Yesterday, the Institute of Medicine warned that employment-based health insurance coverage is eroding, and that the safety net (clinics and emergency rooms that provide charity and uncompensated care) won’t be able to handle the demand from the uninsured. IOM’s new report, America’s Uninsured Crisis: Consequences for Health and Health Care, notes that the decline in health insurance coverage – with 45.7 million uninsured at last count – is likely to continue. Here’s how they describe the situation in the accompanying policy brief:

A number of ominous signs point to a continuing decline in health insurance coverage in the United States. Health care costs and insurance premiums are growing substantially faster than the economy and family incomes. Rising health care costs and a severely weakened economy threaten not only employer-sponsored insurance, the cornerstone of private health coverage in the United States, but also threaten recent expansions in public coverage. There is no evidence to suggest that the trends driving loss of insurance coverage will reverse without concerted action.

Overall, fewer workers, particularly those with lower wages, are offered employer-sponsored insurance, and fewer among the workers that are offered such insurance can afford the premiums. Moreover, employment has shifted away from industries with traditionally high rates of coverage, such as manufacturing, to service jobs, such as wholesale and retail trades, with historically lower rates of coverage. In some industries, employers have relied more heavily on jobs without health benefits, including part-time and shorter-term employment, and contract and temporary jobs. In addition, early retirees are less likely to be offered retiree health insurance benefits than in the past.

The number of uninsured would be even higher were it not for government programs that have substantially expanded coverage in recent years. SCHIP covers millions of children whose parents work but still can’t afford insurance for their families, and many states have expanded Medicaid eligibility to cover people with incomes that are above the federal poverty level but still too low to cover rising healthcare costs.

As states face serious budget pressures, Medicaid programs are likely to shrink, leaving those already facing financial hardship with the added burden of insurance loss. SCHIP is a block-grant program, so its funding doesn’t automatically increase as more families become eligible for it.

Those who lose employer-based coverage and can’t get insurance through a government program have to try to buy a plan on the individual market, but that can be difficult. The IOM explains:

For many people, nongroup coverage is prohibitively expensive or altogether unavailable. In most states, insurers may deny applicants for nongroup coverage completely; impose either a permanent or tempo¬rary preexisting condition limitation on coverage; or charge a higher premium based on health status, occupation, and other personal characteristics.

And it can be particularly hard to get adequate, affordable individual-market coverage if you’re a woman.

The IOM reminds us that uninsurance isn’t just a problem for those who lack coverage; it can also undermine healthcare for the insured population:

The available research suggests that when community-level rates of uninsurance are relatively high, insured adults in those communities are more likely to have difficulties obtaining needed health care and to be less satisfied with the care they receive. For example, privately insured, working-age adults in areas of higher uninsurance are less likely to report having a place to go when sick, having had a doctor’s visit or routine preventive care, and having seen a specialist when needed. They are also less likely to be satisfied with their choice of primary care and specialty physicians or to feel trust in their doctor’s decisions.

The specific contribution of uninsurance to these problems is not well-established. Nevertheless, well-documented fault lines in local health care delivery are particularly vulnerable to the financial pressures that may be exacerbated by higher uninsurance. These pressures contribute to the tendency of providers and capital investments in health care facilities and technology to be concentrated in well-insured areas, the reluctance of specialists to assume on-call responsibilities for emergencies, and a cascade of interrelated hospital-based problems such as insufficient inpatient bed capacity, strained emergency services, and barriers to timely trauma care. These problems can only worsen existing disparities between communities in the supply of provider services and other health care resources and may have potentially serious implications for the quality and timeliness of care for insured people, as well as uninsured people, in these communities.

Hospital emergency departments can be particularly hard-hit – and although most of us don’t visit the ER on a regular basis, it’s something that we really want to be functioning well when we do need it.

The IOM recommends that the President and Congress work on an urgent basis to achieve health insurance coverage for everyone, and to control healthcare costs to make that coverage sustainable. It’s a big task, but President Obama’s speech last night suggests that he’s ready to tackle it.