to alternative energy and agriculture. But it also leads the nation in the number of residents without health insurance.

More than 5.6 million Texans, a quarter of the population, live without health insurance, according to an April 2006 report by the Task Force to Access Health Care in Texas.

These statistics are mirrored by 2005 numbers from the Texas Comptroller of Public Accounts that found nearly 50 percent of the state's uninsured-more than 2.6 million Texans-live in Houston, Dallas and Fort Worth-Arlington.

Three Texas metropolitan statistical areas along the border-Laredo, El Paso and Brownsville-Harlingen-San Benito-had the highest rates of uninsured in the state, according to the Comptroller's report. Laredo led the state with 36 percent.

With a family of four paying an average of $9,100 in health care costs, it's not hard to see why many go without.

Code Red

The 19-member task force was sponsored by medical facilities at Baylor University, the University of North Texas, Texas A&M University, Texas Tech University and all six health institutions of the University of Texas system. The resulting report, Code Red: The Critical Condition of Health in Texas, concluded that the cost of care for the uninsured in Texas was $7.7 billion in uncompensated care in 2003, placing immense pressure on local emergency rooms and hospitals.

That pressure is increasing, according to the report. Hospitals must find a way to pay for uncompensated care or go bankrupt.

More than 2.5 million Texans were enrolled in Medicaid, and about 460,000 were participating in the State Children's Health Insurance Program in 2003, according to the report.

Many of Texas' uninsured are employed, and many of them work for small businesses with fewer than 50 employees. Small businesses make up 73 percent of the businesses in Texas, but only 37 percent offer a health insurance plan to their employees, according to Code Red. Worse, only 35 percent of employees actually enroll. Plans offered by small businesses usually are expensive, according to the report.

The U.S. average insurance premium for each employee in a business with fewer than 10 employees was almost $3,998 in 2004-the latest year for which data is available-and $3,687 for companies with 50 or more employees, a difference of $311 per year per employee, according to survey data from the U.S Department of Health and Human Services, Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends. In Texas, the average insurance premium for each employee in a business with fewer than 10 employees was $4,597 in 2004, but only $3,607 for companies with 50 or more employees, a difference of $990 per year per employee.

The Texas Department of Insurance provides information on available health coverage for individuals and businesses, according to Jennifer Ahrens, associate commissioner for life, health and licensing with TDI.

"Some of these things, like giving information to consumers, we do that already," she said. "But we're limited in our resources."

There are also insurance agents who specialize in working on insurance plans with small businesses. But, in many cases, business owners don't know where to find them.

"We hear a lot from small businesses that there's no way to know who those agents are and where they are," Ahrens said. "Agents are the ones who can help them find something that works for them. We just [need] to bring them together."

More information is available on TDI's Web site at

Small Business, Big Offerings

Chris Johnson knows first-hand how expensive it can be to provide employee health insurance.

"Every year that I have owned my own business the premiums that I pay have increased," Johnson said. "My premiums have gone up each year by a minimum of 9 percent."

Johnson has been in the telecommunications consulting business for nine years and has owned Lubbock-based T-Com for four. As a small business owner with 10 employees, Johnson could choose not to offer a health insurance plan to his employees. But he wouldn't dream of it.

Providing insurance costs T-Com about $14,000 per employee, Johnson said. He covers employees and their dependents. Employees are only responsible for paying deductibles.

There is an upside and a downside to offering insurance, he said.

"The bad side would have to be the cost," Johnson said. "The good is that my employees don't have to worry about paying high prices for insurance on their own. I pay the premiums for the entire family for a couple of reasons: The first is I believe that it helps me to retain the employees that I have now and, second, it gives me an advantage against other, larger firms that only pay for the employee."

New Options for Texas

Texas may receive some relief from Senate Bill 10 (SB 10), which was passed by the state's 80th Legislature and sent to the governor. In addition to improvements to the Texas Medicaid program, the bill also addresses the health care costs of the state's uninsured population.

Specifically, SB 10 directs the Texas Health and Human Services Commission to seek a waiver within the Medicaid program to implement the Texas Health Opportunity Pool (THOP). The THOP would defray costs associated with providing uncompensated health care by using federal, appropriated state and other available funds. Part of the pool would be used to provide premium payment assistance to eligible Texans and to make contributions to their health savings accounts.

THOP funds also would be directed to help partly offset the uncompensated health care costs incurred by hospitals, to enhance the community public health infrastructure and to increase the efficiency of health care systems.

Out-of-State Success

Massachusetts' Commonwealth Care program went into effect in October 2006. The program took about three years to set up and was first available to uninsured workers with an income of less than 100 percent of the federal poverty level, which is about $20,000 annually for a family of four, according to the U.S. Census Bureau.

A second phase of the program started on January 1, 2007, and a third has yet to begin. The number of uninsured residents is already coming down, according to Dick Powers, director of public affairs for the Connector Authority, which oversees the program.

"Overall, the number of uninsured has decreased by about 25 percent," Powers said. "We believe people with health insurance will have better health. They'll see their primary care physicians and have fewer visits to more expensive, less cost-effective emergency rooms."

The Big Picture

Texas is not the only state with a health insurance crisis. Over the last 20 years, the number of uninsured, nonelderly Americans has increased steadily.

YearPercentage of U.S. Population Uninsured
1997 17.0
1998 16.8
1999 16.3
2000 16.6
2001 17.1
2002 18.1
2003 18.7
2004 19.1
Source: Robert Wood Johnson Foundation.

Young and Uninsured

Americans aged 25-34 have the highest rate of uninsured, nonelderly adults.

25-34 27.3
35-44 21.8
45-54 16.8
21-24 15.5
55-64 10.6
18-20 8.1

Source: Robert Wood Johnson Foundation.

Quick Facts

Texas has more residents without health insurance than any other state. The uninsured come from all walks of life, employment circumstances and ethnic groups. The unifying factor, unfortunately, is that their costs continue to increase.

  • Annual U.S. health expenditures per person have increased from $143 in 1960 to $6,040 in 2004.
  • 79 percent of uninsured Texas adults either work or are in a family with a working adult.
  • Texas hospitals provided $7.7 billion in uncompensated care in 2003.
  • Only 37 percent of small businesses offer health insurance.
  • Only 35 percent of small business employees enroll in employer insurance.
  • About 80 percent of the uninsured people living in Texas are U.S. citizens.

Source: Code Red: The Critical Condition of Health in Texas.

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