The uninsured: Montana's health insurance coverage rates are among the worst in the nation.

Montana has always ranked near the bottom in cross-state and national comparisons of health insurance coverage. Current estimates suggest that anywhere from 14 percent to 19 percent of Montanans have no health insurance.

During the winter of 2003, the Montana Department of Health and Human Services and The University of Montana's Bureau of Business and Economic Research conducted two surveys designed to help fill major gaps in the state's knowledge of its uninsured population.

The Montana Household Survey and Montana Employer Survey were then bolstered by a series of 30 interviews with "key informants" statewide--health care providers, clinic and hospital administrators, private business people, farmers, ranchers, insurance executives, and community leaders and advocates who have contact with Montanans who are either uninsured or at high risk of becoming uninsured.

At the time of the surveys, 19 percent of Montanans, or about 173,000 people, were uninsured. Slightly more than half (51 percent) of those surveyed had employer-based health insurance. Individual health insurance policies covered 9 percent of the state's population. And Medicaid and the Children's Health insurance Program (CHIP) covered 6 percent, a rate that was lowered somewhat by counting people who were dual-enrolled in Medicaid and Medicare.

Finally, 15 percent of Montanans were insured under Medicare. Uninsured rates for the non-elderly population are a more accurate measure of the health insurance gap in Montana, since nearly everyone 65 years of age and older has health insurance through Medicare (Figure 1).

Montana's uninsured rate is higher when the elderly who are covered by Medicare are taken out of the sample and population numbers. Twenty-two percent of Montana's non-elderly population has no health insurance--public or private. Employer-based insurance covers 58 percent of Montanans under age 65, compared to the national rate of 67 percent. Individual health insurance coverage is 10 percent in Montana, compared to a national rate of 7 percent. Medicaid and CHIP account for 10 percent of the state's non-elderly health coverage.

Health insurance rates by age show considerable differences between younger and older Montanans (Figure 2). Thirty-nine percent of young people between 19 and 25 years of age have no health insurance. Montanans 26 to 49 years of age have an uninsured rate of 24 percent, while 14 percent of older residents between 50 and 64 years of age have no coverage. Children--ages 18 and younger--have an uninsured rate of 17 percent, one of the highest such rates in the nation.

Sources of insurance vary by age. Fifty-seven percent of children 18 years of age and under have insurance coverage through employers, primarily based on their parents' employment. About 16 percent of Montana children 18 and under receive health coverage from Medicaid or CHIP, one of the highest coverage rates of any age group.

Household income levels are a major determinant of health coverage. As would be expected, lower-income households have higher rates of uninsurance. About 43 percent of Montanans in households with incomes below the 2002 federal poverty level ($18,100 for a family of four) have no health insurance. Alternately, Montanans who live in households with incomes more than twice the poverty level have a relatively low uninsured rate of 13 percent.

A number of uninsured rates show racial, geographic, and employment variations in health care coverage. American Indians under age 65 had an uninsured rate of 38 percent, compared to 20 percent of non-elderly whites and other races. Following Census Bureau methods, the Indian Health Service was not considered a source of health insurance since it is not available to all Indians or in all areas, and its availability and level of service is contingent on federal budget decisions.

Montana's uninsured rate of 21 percent in urban areas was slightly lower than the 23 percent rate in rural areas.

Uninsured rates varied over different employment categories. The uninsured rate for self-employed Montanans was 24 percent, compared to a 19 percent rate for other workers. Unemployed people had an uninsured rate of 41 percent. Full-time students had a 27 percent uninsured rate, while disabled and retired people had uninsured rates of 12 percent.

Montana's uninsured, then, are most likely to be:

* white (86 percent of the uninsured);

* adults over 25 years of age (67 percent between the ages of 26 and 64);

* high school graduates or better (92 percent);

* single or divorced/separated (31 percent + 15 percent for combined 46 percent);

* living in households with incomes more than twice the federal poverty level (45 percent of the uninsured);

* self-employed or employed by someone else (77 percent).

The majority of uninsured Montanans are employed. In the 2003 survey, 24 percent of the uninsured were self-employed and 51 percent worked for someone else. (For uninsured children, these statistics refer to the primary wage earner in the family.) A high percent of employed Montanans who were without insurance were in permanent jobs (84 percent) and were employed by small businesses with 10 or fewer employees (56 percent). Industries with high numbers of uninsured workers included agriculture, construction, government, hospitality services (motels, casinos, convenience stores, and gas stations), and other services such as repair businesses and retail trade.

Insurance Costs and Coverage

The high cost of health insurance and health care are pervasive themes in many of the responses from the interviews. Medical debt is one direct impact of high health insurance and health care costs. The household survey asked respondents about their unpaid medical bills during the past 12 months. Uninsured people were more than three times as likely to have medical debt (21 percent) compared to those with health insurance (7 percent). Average medical debt was $2,500 or higher and represented as much as 16 percent of household income for the uninsured.

Average debt was high for every insurance coverage category. Montanans with medical debt had, on average, $2,546 in unpaid medical bills over the past 12 months. Average debt was slightly less for those with health insurance ($2,506) and increased to $2,700 for uninsured people. Publicly insured individuals had the highest average medical debt: $2,828.

Medical debt attributed to out-of-pocket health care was 13 percent of household income statewide. The debt-household income ratio dropped to 9 percent for people with health insurance. The uninsured had medical debt equal to 16 percent of the household's income. Publicly insured individuals had medical debt representing 25 percent of their household income (Figure 3).

Health insurance premium costs can dramatically impact household budgets. How much choice uninsured persons have to buy or not buy health insurance coverage is an important behavioral aspect of the issue. Some uninsured people have to choose between spending their income on health insurance and paying for housing, groceries, and other basic necessities. However, advocates of the choice explanation argue that some uninsured people choose to spend their money on snowmobiles and other consumer luxuries rather than on health insurance.

The "snowmobile" hypothesis of discretionary choice and household spending was examined by asking respondents in the household survey which statement best applied to them: Do they choose not to buy insurance because they are healthy and would like to spend their money on other things that are not absolutely needed? Or must they use all of the money they have for absolutely necessary things like food, clothing, and housing instead of health insurance?

Ninety percent of the uninsured said their lack of insurance was either forced or the result of a lack of money after paying for basic life necessities such as food, clothing, and housing. This response pattern was reinforced by the comments of focus group participants who said high premiums were beyond their monthly income (Figure 4).

The impact of health insurance costs on household budgets was explored through several other questions in the household survey. Montanans were asked if they could afford a monthly premium--and how much they could afford to pay. Eighty-one percent indicated that they could afford a monthly premium, with $96 the amount considered affordable.

Individual Health insurance Coverage

Individual health insurance policies covered 10 percent of non-elderly Montanans in 2003. Here's the breakdown: 57 percent of those policies covered an entire family, 18 percent were individual policies, and another 25 percent were individual policies provided by someone outside the immediate household.

Nearly all of the individual insurance policies required a deductible. Slightly more than 40 percent of the policies included prescription drug benefits. About 10 percent had a dental benefit, and 10 percent reported having a partner who got their insurance through work.

Premiums varied greatly. The average monthly premium was $265 for a single individual policy. The average for family coverage in the individual insurance market was $418. Average deductibles were $3,283 for a single individual policy and $3,136 for a family policy.

Employer Survey