Understanding all the facts about the uninsured

President Obama is going for broke on health care. He and his Democratic allies call for controls on insurance companies, mandates and penalties on individuals and employers, new excise taxes on insurance, drug, and medical device companies, and the creation of a new government-run insurance plan.

To support his sweeping makeover, Obama and other liberal Democrats repeatedly point to the 46.3 million uninsured Americans. According to annual data released last month by the Census Bureau, the number of uninsured increased by 600,000 in 2008. By contrast, America lost an average of 700,000 jobs a month in the first three months of this year.

A careful examination of the data, however, reveals that Obama and his allies are misrepresenting the problem of the uninsured. Democratic plans would not come close to driving the number of uninsured to zero. At best, about only 29 million would be covered. Fixing existing government programs and creating targeted programs to improve access to health care would be far more effective.

Health insurance does not equal health care in America. This fact is lost on lawmakers and health care activists who actually have health insurance but is understood well by many low-income Americans who lack insurance and who rely on affordable clinics for care.

A federal law called EMTALA prohibits anyone from being denied care whether at an emergency room, a community hospital, or a community clinic.

Many uninsured Americans were able to obtain affordable care, despite the complaints of politicians to the contrary. Last year, the uninsured paid $30 billion out of pocket for health care. That may sound like a lot, but it averages out to a mere $647 per person.

The Census report makes headlines each year. But media accounts tend to wait until the fine print to acknowledge that the report surely overstates the number of uninsured, due to complications with self-reporting and statistical sampling.

The Census states that 46.3 million Americans were uninsured at some point in 2008. Yet, 17.8 million of the uninsured earn more than $50,000 annually. It’s likely that many of them — particularly the 9.7 million that make more than $75,000 a year — have chosen to forego coverage.

Such behavior is common among Americans between the ages of 19 and 29, who tend to be healthy and have no assets to protect. Therefore, they don’t see the need to spend their income on expensive monthly insurance premiums.

Often called the “young invincibles,” these Americans have the highest uninsured rate of any age group in the country. Many would purchase bare-bones catastrophic coverage, but it’s often not available because of state mandates on what policies must cover. These benefit mandates raise the price of insurance by 20 to 50 percent.

Democrats often demonize the young invincibles as parasites who transfer costs to the insured. Yet the Congressional Budget Office finds that “the effect of uncompensated care on private-sector payment rates appears to be limited.”

If there’s a cost shift, it’s from Medicare and Medicaid, whose government-set rates are far below the freely negotiated rates that prevail in the private sector.

The data show that 7.3 million children lack insurance. This would be shocking and unacceptable — but fortunately it’s not true.

First, insurance isn’t access to care, and these kids have plenty of that. More to the point, most would have insurance if their parents signed them up for programs for which they’re already eligible.

The Georgetown University Health Policy Institute estimates that seven in 10 uninsured children already qualify for the State Children’s Health Insurance Program, Medicaid, or both. And the federal government already approved an additional $32 billion to help expand SCHIP earlier this year.

It’s not just children who are neglecting to take up government offers of taxpayer-supported insurance. According to the National Institute for Health Care Management Foundation, roughly one in four Americans without coverage is already eligible for government-provided care.

Before adding yet another government-run insurance scheme to the mix, policymakers should ponder why current programs are undersubscribed. It’s probably a combination of lack of need — most people are healthy most of the time — and the fact that the existing safety net of clinics and pay-out-of-pocket doctor visits serves them well.

Many doctors refuse to take patients covered under programs like Medicaid and SCHIP because of low government reimbursement rates. In Massachusetts, 20 percent of those now enrolled in Commonwealth Care, a free or subsidized insurance program, are having a hard time finding a doctor because of the low reimbursement rates.

Advocates for the poor complain that care was, in some instances, less expensive and more available before the 2006 state law that forced people to buy insurance. Instead of learning from this example, President Obama and his allies want to expand the Massachusetts experiment nationwide.

Then there’s the touchy immigration issue, both legal and illegal. About one in five of the uninsured — 9.5 million people — aren’t technically Americans. Most taxpayers are understandably concerned about extending government-subsidized insurance to illegal immigrants.

All told, roughly eight million Americans genuinely cannot afford coverage. These are the individuals that reform should aim to help. The best way to accomplish this goal is to ensure that all Americans have access to low-cost, high deductible, catastrophic insurance plans that protect them from financial ruin in the event of a health crisis. Individuals should be able to purchase insurance with pre-tax dollars just as those who have employer-provided insurance do.

We should also allow people to purchase health insurance across state lines. There’s no reason a 25-year old man in New Jersey should have to pay nearly six times as much as a 25-year-old man in Kentucky for the same policy.

Finally, we must reform the medical malpractice system. According to PriceWaterhouseCoopers, doctors practice about $210-billion worth of defensive medicine each year because they are afraid of being sued. These extra costs are passed directly onto patients and are a big reason why health insurance premiums continue to spiral higher.

But these reforms are not what the president and liberal Democrats in Congress have in mind. By exaggerating how many Americans are in need of coverage, they’ve set the stage for an unprecedented — and unnecessary — level of government intrusion into health care that will lead to larger deficits, higher taxes for the middle class, increased costs for coverage, and lower-quality rationed care for all Americans.

If they have their way, we’ll eventually be enrolled in a single-payer system where government is the only insurer — “Medicare for All.”

Sally C. Pipes is president and CEO of the Pacific Research Institute. Her latest book is The Top Ten Myths of American Health Care: A Citizen’s Guide. Follow her on Twitter @sallypipes.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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