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Jun
28

Why are they uninsured?

There’s a bit of confusion out there re why people don’t have health insurance.
There are likely multiple reasons; some people choose not to, others can’t afford it, and for the rest coverage may just not be available. Here are the facts.


First, who are they? Turns out that most of the uninsured are employed or dependents of someone with a job. And if employers offer coverage, only 20% of employees decline the coverage.
But if employers don’t offer health insurance (and the number that do is declining rapidly), it is really expensive for individuals, and out-of-pocket costs are much higher as well. The median income in California for a single person (we’ll call Median Man) is slightly over $30k; health insurance premiums would eat up up 16% of that $30k (and remember that’s 16% of the gross, not net after-tax income). And, Median Man’s policy would cover less than half of MM’s medical expenses; the rest would be paid out of pocket.
Remember, half of the individuals in California earn less than our guy; (obvious, I know) for those unfortunate souls health care would consume an even greater percentage of their income.
I suppose one could argue that people who don’t buy insurance are making a choice; they are right in that Median Man is choosing to buy food and pay rent and electricity bills instead of buying health insurance.
But I’d have to guess that Median Man is not blowing his massive roll on trips to Vegas and new kicks and a new grill and an iPhone; no, he’s probably just getting by. Would he buy health insurance if he could afford it? No way of knowing, except to note that people in higher income brackets are much more likely to be insured.
The net? The stats indicate that a lot of people flat out can’t afford health insurance; if it’s offered they choose it, but many employers can no longer afford to offer it.
And that’s why they’re uninsured.


6 thoughts on “Why are they uninsured?”

  1. I want to keep getting your e-mails. Please send to my personal e-mail. coventry Health Care has downsized me!
    Thanks,
    Marian Marracco

  2. “a lot of people flat out can’t afford health insurance”
    The Kaiser Family Foundation agrees.
    http://www.kff.org/uninsured/upload/7571.pdf
    According to this KFF study published last year, 65% of the uninsured have incomes below 2X’s the federal poverty limit. That includes the non-working poor as well as the working poor. 98% are below 4X’s.
    If Medicaid eligibility were expanded to cover more of the working poor, the issue of the uninsured would be solved.
    We’d be left with the conundrum of why so many who are already eligible for Medicaid fail to sign up. But that is a different problem.

  3. Mike – I don’t think expanding Medicaid would work. Approximately 55 million people are already insured by Medicaid and another 42 million have Medicare. Six million of the Medicare beneficiaries are also eligible for Medicaid.
    If we tried to expand Medicaid to people with incomes up to 4X the FPL in order to reach 98% of the currently uninsured, millions more who currently have employer based health insurance would probably be pushed onto Medicaid as their employers drop coverage. I don’t know what percentage of the under 65 working population has income above 4X the FPL (and would, presumably, still receive health insurance from their employer or at least enough compensation to purchase it privately), but I suspect that it’s not very high. The Medicaid benefits package, while comprehensive on paper, is not very good insurance because reimbursement rates are so low. Is this really what we want? I think we can do better.

  4. Barry, it would be interesting to see some of the people who believe that government is the answer, respond to our two comments.
    Essentially, my comment suggests that government has failed to meet its statutory obligation to insure the poor.
    Medicare is an obvious and inconvenient illustration of how government health insurance fails. What assurance can there be that the next government program will spend our money more sensibly than Medicaid? I think history offers almost no assurance. Clear explanations are in order.
    “millions more who currently have employer based health insurance would probably be pushed onto Medicaid as their employers drop coverage.”
    Well, that didn’t happen with Medicare Part D – the Rx coverage – showing that such a response is neither inevitable nor unavoidable.
    But – you may be right. Medicaid may be so feckless and ill-managed that no meaningful relief is possible for the uninsured thru Medicaid. That does not exactly constitute a ringing endorsement of government-sponsored health insurance, eh?

  5. “Medicare is an obvious and inconvenient illustration . . .”
    er, I meant to say Medicaid.
    A similar discussion about the failure of Medicare to meet the needs of our elderly (including Medicare’s $60 trillion unfunded liability for future health care benefits) can await another day).

  6. great system
    some of us can get health insurance from our employer
    some of us can get health insurance from the government
    otherwise you are punished but things are improving
    you can buy very expensive coverage if you can afford it (and you get a little tax break)
    in some states you can buy one of the mandatory high-deductible health insurance policies (very expensive but less coverage – so cheaper)

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Joe Paduda is the principal of Health Strategy Associates

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