Few Americans Lack Access to Health Coverage

Published June 1, 2005

In May, the Robert Wood Johnson Foundation sponsored its annual “Cover the Uninsured Week,” the purpose of which is to raise awareness of the number of Americans without health insurance.

Advocates of expanding government health care programs often cite inflated numbers of people who lack coverage. For example, a couple years ago a Congressional Budget Office (CBO) report found 59 million people–nearly one-quarter of the U.S. population–were uninsured at some point during the year.

The same report showed the number of chronically uninsured was about one-third to one-half that figure, but that fact attracted much less attention.

Numbers Inconsistent

Many surveys track the uninsured, and they tend never to agree in their assessment of the problem. The most widely reported survey is the U.S. Census Bureau’s Current Population Survey (CPS), which found nearly 45 million Americans lacked health coverage in 2003, the number used on the Cover the Uninsured Week Web site.

But many experts recognize the CPS overstates the problem by reporting the number of people uninsured at one point in time, even though the figure is designed to track people uninsured for an entire year. David Hogberg, writing in the March 2005 issue of The American Spectator, noted, “[o]ne of the CPS’s biggest problems is that it doesn’t distinguish between those who are uninsured for a short time and those who are chronically uninsured.” Researchers have observed that respondents asked if they were uninsured for the entire year will tend to answer based on their current coverage status.

Another problem with the CPS was noted in an April 26, 2005 Los Angeles Times article: The survey may count some individuals as uninsured even though they are covered by Medicaid. Experts who have examined Census Bureau figures estimate 10 to 14 million individuals who are counted as uninsured likely qualified for Medicaid or S-CHIP coverage.

The office of the Assistant Secretary for Planning and Evaluation of the U.S. Department of Health and Human Services recently commissioned two new studies of the uninsured. One of the new studies found that 4 million individuals counted as uninsured were likely already enrolled in Medicaid. The other concluded that up to 9 million so-called “uninsured” may in fact have Medicaid coverage.

Inconsistencies Common

That these two studies could not agree on the number of uninsured persons actually covered by Medicaid should not come as a surprise. Such inconsistencies are common. For instance, the CBO compared data from the Survey of Income and Program Participation (SIPP) and data from the Medical Expenditure Panel Survey (MEPS) and concluded the CPS figures were overstated by counting people as uninsured for an entire year when many actually were uninsured only briefly.

When those lacking coverage for only a short time were excluded, the true number of uninsured fell to between 21 and 31 million.

Douglas J. Holtz-Eakin, director of the Congressional Budget Office, told the New York Times, “Far from being a static group, the uninsured population is constantly changing. While many people are chronically uninsured, many more are uninsured for shorter periods of time.” The survey with the lowest reported figures for the uninsured is the Census Bureau’s SIPP, which found about 19 million people lacked coverage for an entire year.

Uninsured by Choice

Even the most extreme estimate (the Current Population Survey) contains some positive news. One is the fact that one-third of the uninsured, nearly 15 million people, live in households with annual incomes of $50,000 or above. Half of those earn more than $75,000. Moreover, (as noted earlier) 10 to 14 million uninsured people may be eligible to enroll in Medicaid and CHIPs but simply have not done so.

Why is this good news? These data suggest about 60 percent of the uninsured already have access to government health insurance programs or have enough income to afford private coverage.

When these individuals are subtracted from the total, the actual number of uninsured truly lacking access to coverage may be as low as 18 million people, or about 6 percent of the U.S. population. If we further subtract those who are not uninsured for an entire year or more, the number is likely even less.

It is completely plausible that many people willingly choose not to purchase health insurance. For instance, people who qualify for Medicaid can always enroll after they become sick. In addition, the uninsured receive a substantial amount of free medical care and physician services–by some estimates, more than $1,000 worth every year–by government-run, for-profit, and nonprofit health care providers. The availability of free care inadvertently creates an incentive for persons to drop insurance coverage.

Good Health, Less Incentive

A common assumption is that most uninsured Americans simply cannot afford the cost of coverage, but this is surely not always the case. As with any good or service, the purchase of health insurance has a lot to do with preferences and priorities. Many people may not wish to divert scarce cash from their budget to pay for insurance–especially if they do not expect to need extensive care.

Most of the uninsured realize they can obtain care when needed. After all, routine physician visits can be paid out of pocket.

It’s also true that many people do not buy health insurance simply because they are young and healthy. According to the Census Bureau, 42 percent of the uninsured (18.8 million) are between the ages of 18 and 34. Households headed by people in that age group spend about three times more on alcohol, tobacco, dining out, and entertainment than they do for out-of-pocket spending on health care. If they have unmet health needs, they would likely shift more of this discretionary spending toward health care.

It’s unlikely any sensible program could ever compel all individuals to obtain coverage. For the voluntarily uninsured, part of the solution is to give them the option of obtaining private insurance that better suits their needs. Under such a program, the number of people who say “health insurance isn’t a good value for the money” would fall, as would the number of those who choose to forgo health insurance.

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