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HEALTH MARKET - Overview
This chapter discusses health insurance coverage, which, in turn, has direct and indirect impacts on health status, the availability of health resources, and health resource utilization. In 2004, the Institute of Medicine (IOM) of the National Academies released its report, Insuring America's Health, highlighting the importance of health insurance:1

  • Compared to people with insurance, uninsured children and adults experience worse health and die sooner.
  • Families can suffer emotionally and financially when even a single member is uninsured.
  • "Uninsurance at the community level is associated with financial instability for health care providers and institutions, reduced hospital services and capacity, and significant cuts in public health programs, which may diminish access to certain types of care for all residents, even those who have coverage."2
  • The nation as a whole is economically disadvantaged as a result of the poorer health and premature death of uninsured Americans. The IOM estimated that the lost economic value of uninsurance is between $65 billion and $130 billion annually.3
What makes up the health market?

The health market is the health care delivery system's economic activity, i.e., purchases and expenditures by a variety of buyers and sellers. Key aspects of the health market include health insurance coverage, health insurance premiums, types of health plans and insurance coverage available, the uninsured, health care expenditures, and medical care inflation.

Who participates in the health market?

Private and public health insurance covered an estimated 90 percent of Hawai'i residents in 2007. Private health insurance covered about 56 percent of residents. Of those people covered by private health plans in Hawai'i, 93 percent were covered through employment-based plans. The number of residents in public-sponsored insurance programs remained fairly stable between 1995 and 2007 at about 36 percent of the resident population.

From 1992 to 2007, the proportion of the population with overlapping coverage has increased by 80 percent. (Overlapping coverage refers to an individual's coverage by more than one insurance plan.) In 2007, nine percent of covered individuals, or 1 in 11 individuals, had overlapping coverage.

Although the Hawai'i resident population is relatively well insured compared to populations in most other states, direct and indirect problems persist. Many low-income Hawai'i residents remain uninsured and a significant number of full-time and part-time workers remain uninsured. Over 50 percent of the total number of uninsured in Hawai'i are working part-time or full-time.

What changes are occurring in the health market?

With the exception of those covered by Medicare and Medicaid fee-for-service options, Hawai'i residents with health insurance are covered under some type of managed care option, either a preferred provider organization or a health maintenance organization. Currently, both Medicare and Medicaid are also moving towards managed care options.

Efforts to control health care costs have been an important factor in marketplace changes in recent years. Over the past 10 years, Hawai'i's average inflation rate for medical care has been nearly 1.2 times higher than the state's overall inflation rate. While health insurance premiums are lower than the rest of the nation, for both single and family coverage, rates are continuing to increase, raising concerns about affordability.



> Understanding the value of health care
> Advances in medical technology
> Demographic and population changes
> Lack of health insurance
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