Friday, October 3, 2008

Pipes on the Uninsured

Sally Pipes, president and chief executive officer of the Pacific Research Institute, has written an excellent analysis of the supposed "45 million uninsured" in America and why the problem has been greatly overexaggerated:
45.7 Million or 8 Million?: Focus on the narrow problem

Officials at the U.S. Census Bureau recently released new health insurance figures purporting to show that the number of Americans officially classified as uninsured in 2007 was 45.7 million, down from 47 million in 2006.

Despite the decline, the new figure is being spun as proof positive that America's healthcare system is still in awful shape. Advocates of socialized medicine are repeating it ad nauseam, arguing that the main problem with the country's health system is the massive uninsured population. After all, if a whopping 15 percent of the population is uninsured, then the current system must be failing.

As Dr. Oliver Fein of Physicians for a National Health Program wrote when the figure came out, "[t]he plight of the uninsured… shows how the for-profit, private health insurance model of financing health care has outlived its usefulness."

But it’s grossly misleading to use the Census Bureau number as an indication of a crisis. A closer look at the agency’s survey methods reveals that the situation isn’t nearly as bad as the pundits and the politicians would have you believe.

To generate this figure, the Census Bureau relied entirely on a questionnaire known as the Current Population Survey (CPS). The survey is intended to garner information about, among other things, the income, age, race, living situation, and, of course, health insurance status of individuals living in the United States.

As with any survey of this size and scope, the accuracy of the data it produces has substantial margins of error. As the Census Bureau itself explains in its annual report, "health insurance coverage is likely to be underreported on the Current Population Survey."

The Census Bureau doesn't tell us that 45.7 million people are chronically uninsured for the entire year. The agency has stated elsewhere that "the CPS estimate of the number of people without health insurance more closely approximates the number of people who are uninsured at a specific point in time during the year than the number of people uninsured for the entire year."

In other words, many of the survey respondents counted as "uninsured" may have experienced only a temporary interruption in their insurance. This circumstance is quite common. When workers quit or lose their job, they are technically uninsured. But they are usually in transition between one employer-provided insurance policy and another.

Despite the media’s tendency to depict the 45.7 million uninsured as a single, homogeneous group, the demographic character of these individuals cuts across age, ethnic, and socioeconomic categories. Many are uninsured for reasons unrelated to cost and don’t need to be “rescued” by mandatory socialized medicine.

We may be accustomed to thinking of the uninsured as low-income individuals and struggling families. But the Census Bureau data show that many are relatively affluent. Over 17.5 million -- 38 percent -- of the uninsured make more than $50,000 a year. And 9.1 million have an annual income of over $75,000 a year.

How can this be? In part, it's because a number of financially comfortable young Americans choose not to purchase health insurance. Known in the healthcare trade as the "invincibles" -- because they’re so sure they won't get sick -- these young singles would rather keep their money than shell out for expensive monthly insurance premiums because of the many mandates and regulations place on insurers by the states.

This intentional avoidance of health insurance is quite common. According to the Commonwealth Fund, Americans age 19-29 comprise one of the largest and fastest-growing segments of the uninsured population.

If the fact that over a third of the uninsured are pulling down more than $50,000 a year isn’t shocking enough, how about this: Nearly 10 million uninsured aren't even U.S. citizens!

It's certainly unfortunate that these individuals don't have health insurance, of course. But they can still get free treatment in emergency rooms. And even a fully nationalized healthcare system would be unlikely to provide them with health insurance.

Another 14 million of the uninsured are fully eligible for government assistance through programs like Medicare, Medicaid, and SCHIP.

How does that break down? A 2008 study by the Georgetown University Health Policy Institute showed that a whopping 70 percent of uninsured children are eligible for Medicaid, SCHIP, or both programs. And roughly 27 percent of non-elderly Americans who are eligible for Medicaid haven’t enrolled and simply live their lives without health insurance, according to the Urban Institute.

Is it really fair to say that such individuals don’t have health insurance? Further, if millions of Americans aren't availing themselves of taxpayer-funded coverage, why should we think that an even bigger government healthcare bureaucracy would solve the problem?

Of course, there are people who really do fall through the cracks. These are the chronically uninsured -- the working poor. They are people who struggle to hold down jobs and support their families. They earn less than $50,000 per year but too much to qualify for government help. They simply can’t afford insurance.

There are roughly 8 million of these chronically uninsured. Any attempt to solve the problem of the uninsured should focus on this narrow slice of the 45.7 million person pie.

The key to helping these people isn’t to create more government red tape. In fact, too much regulation is why health insurance is so expensive in the first place. What these people need is straightforward, affordable coverage that will cover them in the event of a health catastrophe. They should be able to purchase insurance in the state that has the best plan for them, regardless of where they live.

It's true that far too many Americans go without health insurance. And that is a serious problem. But the Census Bureau figure shouldn’t be presented as anything other than what it really is: an imprecise snapshot of a heterogeneous group of Americans, many of whom wouldn't benefit from additional government intrusion into the healthcare market.
It's almost as if some people want to inflate the size of the problem for their own political purposes...