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Exploring Uninsured Options under Budget C onstraint
Nella M Porter, MSW
ABSTRACT
The nation’s compounding financial instability has constrained the budgets of middle-
low-income populations, which has in turn promoted an exponential increase in the number
of medically uninsured individuals. Since the Affordable Care Act (2010) was enacted, the
1 healthcare ge available in the exchange marketplace has still been costly for
circa 36 million uninsured Americans who daily struggle to meet their basic needs. This
reflects a fr d healthcare system that fails to comprehend its consumers’
socioeconomic and racial inequalities. Public and private entities have individually attempted
to address such disarray, but a truly collaborative effort to improve the nation’s health status
has yet to be realized. This paper details how system dynamics can break through the
uninsured status quo of racial minorities in the United States. By infusing R. Chisholm’s
theory of knowledge and V.R. Fuchs’ social determinants of health into M. Grossman’s model
of health and production possibilities frontiers (PPF ), we, as nation, will reduce the
prevalence of four major comorbidities--infant mortality, postpartum hemorrhage, malignant
cancer, and diab hile simul ly decreasing unscheduled absenteeism rates in the
workplace. Essentially, this model integrates system dynamics into a parametric approach to
create a collaborative envir t s, healthcare practitioners, and third-
party payers. Although the findings show a potential savings of approximately US$16,000 per
per year, the application of this technique faces a few challenges due to discord
between the healthcare industry segments, third-party payers, and underserved racial
communities. Finally, J propose that healthcare stakeholders impl “itinerant patient-
centered clinics,” a form of affordable care accessible to diverse minorities nationwide.
Keywords — fragmented healthcare system, production possibility frontier, social
determinants of health, theory of knowledge, and itinerant patient-centered clinics
I. INTRODUCTION
Consecutive financial crises in the United States have prevented millions of American
citizens from fully participating in the economic mainstream of society. The Great Recession of
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2007 accelerated this process by depleting the savings of millions to the point that poverty status
has become irreversible to one-third of the nation. As pinpointed by Wolff (2010), indebtedness
skyrocketed among the middle-to-low income classes after the last recession. The debt-to-ratio
income surpassed 36% for young and middle-aged households. Currently, the top wealthiest 1%
owns 42.7% of the nation’s wealth, and the following 19% share 50.3%. At the bottom of the
social ladder, 80% partage only 7% (pg.15-18).! This population lacks access to banking services
(106 million underbanked), health care coverage (~36 million uninsured), education (46.2
million illiterate), and employment (93.2 million unemployed/partially
employed), and hence they are unable to afford their minimal needs—food, housing, health care,
and safety consistently (FDIC, 2011; BLS, 2014; WSJ, 2015,2016: KFF,2016).2_ Asaresult,
21% of all Americans under age 18 and 38% of adults, including seniors, are living below the
poverty threshold line without any form of health care (HHS, 2011; SAHIE,2013).3 They are
labeled “medical uninsured” because do not qualify for any welfare assistance due to categorical
criteria and yet are ineligible for Medicaid or Medicare benefits (Segen, 2012). Without further
alternatives, the medical uninsured populations have been utilizing hospitals (emergency-rooms)
for non-emergency healthcare to address their primary care routines (CDC, 2011; GAO,2014).5
Based on the 2011-National Hospital Ambulatory Medical Care Survey, the number of
outpatients for general medicine reached 125.7 million, the equivalent of 3 points above the
previous indexes (19.5%) due to budget constraint (CDC,2011; AHA, 2014).° For the medically
uninsured populations, this status quo has promoted material deprivation, social exclusion, poor
health outcomes, and ultimately death (Murali & Oyebode,2004; O’Campo et al., 2015).”
The endless fragmentation of the US healthcare system not only put at risk millions of
American lives, it also has compromised the economic stability of the country by significantly
impacting the labor productivity and supply, consumption of goods, and capital formation
1 Wolff, E. (2010). Recent trends in household wealth in the United States: Rising debt and the middle-class
squeeze — an Update of 2007. Levy & Economics Institute of Bard College. Work Paper 589.
? Federal Deposit Insurance Corporation (2011). The 2011 National survey of bank’s effort to serve unbaked
and underbanked. Reports 2011 and 2013.
US Bureau of labor and Statistics (2014). Unemployment rates for state database.
Wall Street Journal (2015,2016). US unemployment maybe 42. % by Louis Jacobson and What the
unemployment rates show by Jo Mcginty.
The Henry Kaiser Family Foundation (2016). New estimates of eligibility for ACA coverage among uninsured
by Garfield, R et al.
3 US Department of Health and Human Services (2015) National health interview survey early estimates.
US Department of Commerce Economic and Statistics Administration. Real GDP by States and Indicators
4 Segen, J.C. (2012). The concise dictionary for modern medicine. The Parthenon Publishing Group
5 US General Accountability Office (2014). Health care transparency: Actions needed to improve cost and
quality information for consumers. GAO-15-11.
Center for Diseases Control and Control (2011). National Hospital Ambulatory Medical Care Survey:
Outpatient Department Summary
®A merican Hospital A ion (2015). Rethinking the Hospital dmission Program. Pg. 1-8
7 Murali & Oyebode (2004). Poverty, Social Inequalities & Mental Health pg. 216-224
O’Campo, P at al. (2015). Social Welfare Matters: When, How, & Why unemployment insurance impacts
poverty and health conditions.
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(Shurcke et al 2006). Last year, unscheduled absenteeism due to medical conditions cost $320
billion to the US corporations, corresponding to in average to the amount of $3,200 per
employee per year or 10% of the total healthcare expenditure (Gellatly,1995; Circadian, 2015).2
As underlined Adam Smith (1776), “the loss of productivity reflects the weakness in the
productive powers of labor, and hence a disturbance among the different ranks and conditions of
people in society (Wealth of the Nations).'°
For those who are still part of the economic mainstream (i.e. insured and underinsured),
life has become harrowing. They live from paycheck to paycheck, carrying an average of
$75,600 in debt predominantly resulting from medical bills. According to the Bureau of Labor
and Statistics Report (2014), only 32.48% of all employed A mericans are currently covered by
employer-provided health insurance.’ However, their coverage still requires additional high
deductibles, co-payments, and out-of-pocket fees that range between $5,000 and $10,000 for
preventive physical check-ups.'? Over the past years, unpaid medical bills have been the leading
cause of filing for bankruptcy protection in the United States. Studies focusing on medical-
related-bankruptcy emerged in 2005, when Health A ffairs published the Illness & Injury as
Contributors for Bankruptcy, a study conducted by Himmelstein et.al. They investigated 1171
personal bankruptcy files in five civil courts. At that time, the statistical analysis indicated that
between 1.9- 2.2 million Americans filed bankruptcy due to medical-related-bills, including a
percentage of middle class insured people (pg.65-67).!° The topic sparked the interest of other
scholars surfacing new studies because bankruptcy was adding more distress to the ill individuals
and their families, and hence compromising the recovery process (Himmelstein et. al.; 2009;
Emami, 2010; Kalousova & Burgard, 2013; NerdWallet, 2013, 2014; Wall Street Journal,
2015).!4 Outside of bankruptcy, about 56 million adults between the ages of 19-64 continue
to struggle with health-care-related bills, and in the upcoming years, another 10 million
® Suhrcke et al (2006). Chronic Disease: An economic perspective. London, Oxford Health Alliance.
° Gellatly, I.R. (2006). Individual and group determinants of employee absenteeism: Test of a causal model
DOI: 10.1002/job.4030160507
Circadian Information Limited Partnership LLC (2015). Absenteeism: The bottom-line killer (pg.3-5)
10 Smith, A (1776) An Inquiry into the Nature and Causes of the Wealth of Nations.
1! Bureau of Labor and Statistics (2014) Report of National and local health insurance coverage
1 Kellerman, A.L. (2011). A decade of healthcare cost growth has wiped out real income gains for an average
US Family Health A ffairs
13 Himmelstein, D., Thorne, D., Warren, E., & Woolhandler, S. (2005) Illness and injury as contributors to
bankruptcy. Health A ffairs. Vol 30
1 Hammerstein et al. (2009)). “Medical bankruptcy in the United States, 2007: Results of a National Study". The
American Journal of Medicine 122 (8): 741-746
Emami, S. (2010). Consumer over-indebtedness and health care costs: How to approach the question from a
global perspective. World Health Report (2010) Background Paper, 3.
Kalousova, L. & Burgard, S.A. (2013). "Debt and foregone medical care. Journal of Health and Social
Behaviour 54 (2): 204-20
Mangan, D. (2013). Medical bills are the biggest cause of US bankruptcies: study. CNBC of March 2013.
Lamontagne C. (2014). Medical bankruptcy accounts for majority of personal bankruptcies. NerdWallet
Stech Katy (2015) The future of personal bankruptcy in a post-Obamacare world. Published by Wall Street
Joumal on Julyist., 2015.
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will be accumulating medical bills they cannot pay off, (NerdWallet, 2013,2014)? as illustrated
in figures 1 and 2.
Figure1. Medical-Related bankruptcy Figure2. High- Deductible plans
Percentage of all privately insured individuals and
families under age 65 with high-deductible plans
Total percentage with high-deductible health plans
With health savings account
@ Without health savings account 36.9% 36.7%
13.3% 13.3%
PERCENTAGE
=
|
35-44 45-54 25-34 55-64 65+ 18-24
AGE
Note. Adopted from NerdWealth. Retrieved from www.nerdwelath.com
2010 zo 22S (ONS
Note, Adopted from HHS, Retrieved from www.cnbe.com
The American healthcare system is one of the most expensive in the world at $3.4 trillion
in federal spending for 2015, but is not the best delivery system for its costs (US Census, 2015)
as shown in figure 3. In the 2014 Organization for Economic Cooperation and Development
(OECD) Report issued by OECD on 43 countries, the United States received the following
rankings: first in obesity (above 13.2%), in consumption of pharmaceuticals (above $ 502.00 per
person), and in infant mortality amongst wealthy nations (6:1 death per 1,000 live births), 17% in
morality from cardiovascular diseases (below 35.2 per 100,000 pop), 25" in cancer mortality
(below 25.4 per 10,000 pop.), 28" in doctors per capita (0.7 doctors per 1,000 pop in cities), and
25" in hospital beds (below 1.4 beds per 1,000 pop.).
Figure 3. Comparative Analysis Across Developed Countries
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
< ra a
me Heatthcare p/Capital ~—eTrend Line
Note. Adopted from the for Economic Co-operation & Development. Retrieved from http://stats.oecd. org/index.asp
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Economists attribute the cost of the US healthcare delivery system to the principles of the
free market, solidly rooted in supply and demand. However, this system is carved by features and
characteristics of an oligopolistic structure that dictates market share (usually controlled by the
largest players), pricing behavior (kinked demand curve), and strategic interaction between rivals
(game theory).'° With a few firms controlling the prices of products, services, and supplies,
access to care has become unfeasible for low-income racial minorities, who earn the standard
minimum wage between $6.50 and $7.25 per hour (BLS, 2015).!° In other words, household
income, e.g. salaries, wages, retirement income, and cash social benefits, limit the consumption
options of goods. A budget constraint forces consumers to make choices suitable to their
monetary resources towards optimal utility (a benefit in return of consuming a product or
services) as shown on figure 4.17 Under the standard of macroeconomic assumptions,
consumption delivers utility through a utility function.'* For example, if Maria consumes a
quantity X of vitamins in a given period, we can infer she receives Y units of health utility. In
regards to the consumption of healthcare insurance, uninsured populations do not appraise the
optimal tradeoffs between price and utility due to budget constraint.!9
Figure 4 — Key factors of Uninsured Population in the United States
= Too Expensive
Inelegible
z= Immigration Status
Employer Noneligible
Lack of Knowledge
Refuse to Eneroll
Other
Sources — Adapted from The Henry J. Kaiser Foundation. Retrieved on3.20.2016 from www. http://kff. sh
15 Hirschman, A. O. (1964). "The paternity of an index". The American Economic Review (American
Economic Association) 54 (5): 761. JSTOR 1818582.
16 US Bureau of Labour and Statistics. Wage and Hour Division /www.dol.gov/featured/minimum-wage
17 Lipsey, R. G. (1975). An introduction to positive economics. Weidenfeld & Nicolson. pp. 214-7
18 Neumann-Morgenstern theorem proved that any individual expected maximize the value of an investment
based on a real-valued function. A decision utility describes the rational behaviour of a decision maker.
19 Web Finance, Inc (2016) A technique of reducing or forgoing one or more desirable outcomes
in exchange for increasing or obtaining other desirable outcomes in order to maximize the total
retum or effectiveness under given circumstances.
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To control healthcare expenditures and address the major gaps of a fragmented
healthcare delivery system, the United States government passed the Patient Protection and
Affordable Care Act in 2010 (PPACA- Public Law 111-148), targeting primarily uninsured
populations to reduce the largest expenditure — hospitalizations.”°
With the enactment of the PPACA, the key private and public stakeholders assumed that
the U.S. impoverished populations would be able to shoulder the financial burden of expensive
coverage premiums derivable from the healthcare marketplace exchange. They expected that
healthy American uninsured populations would immediately enroll and therefore generate
enough funds to subsidize the unhealthy pool. But the leadership team did not take into account
the exorbitant increases and variations of medical care costs, premiums, out-of-pocket spending,
and families’ existing medical debts. Besides, public leaders ignored the statistical analysis
reported by the National Research Council (NRC,1995) suggesting a new Supplemental Poverty
Measure (SPM): an inflation adjustor manual based on families’ real expenditures, including
food, shelter, utilities, clothing, transportation, and others. By rejecting, the NRC
recommendations of a new poverty adjustor coefficient, the US government vetoed 10 million
eligible Medicare and Medicaid applicants from receiving early-onset medical care.”! These
strategies neither de-escalated the cost of healthcare nor contributed to reduce the comorbid
conditions of the applicants. In fact, they worked in quite the opposite manner. Hospitalization
rates grew exponentially, whereas the expenditures of Medicare and Medicaid skyrocketed in
such way that lawmakers redefined the section 1886(q) of the Social Security Act into a Hospital
Readmission Reduction Program (HRRP), and subsequently into the section 3025 of PPACA
aiming to bring the costs of hospitalization down from the current $920 billion (CMS, 2010).
In October of 2012, the Centers for Medicare and Medicaid Services (CMS) implemented
HRRP forecasting a savings of approximately $428 billion by decreasing acute myocardial
infraction, (AMI), heart failure (HF), and pneumonia (PN) hospital readmissions. However, the
implementation of HRRP has been an ongoing undertaking with each sector of the hospital
industry having its own goals, responsibilities, and competencies. The challenge started with
hospitals facing dichotomies between the two distinct policies, ACA and Title 42 of The Public
Health and Welfare, and has extended to the unfair monetary penalties charged to all hospitals
that exceeded the standardized readmission rates.* Although the reduction of preventable
hospitalizations is an essential piece of cost-control, its practice cannot inhibit patients’ clinical
treatment and safety. In the case of HRRP, the symbiosis between quality of care and cost
control have not yet happened based on national healthcare public reports.
The inaccuracy of standardized metrics and risk adjustment rates neither included the
utilization rates of dual-eligible (Medicare/VA, Medicare/ Medicaid) recipients nor the
demographic characteristics of the of the regions (A rbaje et al., 2008; Krumholz et al., 2012:
20 PPACA-A ffordable Care Act. (2010). 42 CFR part §412.150 through §412.154
21 National Research Council (1995). Supplemental Poverty Measure (SPM)
22 Affordable Care Act (2010). Section 3025 Hospital Readmission Reduction Program (HHRP)
Cost of hospitalization in 2014 was estimated in $920 billion.
23 Title 42 of The Public Health and Welfare, Chapter 7-Social Security (US Congress, 2011
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AHA 2014). Under those circumstances, 150,000 hospitals were unfairly penalized with
unbearable fines for exceeding the CMS readmission rates. To put it in another perspective, the
implementation of HRRP, rather than improving quality of care and managing costs, has
contributed to the shutdown of hundreds of hospitals nationwide.?°A ccording to a new survey,
conducted by two nonprofit organizations, circa 57 inner-city hospitals have closed over the past
three years, and 283 are in danger of ending their operations due to financial deficits aggravated
by CMS penalties. In the inner-cities of Alabama, Arizona, Idaho, Illinois, Louisiana,
Mississippi, New Mexico, North Dakota, Tennessee, Texas, and West Virginia, the closure of
hospitals represent a calamity for patients who have to commute over 40 miles radius to access
26 These closures have significantly raised the infant mortality ratio up to 3.2 points above
the national average (6:1 per 1,000 lives birth) along with postpartum hemorrhage (140,000
deaths per year), and the adult mortality for non-communicable diseases (i.e. heart disease,
cancer and lung disease) has reached 1.5 times higher than the national average of 169 deaths per
100,000?’ (See A ppendix A).
When all the inconsistencies of the healthcare delivery system became more visible to
consumers, the utility function of health care lost its reliability and intrinsic purpose —
maintaining and improving the state of complete physical, mental, and social well-being”* At the
present time, uninsured Americans no longer believe their monetary investments in healthcare
insurance produce tangible and intangible benefits in an equitable manner. The lack of
immediate return on the investment (ROI) has altered consumers’ perception of the tradeoff,
leading them to postpone the acquisition of healthcare coverage. They are more likely to invest
in products and services that provide immediate health benefits today rather than buy protection
for an uncertain sick times in the future.
In response to the administrative disarray, this study suggests an interactive social
healthcare model as a paradigm shift of the existing oligopolistic healthcare structure rooted
exclusively in pricing strategy (i.e. inelastic price). I argue that it is time to meet the consumers
in locus in quo instead they meet the providers in institutional healthcare settings, which are
impersonal, risky, and costly to maintain. Through itinerant patient-centered clinics, healthcare
practitioners can focus on consumers’ health conditions, safety, timeliness, effectiveness,
efficiency, and equity?®. Another way to enact this concept is by “decentralizing healthcare
services” in small cells (e.g. vans, busses, trucks) to promote a positive multiplier effect in the
24 Arbaje et al. (2008). Post- nvi | and soci ic factors and the likelihood of early
hospital readmission among community- iwelliig beneficiaries.
25 Canters for Medicare and Medicaid Services (2012) Hospital Readmission Reduction Program
26 Becker’s Hospital CFO (2015). A state-by-state breakdown of 57 hospitals closures. Retrieved
from http://www.beckershospitalreview.com/finance/ on 3/20/16.
27 See Appendix A — Rates of infant mortality in states with high prevalence of racial minorities are also those
with high number of inner-cities hospitals closed. These populations have no primary care for medical
routine.
28 World Health Organization — definition of health
29 Equity in this context means quality of care tailor to consumers’ cultural background and other personal
characteristics that directly impact their physical, mental and social health status.
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domestic economy. Financially, itinerant patient-centered clinics will instantaneously reduce the
preventable hospitalizations, whereas minimize the number of bankruptcies due to medical bills.
In addition, it will decrease the number of unscheduled absenteeism in workplaces. Medically,
these services will decrease the national prevalence of infant mortality, postpartum hemorrhage,
asthma, diabetes, cancer, and cellulitis before they reach epidemic levels. At same time, through
cost-effective preventive care, these major chronic diseases will be address in early-onset stage,
decreasing the cost of late-onset treatments. Finally, this model, will contribute to lessen the
adverse social association of income inequality and good health care.
Research Question— What medical options are available to insured populations under
budget constraint?
To answer this question, the investigator applied a multidisciplinary approach by combining
philosophical (pre-analytical “aporia”), along with parametric (utility function), and non-
parametric (socio-ecological) methods, and system dynamic simulations (nonlinear).°° The
process starts with a causal loop diagram (CLD) showing the relationships between uninsured
status, chronic diseases, productivity, bankruptcy and utilization of ED’s illustrated on figure 5
Figure 5. Causal Loop Diagram of Health Status & Medical Bills
Chronic Insured Status
- ———, fo
west 48) Healthcare 1) Hospitals
Appointments
Insurance ED's)
?
‘ +
Absenteesim 7
Deductibles/
Bankruptcy related
Co-peymerita] Medical Bills
ae eee
+
a B
Productivity -
Unemployment,
Risk
Author- Nella M Porter, MSW, MHA — March 2016.
5° Chisholm (theory of | ledge), Grossman (producti ibili
framework), and Sterman (system dynamics).
frontier), Fuchs (socioecological
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The philosophical approach employs Chisholm’s (1989) theory of knowledge, which
explains consumers’ mindsets through the concept of “greater reasonability.” Chisholm
suggested a link between directly evident knowledge and indirectly evident beliefs about the
external world, the past, and other matters about which we gain knowledge (pg. 10-13).2! Ina
few words, knowledge is an association of perception, memory, evidence, and belief with
positive and/or negative coherence of conditions and sources that can be found justifiable. For
instance, let’s admit that health insurance prices are equitable, and Mary is processing the
external world framed by her socioeconomic identities, as follows:
Mary believes in healthcare coverage
Mary justifies it
Mary accepts healthcare coverage price
Mary has adequate evidence to prove it
Then, health coverage price is true for Mary
In contrast,
Paul believes that healthcare coverage is costly
Paul has adequate evidences based on his own past experiences
Paul is sure this is true
Then, Paul reasonably believes health coverage is costly
Applying Chisholm’s aporia to uninsured populations, we can infer that they have
established their own greater reasonability about health insurance based on past experiences and
beliefs, and hence they have resisted enrolling in coverage due to knowledge and budget
constraint (45-47).32 But Chisholm also argued that reasoning is elastic and can be reshaped or
transformed by new events (pp. 50-53). Given these points, we can speculate that uninsured
people’s own greater reasonability is changeable if healthcare leaders are willing to deliver new
prices and conditions for their goods (i.e. if elastic knowledge equals elastic price and terms). As
a society, we have seen a few isolated attempts of public and private entities to move towards an
inclusive healthcare system. But all insurance and healthcare providers have neglected and to
some extent penalized disabled-bodies by denying suitable coverage. They have charged higher
prices for their pre-existing medical conditions, or providing inadequate treatments for such
conditions.*°
To reconcile such disarray, I am proposing to infuse Grossman’s (1972) model into the
people’s own greater reasonability, while healthcare leaders adjust the price and terms of the
current healthcare premiums.** This collaborative effort can bring a positive multiplier effect on
31 Chisholm (1989). Theory of Knowledge
2 Socrates aporia and wisdom of emptiness reflect by Chisholm means impasse, puzzlement
33 Medical pre-existing condition is defined as any injury, illness, sickness, diseases or other physical, medical,
mental or nervous conditions
3 Grossman, M (1972). On the concept of health capital and demand for health. Journal of Political Economy,
80(2), 223-55
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comorbidities, costs and labor productivity and supply. Grossman defined an individual’s utility
as a function of the time spent with health (H;) and everything else (Z1):
U =U (Ht Z1)
Unpacking Grossman’s equation, (Ut) utilization of time is a constant variable of 24
hours that determines the health status upon its distribution across lifespan. For example,
knowledgeable individuals (I:) invest 1 hour daily exercising to reduce the risk of cardiovas-
cular disease, whereas individuals without such knowledge (I2) spend the same time sitting on
the couch eating. The lack of health related knowledge for Ip leads to poor utilization of time
along with detrimental consumption of the existing health capital, which consequently
accelerates the decline of their total health status. This decline exacerbates rapidly when
individuals are unable to determine their own health status, what I shall term “knowledge
constraint.” Along with the desirable tradeoffs between H and Z, there are other factors, time and
budget constraint, that obstruct the individuals’ ability to gain total utility (Ui). Operating
independently or dependently of each other, these variables impact the production of H and Z
during individuals’ lifetime. Grossman coined such a limit the “production possibility frontier”
(PPF) for H and Z, which focuses on the tradeoffs of time working, enjoyment, health
improvement, and time sick. In other words, one’s health status is framed by knowledge, budget,
and time constraints. It also can be ameliorated when we recycle knowledge through the
following equation.
0 =24=TwtTz+Tut+Ts
Where
Tw - time spent working,
Tz - time spent enjoyment,
Tu- time spent improving health and
Ts - time spent sick
The value of disseminating this equation among diverse populations is to decrease Ts
(time spent sick), which impacts time working, time of enjoyment, and time to re-establish a
prior healthy status. In practical terms, the reduction of Ts has multiple positive socioeconomic
outcomes such as (a) lowering of the unexpected absenteeism rates in workplace, (b) containing
cost of healthcare expenditures, (c) decreasing of prevalence and incidence of chronic diseases in
early life stage, and (d) increasing of U (Tu, Tz, and Tw) to be reinvested in Ty.
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Figure 6. PPF of +$55,000 (a full time job) Figure 7. PPF of $36,000 (2 part time jobs)
Zz bee. Z
PPF
“ ,
|
|
a
Hy - Hy Hy H
or
Comparing the PPFs of two groups of individuals with different socioeconomic status
(SES), we noticed that individuals with a full time job can invest up to 2 hours daily in health
improvement,
0=24=Tw+Tz+Tu+Ts
10+ 12+2+0
whereas individuals with two part-time jobs have no time to left to invest in their health
improvement because they consume approximately 73.2% of their total time in working
(ie.17.56 hours working). Over lifetime, this systematic utilization of time working (Tw), leads
to poor physical, mental, and social outcomes (Tu), which consequently increases the proportion
of time spent sick (Ts).
0=24=Twt+Tz+Tu+Ts
Scenario 1 17+0+0 +4 resulting in presenteeism
Scenario 2 0 +0 +0 +24 resulting in absenteeism
Racial minorities invest highly in time working Tw but not in improving health Tx due to
policies that promote budget constraint. This cycle starts with no implementation of PPACA —
Part II, sections 1511-1515 — Employer Responsibilities, consequently employees cannot rely on
employers to obtain affordable health coverage. Second, the Congressional Budget Office
estimated that each employee costs +$5,800 per employee/per year, an unfeasible cost for small
businesses. Third, employers are mandated to provide healthcare coverage when their personnel
exceed 50 full-time employees. Four, tax incentives are still in debating in the US Congress, i.e.
“Cadillac” plans. When all those factors come together, low-income racial populations are
environmentally more exposed to multiple chronic diseases at young age and risky behaviors
than Whites. Their recovery is longer, complex, and expensive because the diseases already
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achieved late-onset. As a result, these populations struggle to make financial decisions about
health care investing.
Il. MODELING
" Tf aman neglects education, he walks lame to the end of his life."
(Plato-428-348 BEC)
Knowledge is defined as a human capacity to interpret information acquired from
experiences and education. Indeed, knowledge is an intellectual capital that continuously grows
by extracting information and ideas from external environment. It is then cultivated, processed,
shared, stored, and renovated into new knowledge over a period of time*. Knowledge is not
static, but recyclable. The acquisition and use of knowledge empowers individuals,
communities, and societies to changes their environments. To do this, individuals must realize
that knowledge is available and that they must take the initiative to learn and apply it. But
knowledge is monetized and just the elite can access it on their own. Racial minorities have often
been excluded from the process due to budget constraint, since they are compacted in the 80%
that share 7% of all available resources.
Health status like knowledge can be monetized in the market through investment options.
One of the critical factors among uninsured populations is their limited stock of Knowledge
Options due to budget constraint. This first section of the model has one stock Knowledge of
Options and three variables as following: Actual Options is defined as the total of available
options, whether they are accessible by the uninsured populations or not. Proportion of
Available Learning is a fraction of all existing options that can be learned based on individuals’
assets (capital, knowledge, and structure). Learning about Options correspond to the proportion
of available options over a period of time, and Adjusting time is related to a duration of the
process to learn about the options. Such mechanisms result in a balancing loop (B1) depicted in
the figure 7. As uninsured individuals increase their Learning about Options, they also increase
the Knowledge of Options. As the Knowledge of Options increase the Learning about Options
slow down and the growth of knowledge diminishes, balancing the accumulation of Knowledge
of Options at a level where knowledge stops growing and knowledge does not lead to more
change in options. The same principle applies to healthcare insurers and providers, practitioners,
and payers.
55 Merriam-Webster Dictionary — knowledge definition
Francis Bacon (1597). Meditationes Sacrae
Thomas Hobbes (1668).Opera Philosophica
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Figure 7. Main Structure of Knowledge Options
PROP of availabe
learning
Actual Options
Knowledge
of Options
Learning about
Options _
Ajusting Time
Actual Options - 100
Units- Options
Proportion of Available Learning - 0.45* Assets/A ssets
Units -Dmnl
Learning Options - Prop. of Available Options (Actual Options-Knowledge of Options)/
Adjusting Time
Units - Options/Y ear
Knowledge of Options — INTEG Leaming about Options
Initial Value- 35
Units Options
Adjusting Time - 0.4
Units — Y ear
As the uninsured populations learn more about the different the options, their degree of
knowledge also increases. This outcome is known from the Managing the Knowledge-Creating
Context: A Strategic Time Approach. Chong claimed that when knowledge increases the
proportion of available options increases based on managing knowledge process successfully.*°
The framework for understanding and utilizing knowledge is embedded on the relationship
between time and knowledge processes. As knowledge of options increase, the proportion of
available options also increases, and subsequently, the number of options. After some time,
uninsured become aware of the potential options, and hence they can increase the health capital
by investing more frequently in prevention and maintenance of their own health to preserve the
existing health status. Applying the same concept to healthcare leaders, the knowledge of
36 Reinmoeller, P., Chong, C-L (2002). Managing the knowledge-creating context: A strategic time approach
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uninsured budget constraint should promote more affordable products and services towards
sustainable consumption of care
Figure 8 Main Structure for Assessing Options
PROP of availabe
learning
Actual Options
PROP of available
Learning
about Options
Ajusting Time Assessing
Options
AT Options
Proportion of Available Options - 0.25* Assets/A ssets
Units- Dmnl
Assessing Options - Prop of available Options* (Knowledge of Options-Options)/
AT Options
Units- Options/Y ear
Options- INTEG of Assessing Options
Initial Value — 20
Units - Options
AT Options - 0.2
Units — Y ear
As occurred in the previous mechanism, this second section is also a balancing cycle
(B2) that decreases the flow of Assessing options by the time employed (AT) to assess the
Options. The cumulative effect of both AT (AT, and AT options) extends the duration of the
process and decreases the number of options available because some options expires within
hours, others in weeks, and others in months. The inverse is also valid, less time spent in
Assessing Options, increase the stock of Options available within certain time. Options is fluidic
and volatile, needing a constant inflow and outflow of knowledge. For example, uninsured
populations are mainly composed of low-income minorities with no professional qualification.
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They earn the minimum wage ranging between $ 6,50 to $7.25 per hour without benefits*’.
These populations are ineligible for social benefits despite their financial struggles and needs. As
a result, their earnings are utilized for survival. They cannot access knowledge of healthy
behaviors due to budget constraint. However, healthcare leaders can increase their Options by
disseminating health education & promotion on a regular basis. For instance, by promoting the
idea of preventive investment in immunizations, screening, counselling, and other medical
routines that are culturally tailor to consumers’ lifestyle, we can decrease the prevalence of
communicable diseases nationwide. These steps will produce immediate tangible health benefits
for all stakeholders. The ROI in dollars can be measured through an increase in net monthly
income, improved school attendance for children, decreased absenteeism for employers, and a
substantial reduction in welfare expenses for the government to name a few.
Figure 9. Main Structure of Investments
PROP of availabe
learning
Actual Options
:
o
PROP of available
Options
Learning
about Options
PROP of available
Investments
Ajusting Time Assessing
Options
AT Options Analyzing —
a
AT Investments
Proportion of Available Investments - 0.1* Assets/A ssets
Units-Dmnl
Analyzing Investments - Prop of available Investments* (Options-Investments)/ AT
Investments
Units - Options/Y ear
Investments - INTEG of Analyzing Investments
Initial Value - 15
Units - Options
AT Investments — 0.05
37 US Bureau of Labor & Statistics Minimum wage per state.
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Units - Y ear
As depictured in figure 9, Investments results from a cumulative effect of AT
(AT+ AT Options + AT Investments) on Analyzing Investments. The effect of three delays
reduce the volume of Investments considerably, and hence decrease the ability to generate new
investments. For uninsured populations, this cumulative effect postpones the entire investment
process by weeks, months, or eventually years, causing a drastic damage on their overall health
status. The balancing cycle (B3) slows down the transit of Investments back in to the valve of
Analyzing Options due to individuals’ budget constraint. In addition, the inconsistent inflow of
Options lessens their ability to maximize health (H;) and assets (Z1). Therefore, it is vital to
maintain health programs constantly over the calendar year to reduce unhealthy pitfalls that
depletes individuals’ current health status. For example, eating a donut may contribute to Zt,
(immediate short-term gratification), but it also increases an individual’s sugar levels in the
blood, leading to diabetes Ts (posterior long-term pain). In other words, increasing the stock of
Options increases the levels of Investments in healthy behaviors. In Grossman’s model, this
course of actions increase Tw, Tz, Tu and a decrease Ts (times sick over time).
Figure 10 Main Structure of Assets and Knowledge of Options
Actual Options
Mi Cr
= Rf
Learning SS
about Options
PROP of available
Investments
‘Analyzing
Investments
Adjusting =
Time Assessing
Options
AT Options
AT Investiments
"Actual ROL
Perceived
Net ROL
a \ Decreasing
AY Net RoI
a ae. Z Assets
Effect of Differential
‘on Decreasing Assets ‘Average Time to
Decrease Assets
‘Changing in
Perceived RO!
Initial
Perceived RO!
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Delay — Adjusting Time + AT Investments + AT Options
Units — Y ear
Changing in Perceiving ROI - ("Ratio Actual/Perceived ROI")-1) *Perceived ROI/Delay
Units — US Dollar/Y ear/Options
Perceived ROI - INTEG Changing in Perceived ROI
Initial Value - 1
Units — US Dollar/Options
Perceived Net ROI Analyzing Investments* Perceived ROI
Units — US Dollar/Y ear
Ratio Actual ROI/Perceived ROI - Net ROI on Assets/Perceived Net ROI
Units — Dmnl
NET ROI on Assets — Investments*A ctual ROI/AT Net ROI
Units — US Dollar/Y ear
AT Net ROI - 0.3
Units — Y ear
Actual ROI - 1
Units — US Dollar/Y ear
Initial Perceived ROI - 1
Units — US Dollar/Y ear
Assets - INTEG Net ROI on Assets-Decreasing Assets
Initial Value — 5
Units — US Dollars
Effects of Differential Decreasing Assets - Perceived ROI/Initial Perceived ROI
([(0,0)- (1,1)],(0.0030581,0.0263158),(0.0856269,0.184211),(0.195719,0.280702),
(0.314985,0.473684),(0.440367,0.513158),(0.538226,0.557018),(0.574924,0.657895),
(0.70948,0.710526),(0.840979,0.833333))
Units - Dmnl
Decreasing Assets — A ssets* Effect of Differential on Decreasing A ssets/A verage Time to
Decrease A ssets
Units - US Dollar/Y ear
Average Time to Decrease Assets - 1
Units — Y ear
This last section depictures a series of strategies used by consumers to maintain, change,
and recycle Assets (i.e. preservation of a healthy status), aiming to maximize Net ROI on Assets.
For healthcare consumers, it is paramount that the Net ROI on Assets exceeds the Actual and
Perceived ROI, in order to preserve and improve physical, mental and social conditions. The
three reinforce loops R1, R2, and R3 linking Assets to PROPs of available Learning, Options,
and Investments reflect the direct impact of Assets on each stage of the process of producing
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health as defined by Grossman’s utility function Ut = U (Hi, Z)**. For uninsured
populations the three reinforce loops work negatively due to budget constraint. It means, the lack
of Assets decreases their PROPs of available Learning, Options, and Investments, which
reduces their abilities to produce H: and Zt across lifespan. The balancing cycle (B4) illustrates
the time lag necessary for Changing in Perceived ROI to take place.
Ill. SIMULATIONS
The purpose of all simulations were to test the impact of Assets on increasing or
decreasing the Knowledge of Options, Options, and Investments through a cascade effect. In the
case of uninsured populations, the impact of increasing knowledge increases all four dimensions,
Tw, Tz, Tu and Ts simultaneously.
Figure 11. Simulation Results for Perceived Net ROI
400
300
US$/ YEAR
1995 1999 2003S 2007'S «2011.2 2015. = 2019 = 2023
Time (Year)
Perceived Net ROI: NEM1
Perceived Net ROI : NEM2
Figure 11 shows a potential gain of approximately $330.00 per individual/per year,
starting in 2008. Computing this amount per citizen over a period of 8 years, it represents
roughly an amount of $92.4 billion increment in Assets not gauging other financial oscillations
during this period. This sum could be invested in preventive infant mortality or postpartum
haemorrhage programs to save millions of American lives.
38 Grossman, M (1972). Production Possibility Frontier of H: (production of health) and Z: (productions of
everything else.
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Figure 12. Simulation Results for Net ROI on Assets
400
300
US YEAR
1995 1999 2003 2007 2011 2015 2019 2023
Time (Year)
Net ROI on Assets : NEM1 + + + + + + + +
Net ROI on Assets : NEM2
Figure 12 illustrates the loss in ROI between 1999 and 2003, which would have had
significant impact on Ty, Tz, and Ts. If Americans have started to invest in health in 1995, by
2001 they would have a considerable abetter health status, and increase ROI by US$ 330 yearly.
The delay in promoting health behaviors as an asset has led the nation to absorb 17.9% of GDP
in health expenditures.
Figure 13. Simulation Results for Ratio A ctual/Perceived ROI
am wee eet
1995 1999 2003 2007 2011 2015 2019 2023
Time (Year)
"Ratio Actual/Perceived ROI" : NEM1 t t t t + + + t
"Ratio Actual/Perceived ROI" : NEM2
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Figure 13 validates the benefit of minimizing the discrepancy between Actual ROI and
Perceived ROI to produce a more sustainable Ratio Actual/Perceived ROI when investing in
Assets. In healthcare context, it means an increasing commensal benefit to all stakeholders in
terms of saving millions of lives and billions of dollars invest in health improvement rather than
consumer billions of dollars in ineffective medical treatments that are now compromising the
domestic economy of the country.
IV. DISCUSSION
A. Model Limitations -
According to Sterman (2000) “modelling is an iterative continual process of
formulating hypothesis, testing, and revision of both formal and mental models” (pg.83).29
Although modelling is challenging, it leads to reform of policies, new programs, and practices,
while empowering people to change the status quo.
The vital pieces of this process are:
> Boundaries
> Other factors beyond budget constraint (e.g.
citizenship)
> Underinsured populations
> Policy-mandated ineligibility of individuals and
Employers
> Incomplete knowledge and data
v
Problem Articulation — Partial representation of the
problem, covering the time horizon from 1995 to 2014,
although the problem started to emerge in 1963*°
Vv
Testing— It has not yet been tested
59 Sterman, J (2000). Business Dynamics Systems thinking and modeling for a complex world (pg. 83-93).
40 Fuchs ((1996). Economic values, and health care reform. American Economic Review.86(1):1-
24.http://economicsfiles.pomona.edu/data/healthcare/ pg.15-18
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Figure 14 — Table of Variables
ENDOGENOUS EXOGENOUS
Cultural and linguist barriers “Uninsured knowledge, beliefs, perceptions
Cognitive and technical abilities Time constraint
Data representing diverse uninsured Inconsistent data on uninsured populations
populations -- mostly estimated
Data representing Consumers’ perspective Data available has limited credibility due to
is biased towards publishers lack of rigorous criteria
Past and current data of uninsured Health status at birth
Variation in the stocks Federal and state policies
B. Limitations of the Future Applications
In the US fragmented healthcare environment, conflicts of interests can annihilate profitable
and even cost-effective solutions due to stakeholders with different agendas than the innovators
of new solutions. Mobile-clinics in Russia, Australia, Iraq, Ukraine, Y emen, and Israel have
proved to be a cost-effective healthcare delivering method for inner-city and rural populations.
(WHO,2015). However, in the US, this solution has not found echo and support from healthcare
providers and investors despite its high ROI. Across the US are only 1,500 mobile-clinics in
operation. They are not even distributed across the 50 states nor serving the areas in needing.
Despite the outstanding results — 3,125,668 in emergency room visits, plus $ 20,339,968 in
prevention services annually, and profitability ratio of 36:1 for a full-sized van, and 45:1 fora
bus, public and private organizations opted to lose $1.2B in co-ops (Oriol et al.,2008). Another
operational obstacle relevant to the implementation of an itinerant patient-centered model is the
lack of multilingual healthcare personnel able to culturally communicate with +62 million
foreign-language speakers‘. In inner-cities and rural areas 60% of the primary care patients
come from an ethnic background different from their physician. In order to bridge the cultural
gaps, we will need expand the health education and promotion materials to languages other than
English. Then, knowledge would be accessible to everyone.
C. Recommendations
Itinerant-patient-centered clinics is a proven successful model in Australia, Iraq, Ukraine,
Russia, and elsewhere. Nationwide, there are 1,500 mobile clinics operating in several states,
but not in the ones we have high prevalence of infant mortality and chronic diseases (HHS,
“1 US Customs & Board Protection & US Census Bureau — 2010-Ethnic Study
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MobileMap,2013). In St. Louis, the two mobile-clinics have brought a revenue of $45.00 for
each $1.00 invested in child and prenatal care programs, whereas an expected ROI ratio is
between 11.9:1 and 15:1 (Russell 3000)*2
Additional benefits are:
> Cost-effectiveness as proven by the Maryland Hospital’s community outreach program
> Accurate primary data collection and analysis
> Preventive Health Programs tailored to patients’ physical, mental, and social priorities
while truly prevent them from become chronic ill. Immunizations, screening, and
counselling are few effective strategies, but not enough to prevent consumers from
getting sick. Those approaches should be complemented by annual liver and kidney detox
and supplemental diet programs across lifespan along with family budgeting education.
Vv. CONCLUSION
The nation’s compounding financial instability has constrained the budgets of middle-low-
income populations, which has in tum promoted an exponential increase in the number of
medically uninsured individuals. As a result, more and more individuals have limited money to
invest in healthcare products and services that maintain or improve their overall well-being.
Currently, about 36 million Americans are medically uninsured. They use emergency-
rooms to address their primary care routines. This problem mainly results from two underlying
causes, one is the high cost of healthcare coverage available in the marketplace exchange, which
is reinforced by the scarcity of primary care physicians (i.e. 0.7 per 1,000 in cities and 0.43 in
inner-cities). When the high cost of care combines with scarcity of healthcare professionals, we
have an annual healthcare expenditure of $3.4 trillion or 17.9% of the GDP, making the US
healthcare system the most expensive in the world, but not the best delivery system despite all
available technology.’? According to a CDC report, the prevalence of one or more chronic
diseases among Americans between the ages 18 and 64 reached 43%, leading to an astronomic
consumption of healthcare goods today as well as in upcoming years.‘ This is one piece of
evidence that illustrates the inefficiency of a fragmented healthcare delivery system that is
unable to convey technology into affordable preventive services to consumers.
The nation’s poor health status also negatively impacts productivity rates of all sectors of the
economy by the exponential growth of unscheduled labor absenteeism or presenteeism. In 2014,
unscheduled absenteeism cost US corporations $320 billion or the equivalent of 10% of the
national GDP.** It did not include the cost of presenteeism (See the effects of presenteeism in
” Russell, F (2016). FTSE 3000 Index for market-capitalization. Benchmarking of US and London Stock
Exchanged.
“SB odenheimer, T., Chen E., Bennett H.(2009). Confronting the growing burden of chronic disease: can US
health care do the job? Health Affairs 28(1):64-74.
“* Center for Diseases Control and Control (2011). National Hospital Ambulatory Medical Care Survey:
Outpatient Department Summary.
*S Circadian Tech Inc. (2005). Absenteeism. The bottom-line killer. Unscheduled absenteeism cost annually
$3,200 per hourly employee and $2.650 per salaried employee, plus 1% increase in the payroll costs.
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workforce paper). In addition to the low productivity, the economy experience an unusual rate of
bankruptcy related to unpaid medical bills that often times result from high deductibles, co-
payments and out-of-pocket expenses. Combining those effects, we see a nation with low
economic growth (citation).
Under the lens of healthcare economists, the high cost is carved by the features and
characteristics of an oligopolistic structure rooted in an inelastic pricing strategy. For 80% of the
American population that share only 7% of the nation’s wealth, healthcare coverage is
unfeasible. Particularly for a healthy individual earning the minimum wage of $7.25 per hour, a
premium will cost between $180 to $265 monthly with a $925 deductible. If the annual income
of such an individual is $15,080 before taxes, his or her insurance will cost approximately $2,300
or 16.6% of the household income, without taking into account ancillary costs. For an unhealthy
individual this cost can easily reach $10,000. For these reasons, moderate-to low-income
Americans are medically uninsured. In a word, medically uninsured populations cannot afford
the cost of healthcare products and services due to budget constraint (citation).
To address the medically uninsured status, I propose an exploratory research design
investigating the availability of healthcare coverage to uninsured populations under budget
constraint. Next, I apply philosophical (pre-analytical “aporia’”), parametric (utility function) and
non-parametric (socio-ecological framework) methods, and system dynamic simulations
(nonlinear) to understand the underlying causes related to budget constraint. Finally, I establish
a comparative analysis between the simulations and the outcomes reported by Maryland Hospital
community outreach program.
The following recommendations should be enacted to improve the healthcare status of
uninsured populations:
1. Healthcare stakeholders, particularly insurance companies, hospitals, public
agencies, and suppliers should work more collaboratively towards a
sustainable healthcare delivery system that offers equitable prices to all
consumers.
2. An innovative methodology needs to be adopted that opposes the current
oligopolistic structure and provides an elastic price based supply and demand.
3. Healthcare premiums should be based on income not on risk because low-
income populations are more exposed to environmental diseases and have less
ability to pay for insurance, which hurts the health status of the nation as a
whole and increases comorbidity rates.
4. All individuals residing in the United States should be eligible for health
insurance not only US citizens.
5. Based on the simulations, we should reinforce the preventive community
outreach programs in order to save the total annual expenses of $16,000 per
person, which can be assorted in $320 loss of assets, plus $858 in out-of-
pocket for complementary services, plus $3,200 in absenteeism, plus $8,570
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in preventable emergency room visits, plus $1,578 for ambulance, and $502 in
medication.
The cost of healthcare products and services is a global concern for governments and
citizens as a significant portion of the world population is ageing. Therefore, cost-effective
solutions should be nurtured to mitigate the needs of those cannot afford the cost of a healthcare
coverage because this status quo impacts the nation’s productivity, economic stability, and
proliferates poverty.
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APPENDIX A
{Yearly Premature
_|Death/per 100,000
7.03 0.8 1.54 2551
Note - Adopted Sources from The Henry Kaiser Family Foundation (*), Center for Diesases Control and Prevention **, and America Health Rankings **
Also a complementary data was obtained from OECD library, and from Center for Science in the Public Interest
