2007 July 22 Sunday
Partial Subsidy Won't Reduce Ranks Of Uninsured Much

If the US government offered to pay half the cost of medical insurance premiums only a very small fraction of the uninsured would sign up.

Government subsidies that cut health insurance premium prices in half for people without insurance would reduce the number of uninsured Americans by just 3 percent, according to a RAND Corporation study issued today.

The study by the nonprofit research organization contradicts suggestions by some that large numbers of people without health insurance would sign up for coverage if government provided subsidies or tax credits to reduce the cost of health insurance.

An estimated 45 million Americans don't have health insurance. Most of these people are in low- and moderate-income families where no one gets the insurance from his or her job, but family income is too high to qualify for Medicaid, the health insurance program for the poor.

"Insurance policy prices aren't going to be the tool that solves the problem of the uninsured," said M. Susan Marquis, senior economist with RAND and one of the study's authors. "Price is not the only barrier people face in deciding whether to purchase insurance. A lot of people who don't have insurance are young and healthy and would rather spend their money on something else."

People would rather spend their money on other things and they figure if they get really sick the government will step in and help. This illustrates one moral hazard of the welfare state.

People surveyed for the RAND Health study cited numerous other factors that influenced whether they purchased individual health insurance policies, including personal attitudes toward risk, whether they believe they can get good health care without insurance, perceived difficulty in selecting a health care plan, and even a concern that insurance companies require too much personal information for individual plans compared with group insurance plans.

"One implication of our findings is that if you really do want to get to universal health insurance coverage, voluntary solutions that rely on financial incentives aren't going to get you there," Marquis said. "Government is probably going to have to mandate it."

We could reduce the ranks of the medically uninsured by deporting all the illegal aliens. Most of them are uninsured. Plus, the deportation of those illegals would reduce the cost of medical insurance for everyone else by reducing the cost shifting where medical institutions charge paying customers more to make up for the non-payers. Also, a reduction in the supply of unskilled labor would cause many employers to offer more benefits - including medical insurance - in order to attract employees.

Share |      By Randall Parker at 2007 July 22 10:31 PM  Economics Health


Comments
AMac said at July 23, 2007 10:17 PM:

I have yet to see any discussion of how to square the circle of universal health insurance when non-trivial numbers of illegal immigrants are present. They are illegal--they can hardly be forced into an insurance scheme by administrative rules. If they are not, insurance isn't universal; there are 12 to 20 million people outside of it. And if, somehow, they can be cajoled into joining, the problem still isn't solved. Free health care becomes one more attraction that migrants can exclaim about to their relatives back home--and of course it's the biggest draw for the sickest people. So Today's Plan that succeeds in accomodating 12 to 20 million illegals becomes Tomorrow's Plan that must finance insurance for the influx of an additional X million illegals.

Of course, if there were meaningful border controls and employer sanctions between now and the time the insurance plan went into effect, some large fraction of the X-million-strong Second Wave could be kept out of the system.

Of course, there's no practical reason why such a plan would have to be delayed at all.

In its absence, we might as well talk about how U.S. wage-earners are going to fund a health insurance plan that covers 300 million Americans and 150 million Mexicans. And provides the quality of health care that middle-class Americans now enjoy, and expect.


BTW, typo in heading, "...only a very small fraction of the uninsured will sign up."

Bob Badour said at July 24, 2007 6:28 PM:

AMac,

Your comment triggered a rant (it's not particularly aimed at you):

Universal health care is a fucking myth. It does not exist. The idiots who claim to have created such a thing have done so simply by preventing the middle-class from accessing the health care they can naturally afford so that they do not get any more than the poor. The rich can always flee.

Universal health care is not desirable goal. I find socialized medicine obscene.

/rant


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