Tag: Health

How Many Uninsured? It Does Not Matter

As my colleague Michael Cannon discusses below, in today’s WSJ Online, Carl Bialik examines the data on how many Americans do not have health insurance. Discussions like this one will be rehashed repeatedly during the coming health care debate, but they miss the crucial point: the U.S. should not expand government subsidy for health insurance whether the number of insured is 46 million or just 46.

The economics argument for subsidizing health insurance rests on the claim that private insurance markets do not provide fairly priced insurance. This is allegedly because insurers cannot distinguish the good health risks from the bad health risks and thus price insurance at a level only the bad risks are willing to pay.

This claim of “asymmetric information” is incredibly unpersuasive: absent regulation to the contrary, an insurance company can require any medical tests it wants and learn an insurance applicant’s health at least as well as the applicant. It can also condition coverage on relevant behavior, such as not smoking or maintaining a reasonable weight.

The problem is thus that insurance companies can determine all too well who is a good health risk and who is not, so they will price insurance accordingly if the law permits. This strikes many people as unfair, so they want to subsidize insurance for those born with unhealthy genes.

If insurance subsidies had few unintended consequences, this might be a reasonable form of social insurance. The problem is that subsidizing insurance exacerbates moral hazard, the tendency of people with insurance to consume too much health care. This is a crucial reason for rapidly increasing health expenditures.

Policy must therefore accept a trade-off: subsidizing health insurance will increase some people’s perceptions of fairness, but it will make the health care market less efficient.

A reasonable balancing of these two concerns suggests subsidizing insurance for the truly poor, but no more. In fact, the U.S. already does that via Medicaid. The uninsured are mainly people with too much income to qualify for Medicaid, or people eligible but fail to apply. Thus expansion of subsidized insurance to the currently uninsured, whatever their number, is likely to generate substantial inefficiency relative to any increase in “fairness” it creates.

Cato Health Care Experts Live-Blogging Tonight’s ABC News White House Special

Tonight at 10:00 PM EST, ABC News will broadcast a “special report from the White House” on President Obama’s plan to revamp the nation’s health care system. Cato scholars Michael D. Tanner and Michael F. Cannon will offer live commentary and analysis when the program begins.

Don’t miss this opportunity to hear another voice in the health care debate.

Sign up below:


For more on Cato’s research on health care, visit Healthcare.Cato.org


How Many Uninsured Are There?

The Wall Street Journal’s Numbers Guy tackles the question:

The Census Bureau estimates that the number of uninsured amounts to 45.7 million people. But the agency might be over-counting by millions due to faulty assumptions…

Even though legislation won’t cover many of them, illegal immigrants are especially difficult to enumerate: Few raise their hands to be counted. Prof. [Jonathan] Gruber estimates they make up about 13% of the uninsured today, or nearly six million people of that 45 million number…

Of the rest, some people are eligible for health insurance but don’t know it and many can afford it but don’t want it. About 43% of uninsured nonelderly adults have incomes greater than 2.5 times the poverty level, according to a report released Tuesday by the business-backed Employment Policies Institute.

He left out a few things, though.

The estimate of 46 million uninsured, which comes from a less-than-ideal government survey, has been the occasion of a fraud on the public.  For 20 years, the Church of Universal Coverage told us that 40-some million Americans are uninsured for the entire year.  Then, experts including the non-partisan Congressional Budget Office said that no, 40-some million is the number who are uninsured on any given day, and a lot of those people quickly regain coverage.  The number of Americans who are uninsured for the entire year is actually 20-30 million.  Yet the Church of Universal Coverage kept using that 40-some million estimate as if nothing had happened – even though the meaning of that estimate had completely changed.

The Congressional Budget Office also reports that as many as 15 percent of those 20-30 million chronically “uninsured” are eligible for government programs, so they’re effectively insured.

According to economists Mark Pauly of the University of Pennsylvania and Kate Bundorf of Stanford, as many as three-quarters of the uninsured could afford coverage but choose not to purchase it.  Again, according to the Congressional Budget Office, 60 percent of the uninsured are under age 35, and 86 percent are in good-to-excellent health.

Government intervention has made health insurance unnecessarily expensive for them, so these folks quite sensibly don’t want to be ripped off.  Mandating that they buy coverage is really about hunting them down and taxing them.

Higher Taxes for Health Care, Fewer Jobs

President Obama broke his pledge not to raise taxes on lower- and middle-income families with his large tobacco tax increase back in February. It appears that the increase is not just hurting tobacco consumers, but also hurting workers in the cigar industry. From Tampa Bay Online:

Tampa will lose part of its cigar heritage in August when Hav-A-Tampa shuts its factory near Seffner and lays off about 495 employees, closing a factory that has been operating since 1902.

Several things conspired to hurt Altadis’ sales, McKenzie said, including the recession and the growth of indoor smoking bans. The bans have especially hurt sales in cold-weather states, where it’s impractical to smoke a cigar outdoors in the winter, he said.

However, the company attributed much of its trouble to the State Children’s Health Insurance Program, or SCHIP, a federal program that provides health insurance to low-income children. It is funded, in part, by a new federal tax on cigars and cigarettes. McKenzie couldn’t say how much sales of Hav-A-Tampa cigars had fallen off, but the numbers have dropped significantly, he said.

Previously, federal excise taxes on cigars were limited to no more than a nickel, said Norman Sharp, president of the Cigar Association of America trade group. The tax increase, which took effect April 1, raises the maximum tax on cigars to about 40 cents, Sharp said.

This health-tobacco legislation raised taxes $65 billion over 10 years. Imagine the damage that would be caused by the giant health bill currently moving through Congress, which will cost $1 trillion or more over 10 years.

Hat Tip: Tad DeHaven

Ed Crane Describes a Libertarian Approach to Health Care Reform

Last week, Cato hosted an all-day conference on health care reform, which included expert opinions from across the political spectrum.  Cato Founder and President Ed Crane started the event with a talk about a libertarian approach to reforming health care, which would reduce federal involvement, increase competition, decouple health care from employment and increase the amount of doctors available.

You can find all of Cato’s reasearch on health care reform at Healthcare.Cato.org.

You’re for Fair Competition, You Say?

Len Nichols is the top health-policy guy at the New America Foundation.  He’s spent the past few months trying to negotiate a compromise between the Left and the far Left over the creation of a new government health insurance program that would compete with private insurers.  With John Bertko, Nichols wrote a paper on how to create a level playing field between a government program and private insurance.

Yesterday’s CongressDailyAM, however, had an interesting article that sheds light on Nichols’ sense of fair play.  According to the article:

Nichols has floated the idea of writing into law a requirement that certain changes to the system would require a two-thirds vote to pass rather than a simple majority.

Never mind that such a requirement would guarantee that the new program would breed even more stagnation and death than Medicare and Medicaid do.

What Nichols proposes is that a Democratic Congress should be able to create a new Fannie Med by a simple majority vote in each chamber, but if a subsequent (Republican?) Congress wanted to repeal it, they should face a higher bar.

Keep that in mind when you hear talk about a level playing field.

Panic Starting to Set in Among Advocates of Government-Run Health Care

Until now the usual suspects hoping to win a government takeover of America’s health care system appeared to be confident of victory.  No longer, however.  Some of them, at least, are starting to notice the fact that health care “reform” will be incredibly expensive at a time when the U.S. government has no money.  Indeed, the problem is not that the Treasury is empty.  Rather, it is filled with IOUs for which foreign creditors, such as China, now worry about collecting on.

Writes Jonathan Cohn at the New Republic:

Attention fellow liberals who want health care reform: You are in danger of losing the fight for universal health insurance. And it’s not only–or even primarily–because of the public plan.

It’s because of the money.

Well, contrary to the belief of many on the Left, money does matter.  As much as we all might wish, money does not grow on trees.  And running the printing presses isn’t the panacea that some believe.

Cohn seems surprised that the Congressional Budget Estimate came in so high, but a complete bill almost certainly would cost even more.  Thankfully, the government-takeover bandwagon has hit a large bump, and even larger barriers must be overcome for health care “reform” to triumph.