Taken as a whole, these data suggest that spells without coverage can be substantial and widespread and can involve millions of children. Indeed, some 20 million children experienced at least one spell when they were uninsured during the 1992-1994 period (Table 2.6).

If children's episodes without coverage coincide with any major illnesses or injuries, their families face large out-of-pocket expenses for medical treatment. If families choose to forego treatment initially because of the cost, untreated illnesses and injuries can escalate in severity and can become much more costly to treat later on.

Much of the care provided to uninsured families becomes bad debt and is thus described by providers as "uncompensated care." As discussed in Chapter 4 of this report, uncompensated care provided by hospitals has historically been offset in part by Disproportionate Share Hospital (DSH) payments made under Medicaid and Medicare. The Balanced Budget Act of 1997 significantly reduced the amount of DSH funding and also eliminated cost-based reimbursement for community health centers. For these and other reasons discussed in Chapter 4, safety net providers need to change the structure of their services and to identify other financial resources to pay for or to offset the costs of uncompensated care.

Figure 2.12 shows the state-by-state variations in the rates of uninsured children. The highest rates (greater than 20 percent) are in central southeastern, south-central, and southwestern states (Mississippi, Louisiana, Oklahoma, Texas, New Mexico, Arizona, and Nevada). The lowest rates (less than 10 percent) are in the northern tier. Moving from east to west, the rates of uninsured children are lowest in Pennsylvania, West Virginia, Ohio, Michigan, Illinois, Wisconsin, Minnesota, North Dakota, South Dakota, Nebraska, Montana, and Washington.

There are tremendous state-to-state variations in the availability of employer-sponsored health