Health Insurance: It's a Policy, Not a Choice

You need health insurance -- whether you want it or not.

By now, you've probably seen the ads between segments of your favorite cable news yak show. "When you're uninsured, life turns out differently," the ad instructs, as we see an adorable girl who's either orphaned or not depending on whether her cancer-stricken mother had a health insurance card in her wallet. The fate of similarly situated girls, the ad implies, is ours as a society to decide.

This television ad is part of a multimedia campaign to place uninsured Americans at the center of the political agenda in D.C. It's funded with $10 million in soft-money donations from interest and advocacy groups, labor unions, and foundations.

This effort is odd for a number of reasons. Although the campaign cites research by Families USA that shows the number of uninsured increasing by 2 million in the past year, the unheralded trend in recent years has been a significant decline in the numbers of uninsured. Since the numbers peaked in 1998 at 44.2 million, 5.6 million Americans have left the ranks of the uninsured. One reason: managed care held down costs, and therefore made private insurance more affordable. Nine in 10 children living in the U.S. are insured.

Despite the apparent united front, the sponsoring groups for this ad campaign are often at odds on what to do about the uninsured. Some favor more government regulation and provision of health care. Others favor a less-intrusive tax credit approach. "There is only one common position all these groups hold," notes Tom Miller, director of health policy studies at the Cato Institute. "Health care costs too much and somebody else should pay for it besides me."

The fight to foist insurance on us all involves some cheap rhetorical hedges. "For tens of millions of Americans, not having health coverage means not having access to health care," says Dr. Steven A. Schroeder, president and CEO of the Robert Wood Johnson Foundation, a partner in the effort.

But not having health insurance does not necessarily equal not having access to health care. Uninsured individuals consume, on average, half the dollar amount of health services that individuals with insurance purchase. A recent study by the National Bureau of Economic Research found that the self-employed consume roughly the same amount of health care services as do the traditionally employed, even though they are less likely to have health insurance. The annual out-of-pocket expenses for health care are similar for the insured and the uninsured, with the former spending $211 each year and the latter shelling out $242, according to recent work by Yale's Bradley Herring. (For comparison, the average U.S. household spent $448 in 1999 on cereal and bakery products.)

The U.S. social safety net -- which includes community health centers, public and non-profit hospitals, any emergency room, and charity care by physicians -- absorbs two-thirds of the cost of the health care consumed by the uninsured. This safety net, while not a single, unified, easy-to-manage system, essentially functions as a catastrophic health insurance policy. The more health care the uninsured need, the less they pay. Uninsured individuals pay a mere 9 percent of the hospital inpatient costs they incur.

Defining the key problem in the American health care system as lack of health insurance implies that the goal is 100 percent insurance coverage. That can only be achieved through coercion that Americans are unlikely to tolerate. The government would have to force people to purchase insurance, either through an employer mandate (the German model favored by Hillary and Bill Clinton in 1993) or through taxation that pays for government provision of insurance or actual health services, the route taken by Canada, Great Britain, and others.

If left free to choose, some people will decide not to buy insurance. The uninsured population is not uniformly poor or clamoring for health care. Nearly one in three lives in a household earning more than $50,000 a year. One in seven comes from a household earning more than $75,000. It's just that with total out-of-pocket health expenses averaging $242 a year, the high price of health insurance just doesn't seem like a good deal, and for many it isn't. It'll take much more than a media campaign to change that.