• Unemployment is also an uninsurance problem

    The CDC has released a report entitled, “Health and Access to Care Among Employed and Unemployed Adults: United States, 2009–2010“. Key finding:

    Overall, in 2009-2010, more than 80% of employed adults age 18-64 had health insurance. But only 48% of unemployed adults in the same age group had insurance. But it gets worse. Less than 30% of unemployed adults had private insurance (less than a third!), versus more than three-quarters of employed people

    Many people like to think that being uninsured is a “choice”. And they’re correct, in the sense that you can “choose” not to buy insurance. I get that. But many people “choose” not to buy insurance for the sole reason that it’s crazy expensive. The average – not gold plated, but average – employer sponsored insurance plan for an individual plan in the United States last year was $5429. And that was just the premium. It didn’t include deductibles, co-pays, or co-insurance. The average family plan was $15,073. The median salary in the US, on the other hand, was less than $50,000 for households. For individuals, the median paycheck is $26,364.

    When you’re making that amount, and you lose your job, paying for that insurance plan is no longer possible. Paying for COBRA is even harder, as it’s usually more expensive. So sometimes you get poor enough to go on Medicaid. Or, if you’re in the majority of states that offer no Medicaid benefits whatsoever to adults who aren’t parents of children, you go uninsured.

    In case you haven’t noticed, the economy is hurting. Unemployment is very high, especially in groups that tend to also need health care the most. At times like this, it’s hard to imagine attacking the safety net programs that protect the poorest among us. Without them, the uninsurance rate among uninsured adults would be much, much worse.

    UPDATE: Fixed to make one point clearer.

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    • You report the average insurance cost and median salary. Would you have medians for insurance cost, healthcare cost (insurance plus out-of-pocket) and total compensation (salary plus benefits, including insurance)?

      thanks

      • I give the median salary, because the range of salaries is so vast that outliers skew the value out of whack. It’a also the generally reported value. I expect that the difference between the median and the mean insurance plan is not as large, but I don’t have the median. If anyone does, I’m happy to post that.

    • -There’s also a wide variation in insurance plans even within the same state, subject to all of the same mandates, etc so the concept of an average price for insurance is every bit as problematic as the concept of average wages.

      If someone wants insurance that actually functions primarily as insurance, instead of prepayment for all routine health care needs plus the insurance component, then they can easily address the affordability issue by purchasing a catastrophic plan. When I was last shopping for an individual plan catastrophic plans were 4-8x less. Someone who can’t afford the most comprehensive plans might very well be able to afford a catastrophic plan that will cover them very well in the event of a major illness or injury, and the savings will be more than sufficient to cover dozens of visits to the urgent care, or an outfit like this: http://www.zoomcare.com/

      It’s also worth asking what affordability means in the context of other expenses. Does not being able to afford mean – “we’re eating rice and lentils, have sold off all of the valuables, and live in a studio apartment or the parent’s basement,” or “we’re unwilling to make the lifestyle alterations that would enable us to pay for insurance.” My wife and I have foregone things like purchasing a home, renting a nicer home, cable, smartphones, pack our own lunches, etc so that we can stay ahead of our expenses, and I’ve lost count of the number of times that someone with two newish cars and mortgage that’s well north of $2K a month has said they can’t afford health insurance. Sell the house, sell the cars, sell the jewelry, cut the cable, stop eating out, stop taking vacations, etc, etc, and then lets talk about what you can afford.

      -The Community rating and guaranteed issue part of the ACA will only exacerbate the affordability problem. Even if the income-indexed transfers mitigate this problem somewhat, it’s not clear how many non-group plans will still be around if the 80%MLR requirement sticks. Will the ACA make it easier for people who are either unemployed or self employed to secure insurance that they can afford? I sure hope so but I’m not convinced that the actual outcomes will be consistent with the policy intentions here.

      • “Will the ACA make it easier for people who are either unemployed or self employed to secure insurance that they can afford?”

        If nothing else, it will help those willing to pay who are currently denied insurance. Here’s a surprising account of someone trying to enter the individual market: http://tinyurl.com/4dz2s4v. (People with more serious pre-existing conditions are completely out of luck.)

        There are people who can’t leave MA because they won’t get health insurance elsewhere.

    • More on the potential effect the MLR requirements in the PPACA may have on the individual market here:

      “The American Academy of Actuaries (AAA) has noted three ways in which the MLR standard could cause disruption to consumers in the individual market…”

      http://www.naic.org/documents/committees_e_hrsi_hhs_response_mlr_adopted.pdf

      The best outcome for unemployed people who are suddenly cast out into the group market and into an individual market in which affordable catastrophic coverage is no longer available is that they get heavily subsidized first dollar coverage through and exchange. Good for them, but per RAND, hard to see how it helps move the country towards spending less money on healthcare, much less reducing overutilization, etc.

      If there’s something obvious about the consequences of the MLR regs in the PPACA for the individual/small-group market, or how shifting the individual/small group market people from high-deductible to first-dollar plans saves money, I’d be glad to hear from someone who can straighten me out.

    • Ellen – I’m glad it helps people without coverage get insurance, but there’s got to be a more efficient way to do that than forcing everyone in the individual and small group markets to pay several thousand dollars more every year for first-dollar coverage that they don’t want or need.

      Just using income and asset adjusted transfers (100% coverage for the destitute, 0% coverage for Bill Gates, coverage for the tax attorney in Grenwich, CT only kicks in when he’s sold the McMansion…) from Federal tax revenues to cover people with pre-existing conditions who can’t afford to pay the premiums necessary to secure health insurance would accomplish the same thing, cost many orders of magnitude less, target resources towards the specific problem much more effectively, and significantly reduce the scope of unintended/unforeseen consequences that have the potential make this solution costs many times more than the problem it was intended to fix.