Uninsured? So What?

About 47 million Americans lack health insurance according to the most recent Census Bureau report.  The annual report is an opportunity for pundits to dust off last year's editorials and speeches and one more time deplore …, well, deplore what exactly? 

Both conservatives and liberals have been mislead by this number – often citing it as the basis for all manner of health insurance reforms.  Yet while there may be good reasons to reform the health care system, the 47 million number isn't one of them. 

Virtually everyone in the "deploring" business points out that most of the uninsured have low incomes, hoping to invoke our sympathy.  But this fact is misleading.  Almost every poor person in America is eligible for Medicaid and millions of near poor adults can enroll their children in a state children's health insurance program (CHIP) even if they can't enroll themselves. 

Estimates vary, but somewhere between one-fifth and one-third of all the uninsured can sign up for free government health insurance at the drop of a hat.  Plus, they don't have to enroll while they are healthy.  They can sign up in a hospital emergency room.  In fact, in many states people can enroll in Medicaid and get the bills paid several months after the care is delivered.  To call such people "uninsured" is a misnomer.  They are insured de facto. 

A better question is: Are they getting health care?  There are probably a hundred peer reviewed studies showing that the uninsured get less health care than the insured.  Unfortunately, virtually all these studies are defective – failing to distinguish those who actually seek care from those who do not.  A recent RAND Corporation study remedied these defects.  And guess what?  Among patients who actually see a doctor, the American health care system delivers virtually the same care regardless of whether patients are insured or uninsured and regardless of what kind of insurance they have. 

But what about people with chronic illnesses who say they can't get insurance?  Answer: They probably haven't tried hard enough.  A 1990 Census Bureau report found that only 1 percent of Americans were denied insurance because of a health problem.  Since that time we have enacted all sorts of federal and state regulations to help the 1 percent.  Employers who offer insurance cannot deny it to a new employee because of a health problem.  Insurers cannot turn down employer groups because of health problems.  And anyone who loses coverage (because of the loss of a job, say) is entitled to get insurance.  (The exact method differs from state to state.) 

What about bankruptcy?  One frequently hyped study claims that 55 percent of all bankruptcies are due to medial expenses.  Turns out that the real number is less than half that amount; and it's not clear why bankruptcy resulted even in those cases.  In most places, hospitals do not aggressively pursue bad debts.  (They almost never take anyone to court, for example).  And many bureaus do not even list unpaid medical expenses on credit reports.

To this point, we have been assuming that the 47 million number is meaningful.  It isn't.  Other government reports suggest that the true number is as little as half that size.  And like unemployement, the condition of uninsurance trends to be temporary.  Of those uninsured at any point in time, 75 percent will become insured within 12 months. 

If there is one clear policy recommendation that flows from the evidence it is this: It is far more important to make medical care easily accessible than it is to make health insurance easily accessible.  Beyond that, health care reformers are simply using the uninsured as a excuse to hawk reforms they want enacted anyway.

Take the oft-repeated proposal to make health insurance mandatory, just like automobile liability insurance.  Health policy expert Greg Scandlen points out that although 47 states make auto insurance mandatory, the national uninsured rate for drivers is almost the same as the health uninsurance rate (13.2 percent vs. 15.7 percent in 2004). 

To use the uninsured as an excuse to socialize the entire system is even more outlandish.  At Parkland Hospital in Dallas, the patients are predominantly low-income.  Yet the insured and the uninsured all come through the same emergency room door; all see the same doctors; and all get the same care.  Using the hospital emergency room for the delivery of routine care is very inefficient, but thousands of people get their care that way in London and Toronto, just as they do in Dallas.  On paper, the patients in London and Toronto are "insured," whereas many of the patients in Dallas are "uninsured" – even though they probably are receiving better care (less rationing, for example). 

These formal distinctions (who is "insured," who is not) are mainly of interest only to hospital administrators, because they determine how the hospital gets its money.  They are not a reason to make Dallas like Toronto or London.  And they are not a reason to collectivize the system for everyone else. 

So what should we do?  We should enact some baby step reforms that encourage people to be insured, rather than uninsured.  Giving people who purchase their own insurance the same tax relief we give to group insurance should be a no-brainer.  We should also make it easier for employers to purchase individually-owned insurance that people can take with them from job-to-job.

We should stop pouring money into free care and Medicaid systems that encourage people to drop their private insurance and become a burden to the taxpayers.  As Governor Mitt Romney has shown in Massachusetts, charity care funds can be used to subsidize the purchase of private insurance.  As Governor Jeb Bush in Florida and Governor Mark Sanford in South Carolina have shown, Medicaid funds can be used to encourage private coverage instead of discouraging it.

Finally, we can all promise that between now and next year's Census report, we will put silly ideas aside and think creatively about how to create a better health care system.