Where Are All The Uninsured?

(Latest Post in the Healthcare series)

That's the question Megan McArdle asks in a recent post, noting an analysis concluding that 65 to 90% of the 2.2 million buying health insurance on the exchanges to date were previously insured, with most of them losing their coverage due to the provisions of Obamacare.  In other words, very few of the newly covered are the uninsured we heard so much about from the proponents of the legislation with some estimates that the percentage of previously uninsured signing up is only 11% of the total to date.  So, when you hear the Administration trumpeting the total number of policies purchased on the exchange keep in mind that it consists primarily of people who lost their coverage in the first place due to the Administration's policies.  Under different circumstances this would be called a "scam" and the perpetrators prosecuted for consumer fraud..

As a side note, it turns out there is a new wrinkle that will cause many to lose their existing coverage.  If you are a small family business with a group plan covering your family members it is now non-conforming and will be cancelled even if it meets every other substantive requirement for coverage under Obamacare and you will be forced onto the individual insurance market.  So much for helping family businesses!

Megan speculates that there are two possible explanations for the missing uninsured:

That leaves us with two possibilities: First, would-be applicants may simply be waiting until March. They’ve gone without insurance a long time; why not wait a few more months and save on premiums?

The second possibility is more troubling: There may be something seriously wrong with our understanding of who the uninsured are, and what they are willing and able to buy in the way of insurance. I don’t know exactly what the fault may be in our understanding. But if the numbers stay this low, I’d say we need to reassess the state of our knowledge about the uninsured -- and the vast program we created to cover them.

I lean towards the second explanation because of what we already know about the insured.  The number is notoriously hard to pin down but most estimates are that it is between 40 and 50 million.  But what is more important are the component parts of that estimate.

According to most analysts the uninsured fall into four roughly equal (about 25% each) buckets:

• Illegal immigrants.

•  People already eligible for Medicaid or CHIP (children's health program) but who, for unknown reasons, have failed to sign up.

•  People, mostly young adults, who can afford insurance but have chosen not to purchase it.

• People who want to be insured, cannot afford it or otherwise obtain coverage and are not otherwise eligible for Medicaid or CHIP.

And one other wrinkle; the calculation of the number of uninsured includes those who at any time during a calendar year did not have insurance, even if they later obtained it.  It is believed that a substantial portion of the total uninsured are only temporarily uninsured.

In other words, the number of uninsured that most of us are concerned about may be less than 25% of the bigger 40-50 million number that has been thrown around for years.

That something is drastically wrong with the uninsured estimates is shown by the experience with the high-risk pools.  You'll remember that one of the claims about the urgency for Obamacare was the number of people who lost coverage through job loss or other circumstances and could not get coverage due to pre-existing conditions, a number estimated in various places at between 2 and 4 million.  Because of the perceived urgency Obamacare established a high-risk pool immediately, rather than waiting till 2014 when the rest of the legislation kicked in.  THC has looked and found different figures on this but even the highest show that only about 225,000 people enrolled in the high-risk pool (though the per person cost turned out to be double the Administration's estimate!).  Where were the rest?  Did they really exist?

Has this entire fiasco been triggered by bad estimates abetted by the misuse of those estimates to create a crisis atmosphere to justify passing a law under which the Department of Health & Human Services estimates that up to 93 million Americans may lose their existing insurance, and, in many cases, end up spending substantially more out of pocket for their new coverage and possibly losing their existing doctors?

If it is true that the real number of long-term uninsured is somewhere less than 10 million here is my proposal.

• Budget $5,000 for coverage per person or $20,000 for a family of four.  That's $50 billion a year.

• The 2013 Federal budget is approximately $3.6 trillion.

• Appoint THC as a one-person commission to cut $25 billion from defense spending and $25 billion from non-defense spending (1.4% of total) to pay for the $50 billion in coverage.

• Repeal Obamacare in its entirety.

• Focus on targeted reforms to create uniform tax treatment for health insurance and open up competitive markets for catastrophic insurance and create transparency in all medical pricing.