For Immediate Release:
January 10, 2006

Contact: Susan Martin, Press Office
415-955-6120 or smartin@pacificresearch.org

Illegal immigration, overregulation attributed to state’s higher than national average figures for those without health insurance

SAN FRANCISCO – A report released today by the Pacific Research Institute on health insurance in California asserts that the state is not out of line with the rest of the U.S. when it comes to health insurance coverage. California’s Uninsured: Crisis, Conundrum, or Chronic Condition? (available at www.pacificresearch.org) challenged the figures of 18 to 20 percent uninsured that are usually cited in discussions of California’s health insurance crisis. John R. Graham, Director of Health Care Studies at PRI and author of the report, contended that these percentages are likely more than double the true figures.

According to Graham, “The problem of Californians without health insurance may not be as awful as generally portrayed. The number of Californians without health insurance for an entire year (whether legal or illegal) is likely around 9 percent.”

Graham calculated this figure by scaling down the U.S. Census Bureau’s national Survey of Income and Program Participation (SIPP) data, which estimated that 6.8 percent of U.S. residents were without health insurance for a year. The SIPP data is considered more accurate by Graham and other researchers than the often cited “Income, Poverty, and Health Insurance Coverage,” also compiled by the U.S. Census Bureau.

Graham also noted that non-citizens, many of whom are illegal, have a much lower rate of health insurance than citizens, no matter what ethnicity. “Because California has a much higher share of illegal immigrants than other states,” said Graham, “this is really a challenge of illegal immigration, not health insurance.” Moreover, a number of people who are eligible for government programs fail to enroll in them, causing almost a million children to go uninsured. “These points taken together, California’s uninsured may not necessarily be higher than the national averages,” concluded Graham.

Eliminate State Tax on Health Savings Accounts

“Nevertheless, the state government has the power to improve the state of health insurance in California,” continued Graham. “First, we have to get out of our heads the notion that Californians should enjoy health ‘coverage’ that pays for all or most of our health expenditures. That’s not the way we use car insurance or homeowners’ insurance. However, the state’s laws and regulations that force health insurers to provide policies on this basis ensure that health insurance is too expensive for some Californians to buy.” He estimated that the cost of these regulations add about 30 percent to the price of health insurance in California.

“The state must give Californians greater ability to manage health costs directly before having to rely on insurance kicking in to cover catastrophically high costs,” said Graham.

In 2004, the federal government established Health Savings Accounts (HSA), which allow individuals to pay for ordinary health costs with pre-tax dollars, and invest a certain amount annually to pay for future health costs.

“A top priority for California lawmakers must be to make HSA contributions and earnings tax-deductible from state income tax, too,” said Graham. “It has been two years since the IRS has recognized HSAs and Californians would have been better served if our state government had given us the same tax break then. It’s time to get health care dollars out of the hands of the government and into the hands of the patients who need them.”

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About PRI
For 27 years, the Pacific Research Institute (PRI) has championed freedom, opportunity, and individual responsibility through free-market policy solutions. PRI is a non-profit, non-partisan organization. For more information please visit our web site at http://www.pacificresearch.org//