Warum sind so viele Amerikaner unversichert?

April 24, 2009 -- As Congress returns from spring recess and gets to work hammering out a health care reform bill, that dreaded statistic is in the news again: 46 million Americans have no health insurance. Like many scary numbers the press serves up every day, this one needs to be examined with a skeptical eye. In reality, the situation is not quite as bad as it is made to appear.

Still, there is a problem, and it is severe enough to be worth addressing. Some millions do want health insurance but are unable to afford it. Does this not demonstrate that the free market is unable to provide for the needs of the people? Given that the free market works so well in so many other areas, it would be curious if it fell short in this one part of the economy. When faced with an anomalous effect, we should seek out anomalous causes. Indeed, upon closer examination, the U.S. market in health care is far from free.

SIZING UP THE PROBLEM

The U.S. Census Bureau, in its August 2008 report , pegged the number of people without health insurance in 2007 at 45.7 million, down slightly from the previous year. The first thing to notice is that the Census Bureau itself admits that this number, from its Current Population Survey (CPS), is too high. Appendix C of the report starts off, “Health insurance coverage is likely to be underreported on the Current Population Survey.” It then dances around the issue for a page and a half, but it does direct the intrepid reader to the Congressional Budget Office’s 2003 report, “ How Many People Lack Insurance and for How Long ?”

The CBO document examines data from the year 1998, when the CPS found that roughly 40 million people were uninsured (or about 15 percent of the population, which matches the current rate). The report estimates that the number of people who were uninsured for the entire year was actually between 21 and 31 million—that is, anywhere from 25 to 50 percent lower than the CPS number. “Although the CPS is intended to measure the number of people who lack health coverage for a whole year, its estimate more closely approximates the number of people who are uninsured at a specific point in time during the year.” (Emphasis added.) It is one thing to be chronically uninsured, and quite another to be without insurance for a few months.

If the market for health insurance were truly allowed to function freely, competition would exert downward pressure on prices and ensure a wide range of products.

A further source of inflation in the official figures is the fact that many of those among the officially uninsured are eligible for Medicaid but have not applied for it. The CBO report does not provide a sense of the number here, merely saying that “half of eligible nonparticipants have private coverage and half are uninsured.” But just how many “eligible non-participants” are there to begin with? Peter Pitts, president of the Center for Medicine in the Public Interest and a former FDA Associate Commissioner, says the number is huge, writing recently that “12 million Americans without health insurance already qualify for public health coverage. They simply haven’t signed up.”

Aside from the Medicaid mix-up, there is another qualification to bring to the official figures. When the uninsured were asked why they lacked health insurance, 10 percent of nonelderly adults reported that they “have not needed insurance” and another 1 percent said they “do not believe in insurance,” according to the CBO report. This indicates that at least some of the uninsured are uninsured by choice. This is not necessarily irrational; someone who is young and healthy may choose to take the tiny risk of investing elsewhere temporarily. Someone who is very well off may be able to afford to pay for likely risks out of pocket.

Further evidence that some significant portion of the problem is voluntary can be found by examining incomes. Returning to the Census Bureau report, we find that 8.5 million of those who lacked health insurance in 2007 had annual household incomes of between $50,000 and $75,000, while an additional 9.1 million had household incomes above $75,000. Surely these 17.6 million of the uninsured could have afforded health care, right?

THE HIGH COST OF GOVERNMENT REGULATION

Although the scale of the problem is not quite what it is made out to be, there are nonetheless millions of Americans who want insurance but remain uninsured for extended periods of time. The number might be “only” 10 or 20 million, taking account of the issues raised above and allowing for overlapping categories, but that still represents a significant problem.

The most commonly cited reason for lacking health insurance is its high cost. And the cost is high. According to the National Center for Policy Analysis , a family policy in Massachusetts will set you back a shocking $16,897 a year. That is enough to make even many higher earners balk. In Wisconsin, however, a family policy is a much more affordable $3,087 a year. How can this be?

Simply put, the government of Massachusetts regulates the market for health insurance much more heavily than Wisconsin’s does. As the NCPA explains, “The federal McCarran-Ferguson Act, which lets states set their own requirements for coverage, has protected state markets from competition, and led to an assortment of mandates—many of which the insured do not want or need.” Heavily-regulated states require health insurance policies to cover such vital necessities as acupuncture, massage, marriage counseling, contraceptives, fertility treatments, and—I kid you not—hairpieces (required by seven states). Residents of Massachusetts, in other words, are forbidden by law from purchasing the kind of basic, no-frills insurance policy available to residents of Wisconsin.

The second most commonly cited reason for lacking health insurance is lack of access to an employer-sponsored insurance plan. The reason why this matters is that employer-provided plans are tax exempt, while plans purchased by individuals are not. This makes individually-purchased plans more expensive, punishing the unemployed and those who work for smaller companies that provide no health benefits.

BLAMING THE FREE MARKET

If any industry in the United States illustrates the unintended negative consequences of government regulation, health care is it. Yet this government failure is often blamed on the free market and used to justify further regulation. In the most heavily-regulated states, guaranteed issue (no one can be refused) and community rating rules (everyone must pay similar premiums regardless of risk factors) push prices even higher, yet some argue that these should be adopted nationwide. At the extreme, some Americans want a universal health system like we have in Canada, trading high direct monetary costs for burdensome taxation and, yes, long waiting lists—despite what Michael Moore would have you believe.

If the market for health insurance were truly allowed to function freely, it would respond to the laws of supply and demand, just as markets in other areas of the economy do. Competition would exert downward pressure on prices and ensure a wide range of products, from no-frills basic insurance to gold-plated luxury insurance. No one in their right mind would need to go without basic care, just as no one in America today goes without shoes or a watch, unless they have good reasons to be barefoot and watch-less—while soaking up rays on vacation, say. But if the government were to mandate that all watches had to meet the standards of a high-end Rolex and come bejeweled with diamonds and sapphires, there would be many a bare wrist out there on the streets.

Of course, the free market does not guarantee that people will receive a certain good or service. It just ensures that no one is prevented from working out ways to get that good or service using their best judgment and efforts. Free markets do not ensure either good judgment or productiveness, but they do enable and encourage those virtues. The small minority who were unable or unwilling to fend for themselves in a free market would be free to seek out support from family, friends, community organizations, and other forms of voluntary charity.

Beyond economics, there is the question of why someone should be forced to buy acupuncture insurance if he is to buy insurance at all. Why, too, should a woman who watches what she eats, exercises regularly, and doesn’t smoke or drink to excess be forced, by community rating rules, to subsidize someone with an unhealthy lifestyle? Even subsidizing someone who is sick through no fault of his own is not “insurance”—which is about risk-mitigation, after all—it’s charity, and should be treated as such. As usual, lack of freedom and lack of fairness go hand in hand.

But health care is simply too important, some will argue, to be left to the free market. On the contrary: health care is too important for excessive regulation to continue depriving people of the freedom to buy the coverage they want and need. In the name of a supposed entitlement to health care, some people are willing to impose unchosen obligations on others—with the predictable effect of impoverishing us all. We should instead step aside and let a dose of freedom treat what ails us.

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