• Who will be uninsured in the future?

    The Robert Wood Johnson Foundation’s State Health Access Reform Evaluation program and the Urban Institute have a report out on who remains uninsured in Massachusetts, and Igor Volsky has a nice summary.  You may remember that Massachusetts enacted a form of health care reform years ago that is somewhat like the PPACA.  So by looking at who remains uninsured, we might get a clue as to who will remain uninsured nationally after 2014.

    First of all, let’s recognize that Massachusetts had an uninsurance rate of 4.1% in 2008, which is much better than the national average of 15.1%.  Yes, it’s expensive, but I don’t think it was ever designed to contain costs (a flaw).  But who is this 4.1%?

    Consistent with earlier work on the characteristics of uninsured adults in Massachusetts and in the nation as a whole, we find that the adults who remained uninsured under health reform in Massachusetts in 2008 were more likely than those with insurance coverage to be:

    – Male, young, and single

    – Racial/ethnic minorities and non-citizens

    – Unable to speak English well or very well

    – Living in a household in which there was no adult able to speak English well or very well

    Compared with insured respondents, uninsured adults also reported substantially lower educational attainment and less employment and had lower family income and greater financial stress.

    They make the logical argument that if you wanted to target people for interventions, you would look for younger, single, minority males, especially those who don’t speak English well or are non-citizens.  Good information to have, I guess.

    But I’m not so sure that we will see entirely the same thing with the PPACA.  I’m taking a chance here, because what comes next seems so strange, I’m afraid I’m missing something.  If so, let me know.

    The Kaiser Family Foundation has a nice subsidy calculator up that you can play with.  You enter information about your income and situation, and you get to see how much health insurance and care will cost you in 2014.

    It’s not all good news.

    Let’s say you are a 60 year old divorcee in 2014.  You make $46,136, which is 401% of the poverty line.  You are therefore eligible for NO subsidy from the government.  Your premium will be $10,162.  Should you actually need care, your out of-pocket costs will be capped at $6250.

    So in a best case scenario, your health insurance/care will cost you 22% of your income.  In a bad year (or a regular year if you have a chronic illness) your health insurance/care will cost you 36% of your income.  Um… that’s not affordable.

    Granted, the cost is so high that you would likely not be subject to the mandate.  Great.  So you continue to have the option to be uninsured.

    I worry that the people who are going to be left out in the PPACA are those making just over 400% of the poverty line.  Because, ironically, if you make just a little bit less – say $45,906 (399% of the poverty line), then – due to subsidies – your premium will cost you $4361.  That’s less than 10% of your income.  And your out-of-pocket costs are capped at $4167.  So the most you could pay in a year would be 19% of income.

    That’s still a lot.  But it’s WAY less than if you make just over the 400% line.

    I have yet to see a good answer for what the government is going to do when people start asking for pay cuts to get under the 400% line.  I don’t see why it won’t happen.

    • And this will of course blow up the cost estimates of the bill, because the more that people act optimally, the more the bill costs. I already know people working on helping small businesses optimize their insurance costs under the new rules, and optimal for them means worst case for the taxpayers. It’s simple anti-selection.

    • Could you please clarify what you mean by “unaffordable”? I’m having trouble understanding how, in your example, an single individual earning nearly $30,000, after medical expenses are paid for, would find it difficult to survive. Sure, spending 36% of one’s income is a significant burden for someone closer to the poverty line, but at 400+% FPL, I don’t see “affordability” as a serious problem.

      You do raise a good point about incentives to change one’s earnings around the cutoff, and that is problematic. It seems foolish to have such a large kink when it could be easily phased out more smoothly like the EITC. That doesn’t get rid of the problem entirely, but would seem to dampen the incentives to alter one’s income

    • He could simply pay the fine for being uninsured, wait until he needs a doctor, sign up and then cancel the policy after he gets well.