Saturday, August 1, 2009

Miscounting the Uninsured

Economizing on my time, here is the letter I sent to my congressional representative regarding the current legislative proposal to reform medical insurance.

Dear Hon. Eshoo,

I understand the pressures on Congress to create legislation to reform access to health care, however I strongly believe several basic tenants upon which the current legislation is premised are gravely in error. In this email I will address only one.

"47 million Americans are without health insurance."

This frequently quoted statistic is highly misleading.

The figure based on 2007 data and extrapolated to 2009. The actual 2007 figure was 45.7 million. From this starting point, the following groups of people must be subtracted in order to arrive at an estimate of the involuntarily uninsured (those who could not afford medical insurance, even though they would like to.)

Of the 45.7 million:

A. 6.4 million are due to the Medicaid undercount.
B. 4.3 million are eligible for government-supplied free or heavily subsidized insurance, but have chosen not to apply.
C. 9.3 million are non-citizens.
D. 10.1 million have incomes more than three times the poverty level and ostensibly could afford to purchase insurance but for a variety of reasons have chosen not to.
E. 5 million are adults 18-34 years of age without children, and may have rationally chosen to pay for their medical care directly rather than through insurance.

Another error is counting as "uninsured" anyone who was with medical insurance at any point in time during the year. A CBO report from 2003, "How many People Lack Insurance and for How Long?" states that 25-50% of the "uninsured" actually lacked insurance for less than one year.

Subtracting the above groups leaves only 10.6 million uninsured. This means the problem you are attempting to address concerns 3.5% of the US population--not the 15% which 47 million implies.

We do not need to mandate universal medical insurance in order to address a small subset of Americans. You have written "The House legislation as written today will ensure that 97% of all Americans will have coverage under a healthcare plan that is affordable and offers quality, standard benefits." However, nearly 97% of Americans already have insurance or have chosen to go without. Cheaper solutions exist which are more in line with the American principles of the individual rights to life, liberty and property.

Please do not support the current legislation. It is a non-solution to a non-problem.

Thank you,

Beth Haynes, MD


Further information can be found at these sources:

"How many uninsured people need additional help from taxpayers?" Keith Hennessey

"Why on Earth...Are So Many Americans Uninsured?" Bradley Doucet

"Who are the Uninsured?"
June and Dave O'Neill



If you prefer a video, here's a talk by the O'Neills:

3 comments:

Anonymous said...

I've been trying to sort out how I feel about the health care reform and read your letter with great interest. I've heard the statistics you quote, as well as the criticisms, in the media. Frankly, I don't know what to believe.

Aside from those statistics, though, haven't some of our leaders, including Arnold Schwarzenegger, claimed that it would cheaper to insure the uninsured than to have them continue to use the emergency room as their primary care provider? Additionally, the health care industry is fraught with complications that confound its treatment from a free market perspective. Among them are the inherent information asymmetry and the duress of serious illness or injury.

I could go on about the many considerations that leave me very conflicted about this issue, including the simple question, "if we, as a society can provide care for everyone, why shouldn't we?" But I'll just close with a criticism of your assertion that people earning 3 times the poverty level could afford to buy their own insurance. According to the Bureau of Labor Statistics (http://www.bls.gov/news.release/cesan.nr0.htm), the average family with 2.5 individuals in it and an income of $63,091 in 2007 (just below $66,150, 3X the current poverty level for a family of 4) spends $49,638 annually, including $5,336 for "Personal insurance and pensions." The average premium for health insurance for a family is more than $10,000. So, it appears that the family of four would be about $5,000 in the hole before considering adjustments for 1.5 person-years of food, clothing, etc. So, how is it that you figure these people could afford insurance if they wanted to?

By the way... In my absence I have read some of Mises, Hayek, Rothbard, Hazlitt, even the more contemporary Woods. I see their points and I believe they have the right idea when they advocate for the gold standard and abolition of the Fed. However, complete laissez-faire capitalism, I believe will leave us a poorer nation, at least in terms of intangible qualities. It appears, though, that the bailouts were not the good thing that I thought they were months ago when I advocated for them. As you and some of your contributors predicted, we have slid some distance down the slippery slope, and if Mises is correct we will reap a bubble and subsequent recession due to further mis-allocation of capital.

As I did my reading among the advocates of laissez-faire I made an interesting observation. While Mises, Hayek and company were gentlemen arguing an academic point, the heirs to their theories appear to be irascible, uncivil and given to name calling. Notably Reisman seems never to let slide an opportunity to deride those who disagree with him and call them names. His repeated assaults on Krugman come of as bitterness because Krugman won the Nobel Prize for proving Riesman's theory. I wonder if this sort of animosity existed between Mises and Hayek. Woods does a bit of name calling himself in "Meltdown." It's a shame, because Woods and Reisman have some good insights, but I think they alienate some who might read their thoughts, if it weren't for the nastiness. Personally, I can't read Reisman's blog anymore; it seems he is just a disgruntled old man pissed off because he doesn't get the recognition he thinks he deserves.

Anonymous1

Beth said...

Anonymous1,
Welcome back. Thank you for your comments. I have missed your contributions to the discussion as I learn much from the points you raise which challenge what I am reading in other places.

I am just back from being out of town for several weeks--and once I get caught up, I will look further into the matter of the affordability of insurance for those who are at 3X the poverty level.

I most heartily agree that name calling and anger detract from any argument being presented. Both Drs. Reisman and Krugman can be difficult to read because of their animosity and condescension toward those who disagree with them. I do my best to try and focus on the economics and the logic of their arguments, but their irascibility (even when I understand and agree with it) is an irritating distraction.

Someone who I have enjoyed, in part because of his gentlemanly attitude, (though I agree less with his economic analysis then with Reisman) is Russ Roberts, econ professor at George Mason University. He has a series of interviews at Econtalk (http://www.econtalk.org/) which you may find interesting----and very civil.

Thank you again for reading and commenting. I am glad you found something of use in your reading and would be interested in your suggestions of books you think would add breadth to mine.

Anonymous said...

So, I woke up today thinking about the big picture. The fear seems to be of socialized medicine, and, for that matter, socialism in general. Let's say socialized medicine is bad. If that is true then should we do away with Medicare and Medicaid (and, for that matter, social security)? Should we also get rid of the system that cares for our military, Tricare and the VA system, which are about as socialized as it gets.

Is that where we should be?

If we don't have universal health care, and providing services to the indigent is bankrupting our system, should we take a capitalist approach and deny services to all those who can't pay? If you show up in the ER and don't have proof insurance or ability to pay, do we escort you to the sidewalk and let nature take its course?

I apologize for being all over the map, but here is one more thought. The inclusion of health insurance as an employment benefit, part of overall compensation, if you will, stems from companies efforts to circumnavigate wage controls during WWII. As such, it is just a disguised from of wage. Therefore, to level the playing field, to make compensation more closely free market, health insurance benefits, as well as 401(k) matches and pension contributions, should be taxed as income.

Oh, and I read Bernstein, too. He makes some good points, but his arguments are pretty biased. For example, if memory serves, he repeatedly uses the example of the railroad era as proof that unfettered capitalism is responsible for the great growth of the economy. He fails to mention, however, Russia and one of the Scandinavian countries saw similar booms while under Czarist and socialist rule, respectively. The booms in all three places are more related to the development of huge, previously untapped stores of natural resources than to any particular economic or political system. Russia's boom, in fact, was a land expansion to the east, mirroring the American expansion to the west. In the case of Sweden (I think it was), the discovery of oil reserves boosted the economy. The boom in Russia, by Bernstein's logic, makes the case for Czarist rule and an economy based on aristocracy, and that is Sweden makes the case for socialism. Which, of course, is nonsense.

Anonymous1