Experts Debate Causes, Cures for Uninsured

Published June 1, 2008

April 27-May 3 was Cover the Uninsured Week, a Robert Wood Johnson Foundation-sponsored initiative to raise awareness about the millions of Americans who lack health coverage. The grassroots campaign included forums across the country at hospitals and community centers, seminars for small businesses, and information about enrolling in free or low-cost health plans.

Policy experts use the annual event to debate the extent of the problem and possible reasons millions lack coverage.

This is a laudable goal, as there is much misinformation about the uninsured.

How Big a Problem?

According to the most recent U.S. Census Bureau report, at any given time about 47 million people are uninsured. The increase in the number of uninsured is due largely to immigration and population growth. When expressed as a percentage of the population, the figure has changed little in the past decade.

Writing in his book The Cure, Manhattan Institute Senior Fellow Dr. David Gratzer highlights Census Bureau data from the 1990s showing the uninsured rate fluctuated between 14.1 percent in 1991 to a high of 16.3 percent in 1998.

In 2006, 15.8 percent of the population lacked coverage, compared to 16.2 percent a decade earlier.

During this same period, the number of people with health coverage rose by nearly 25 million, while the number without health coverage increased about 3.5 million.

For most people, spells of being uninsured are mercifully brief. A Census report found about 75 percent of periods without insurance are over within 12 months.

Who Are the Uninsured?

People often assume the uninsured are all low-income families, but that’s not true. Among households earning less than $25,000, the number of uninsured actually fell by about 24 percent over the past 10 years. It now stands at about 14 million people.

Moreover, many of these likely qualify for public coverage but just haven’t signed up because they haven’t needed to. A BlueCross BlueShield report estimates up to 14 million uninsured adults and children qualified for government programs in 2004 but had not enrolled.

In addition, surveys show up to one-quarter of the uninsured–possibly 10 million people–have turned down employer-sponsored coverage through work. Some of these might be willing to enroll if coverage were tailored better to meet their needs.

According to Dr. Robert Graboyes, senior health care advisor for the National Federation of Independent Business, “the best way to expand coverage is to lower the cost of care and insurance.” He adds, “We can do so through better pooling arrangements, fewer tax biases in insurance markets, and stronger incentives for preventive care and consumer choice.”

Diverse Uninsured Population

The uninsured include diverse groups, each uninsured for different reasons:

Immigrants. About 12.6 million foreign-born residents lack health coverage–accounting for 27 percent of the uninsured. About 45 percent of foreign-born, non-citizen residents are uninsured. Income may be a factor, but it is not the only one. A partial explanation of this disparity is that many immigrants come from cultures without a strong history of paying premiums for private health insurance. In addition, immigrants do not qualify for public coverage until they have been legal residents for more than five years.

The Young and Healthy. About 19 million 18-to-34-year olds are uninsured. Most are healthy and know they can pay incidental expenses out of pocket. Using hard-earned dollars to pay for health care they don’t expect to need is a low priority for them. This is especially true where state regulations require insurers to overcharge young people in order to offer lower rates for older, less-healthy enrollees.

Higher-Income Workers. The fastest-growing segment of the uninsured population over the past 10 years has been middle- and upper-income families. From 1997 to 2006 the number of uninsured among households earning more than $50,000 annually actually increased by nearly two-thirds–about seven million additional people. Currently, about 18 million of the uninsured live in households with annual incomes above $50,000 and could likely afford health insurance.

‘Most Health for the Money’

Because the uninsured must pay for care out-of-pocket, we might assume they spend an excessive amount of take-home pay on medical care. But a recent Health Affairs article found families without coverage actually spend a smaller proportion of income on medical care (3.8 percent) than those with employer-sponsored coverage (5.6 percent).

In light of all these considerations, Michael Cannon, director of health policy studies at the Cato Institute, thinks it’s premature to discuss expanding public programs to achieve universal coverage, which could easily require $100 billion in taxpayer subsidies. He suggests there may be better ways to improve health outcomes for the same amount of money.

“There is no evidence … that spending that money on expanding coverage would buy better health outcomes than spending it on discrete health programs, or nutrition programs, or even education,” Cannon argues.

“If it’s better health you’re after,” Cannon says, “you don’t want to cover the uninsured. You want to conduct experiments to learn which of those options delivers the most health for the money.”

Devon M. Herrick, Ph.D. ([email protected]) is a health economist and senior fellow at the National Center for Policy Analysis.

For more information …

“Income, Poverty, and Health Insurance Coverage in the United States: 2006”:

“Crisis of the Uninsured: 2007”:

“Financial Burden of Health Care, 2001–2004”: