Concerning the Uninsured

18% of the US population is currently uninsured. Though Medicaid commonly covers women and children, 28% of people ages 18-25 are still uninsured and anomalies exist because 64% of uninsured individuals have full time/full year jobs. The consequences of being uninsured is that these people are more likely to get reasonable coverage when they are sick. Thus, the uninsured tend to use more clinics and ER services, postpone care, fail to pick up prescriptions, and use less preventative services (Institute of Medicine Report). It has been shown that the uninsured tend to get diagnosed for chronic diseases too late and they are thus more likely to die of diseases such as cancer. In fact, the uninsured have 25% higher mortality rate then the insured- leading to 20,000 excess deaths per year. Given all this, it’s certain that we have to find a way to cover the uninsured in the US. I don’t really know how. However, I can discuss what we shouldn’t do and also, some suggestions as to where to start.

First, we have to note that there are clear differences between the personalities of those insured verses those uninsured. The insured tend to seek medical care more frequently while the uninsured tend to be more like population on Medicaid- poorer, less self sufficient, and underrepresented. Second, it is important to look at why people are uninsured: 64% say insurance is too expensive, many cite employer related reasons, and some even say they don’t want/don’t need it. About 1% of people simply are too sick to get insurance. In terms of not being able to acquire health insurance, it is understandable. A family of 2 may make only $10,000 per year which is around the annual cost for insurance so for the poor, there is a tradeoff between medical care and basic living needs. Thus, a simple way of providing coverage is to increase the income poverty line.

Third, people are not charged their individual average costs. Rather they are charged the group’s average cost so insurance often have a “high administrative” load for young, healthy workers. Also, since people know there are safety nets available to give them free care, a free loader problem could exist and contribute to current rates of uninsured (Feldstein Chapter 7). Finally, some of the insured are likely crowded out of private coverage because they drop coverage for free care. This happens when people opt into public programs such as Medicaid because it’s free even if the quality is worse.

In solving all these problems, there are also two political constraints. First, we are unlikely to get rid of private insurance which has very concentrated interests with over $500 billion in revenues. Workers in large firms are thus very content with their health insurance and are resistant to change. Second, the government faces enormous fiscal pressure. Social Security and Medicare will go unfunded soon and the federal budget has been in deficit for 30 years.

Possible solutions include expanding Medicaid, creating tax subsidies for group and non-group insurance, instilling an employer/individual mandate, or establishing universal access. Issues, however, arise with all these solutions. First, pubic expansion may be taken up by previously insured instead of the uninsured and employers may reduce/drop coverage. Take up rate is 10-70% while crowd-out can be as large as 50% so this is ineffective. However, the size of benefits and providing good information may help and simulations by Holahan and Zedlewski show that Medicaid expansions can reduce the number of uninsured. Second, tax subsidies for employers are tricky and not very elastic. Small employers may benefit but on the other hand, reducing tax subsidies hurts too. Take up rate may decline when workers have to share higher cost of health insurance and take up rate does not go up when net premium prices are lowered. Finally, individual mandates requires everyone to get health insurance with the government subsiding the process. Massachusetts tried this and failed. Even though they had a low uninsured population, government subsidies for the working poor were high.

I’m not sure where we go from here, but I know that we have to learn from our successes and failures. Good information is a must and we have to keep in mind that government actions may worsen effects but having health insurers compete on the basis of risk-adjusted premiums is desirable (Feldstein Chapter 7). Maybe the solution lies in having a national health insurance program that would eliminate high overhead and profits while making it possible to set and enforce overall spending limits. Still, I can’t argue for a best way to cover all of the uninsured in the US. I’m not sure this is even possible.