Nor are the uninsured necessarily poor. A new study by June O’Neill, former director of the Congressional Budget Office, found that 43 percent of the uninsured have incomes higher than 250 percent of the poverty level ($55,125 for a family of four). And slightly more than a third have incomes in excess of $66,000. A second study, by Mark Pauly of the University of Pennsylvania and Kate Bundorf of Stanford, concluded that nearly three-quarters of the uninsured could afford coverage but chose not to purchase it.
And most of the uninsured are young and in good health. According to the CBO, roughly 60 percent are under the age of 35, and fully 86 percent report that they are in good or excellent health.
Finally, when we hear about 45 million Americans without health insurance, it conjures up the notion that all of those are born without health insurance, die without health insurance, and are never insured in between. The reality is that most people without health insurance are uninsured for a relatively short period of time.
Only about 30 percent of the uninsured remain so for more than a year, approximately 16 percent for two years, and less than 2.5 percent for three years or longer. About half are uninsured for six months or less. Notably, because health insurance is too often tied to employment, the working poor who cycle in and out of the job market also cycle in and out of health insurance.
None of this is to suggest that many of those without health insurance do not face severe hardship, or that we shouldn’t try to expand health insurance coverage. But it does mean that we might be able to deal with this problem in a much more targeted way, rather than having a huge and expensive new government program.
For example, young, healthy, and well-off people might be more inclined to buy insurance if it cost less. That means ending regulations, like community rating, that increase the cost of insurance for younger and healthier workers; eliminating costly mandated benefits; and creating more competition by allowing people to purchase insurance across state lines.
And if people are losing their insurance when they lose their jobs, we should move away from a health care system dominated by employer-provided health insurance. That means changing the tax treatment of health insurance.
The current system excludes the value of employer-provided insurance from a worker’s taxable income. However, workers purchasing health insurance on their own must do so with after-tax dollars. This provides a significant tilt toward employer-provided insurance. Workers should receive a standard deduction, a tax credit, or, better still, large Health Savings Accounts (HSAs) for the purchase of health insurance, regardless of whether they receive it through their job or purchase it on their own.
We can then look at those people who may need some kind of subsidy to better afford insurance.
Doctors know that if you don’t get diagnosis correct, you are not going to prescribe the right treatment. The same is true with health care reform. In trying to expand coverage to those who need it, let’s make certain we understand the facts.