Matthew Holt

Connecting the dots–Uninsured people are poor!

A bunch of random articles all hit at once on Wednesday morning. And they win the John Madden award for stating the bleedingly obvious. This is kind of  a companion piece to my rant about Friday’s NY Times article on the health industry and its political allies and adversaries sitting down to come to consensus.

Inquiry featured a worthy study. It tried to suggest that high costs “crowd out” health insurance spending.

The analysis, “What Do People Buy When They Don’t Buy Health Insurance and What Does that Say about Why They Are Uninsured?” suggests that prices and personal preferences – as well as income – may help explain why some people do not buy insurance. The findings also raise the possibility that the uninsured make difficult trade-offs, and thus lack health coverage, in part, because they face higher prices for basic needs such as food and shelter.

The study used 2004, 2005, and 2006 data from the Consumer Expenditure Survey, an annual, nationally representative survey of 17,000 households. Results showed uninsured households to be much poorer, with an average spending outlay of about $28,800 — nearly half the $55,480 outlay of insured households. Compared to the insured, both low- and high-spending uninsured households spend a significantly larger portion of their budgets on housing, food at home, utilities, clothing and tobacco; high-spending uninsured people also spend more on alcohol and transportation. Besides health insurance, the uninsured spend a much smaller share of their budgets on other goods — particularly pensions and retirement accounts.

So–DUH!–poor people are likely to spend relatively more of their limited cash on immediate needs and not on health insurance.

Not to be outdone Health Affairs published an Urban institute study which found that if you cut Medicaid benefits then bad things happen to the poor and those who service their health care needs. To wit:

the cutbacks were followed by a major increase in the numbers of uninsured people, greater uncompensated care burden on hospitals, and revenue shortfalls that forced community health centers to obtain larger state grants and charge patients more.

And The New York Times discovered that uninsured young adults who get sick are really financially screwed too.

“For a lot of people, it’s a choice between being able to survive in
New York and getting health insurance,” said Hogan Gorman, an actress
who was hit by a car five years ago and chronicled her misadventures in
“Hot Cripple,” a one-woman show that was a hit at last summer’s Fringe
Festival. “There was no way that I could pay my rent, buy insurance and
eat.”

And even for those whom the state protects with a modicum of regulation (such as the insurance provisions of HIPAA that all of you bar Nate have forgotten about), get screwed too. HIPAA says that if you have had continuous coverage you can still get health insurance through a high-risk pool.

Having been personally offered this in the past I can assure that it is not the kind of insurance anyone would want (I recall being offered a $4K –  5K deductible plan for $500-ish a month. But even beyond that St Lisa Girion, (continuing to whack California’s insurers in the LA Times), showed that even at the incredibly high rates the state allows insurers to charge those who are out of other options, two California plans (Wellpoint and a yet again unrepentant Blue Shield) have been charging way more than they were supposed to.

And why is that?

Blue Shield, a nonprofit based in San Francisco, said that even with
the higher rates it lost about $7 million on its HIPAA coverage last
year and expects to lose up to $20 million on such policies this year. “It’s been a pretty consistent money loser,” Epstein said.

For those not getting it, Lisa explains:

For consumers, HIPAA coverage is expensive even under the state-issued
rate structure. People without pre-existing conditions can obtain
cheaper health insurance on the open market. Those who buy HIPAA
coverage tend to have continuing medical conditions that most insurers
would otherwise refuse to cover.

So take a breath. What does this tell us?

First, health insurance cannot be sold as a voluntary consumer good to poor people. Second, if it can, it can’t be sold to sick poor people. Third, even if it is, then the insurer of last resort can’t maintain the service, even after price gouging.

Do you need any more evidence that a patchwork system of mixed-public and private systems can’t work to cover everybody?

You may not, but as the NY Times reports and as I comment in my other piece today, lots of other apparently well meaning health care lobbyists do.

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John_MayerMatthew HoltANNIEMargalit Gur-ArieMelissa Recent comment authors
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John_Mayer
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Are you uninsured in America? You should check out the website http://UninsuredAmerica.blogspot.com – John Mayer, California

Matthew Holt
Guest

There’s no point in wasting time to correct the David MDs and Nates of the world. Mankiw’s “analysis” has been well refuted on the grounds of logic and real research many times over. To wit just one example http://tiny.pl/bx3p
But instead here’s my suggestion. Let’s strip Mankiw, Mark Pauly, et al of their Ivy league tenured positions, give them a mild pre-existing condition and stick them into the individual market. Their opinions would change damn quick.

ANNIE
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ANNIE

I am a young adult I have a masters and bachelors degrees. I haven’t had health insurance since I was 23 in college. I have always worked several part time jobs and part time jobs in the arts that don’t offer health insurance. Id rather use that 500 dollars a month to make my student loan payments or save up to buy a house, buy better food and pay for my yoga classes then put it toward healthcare which I may only use twice a year. I am now 32. How do I get by without health insurance? I dont… Read more »

Margalit Gur-Arie
Guest

Well, I read the Mankiw study and while it is trying to debunk common misconceptions, it creates brand new ones. Here are the points that raised questions for me: 1) The study quotes a 10 million figure for non citizens as being uninsured. I cannot validate that number, but does that number include legal aliens? These residents work and pay taxes in this country legally, surely they will be covered by any national reform. So how many of those non citizens are legal residents? 2) According to that study 18 million of the uninsured have a household income above the… Read more »

Melissa
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Melissa

I think it is dumb that this information surprises people – poor people don’t have health insurance….because they can’t afford it – DUH! My husband’s company “offers” health insurance – hah! His premium would be 165.00/month – seems almost reasonable – but the deductible is 5000.00 per year. To add me and the kids would bring the total to 850.00 per month – with a total family deductible of 10,000.00 per year – yeah sure….I didn’t buy it NOT because I am lazy and cheap or lacking in personal responsibility….I didn’t buy it because it is rip-off garbage AND it… Read more »

Norma
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Norma

I have a problem with Nate who seems to think uninsured are cheap or lazy.Does he have a job with insurance companies?I hope you NEVER lose your job or get ill and lose your insurance.Then will you be lazy or cheap?Private insurance companies are ripping off all of us.
WELLPOINT owns BCBS and others but profit for 2007
4.6BILLION!!

Nate
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Nate

I have a problem that more people aren’t beaten over the head with a rolled up copy of Mankiw’s study or any of the other numerous studies proving we don’t have an uninsured problem we have a lack of personal liability/responsibilty problem.
These “reform” propogandist want to scrap our system based on 40 million people being to lazy to sign up or to cheap to purchase insurance.

Lew
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Lew

David MD and others: look here if you want to better understand why estimates of the uninsured vary: http://www.shadac.org/content/charts-tables
SHADAC provide technical assistance to states, is funded by RWJF.

David MD
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David MD

I forgot to add from a different post: http://www.nytimes.com/2007/11/04/business/04view.html As Harvard Economist Greg Mankiw points out in the above article there are really only a few million uninsured US citizens. 1. 10 million of uninsured are not US citizens. Millions more are eligible for Medicaid but have not applied presumably because they are healthy and need not apply. He continues: “The 47 million also includes many who could buy insurance but haven’t. The Census Bureau reports that 18 million of the uninsured have annual household income of more than $50,000, which puts them in the top half of the income… Read more »

David MD
Guest
David MD

From the same article that Matthew quoted: Mr. Aaron was one of several young adults who said living without insurance meant trying to take better care of themselves. “I’ve stopped eating fast food,” said Santiago Betancour, who is 19 and lives in Rosedale, Queens. “I’m eating rice, vegetables and fruits. And when I get sick, I exercise to sweat it off.” And this is the point: health care is first and foremost dependent on healthy lifestyle choices. The country should emulate New York City’s lead (thanks to Mayor Bloomberg) and help people quit their smoking habit by raising taxes so… Read more »