Tuesday, April 1, 2008

Solving Idaho's Uninsured Problem

I've added this to the campaign web site--I thought the rest of you might find this interesting. It's an expansion of what I wrote here a few days ago.

What Is The Nature Of The Problem?

How big is the problem of uninsured Idahoans? A website sponsored by the Robert Wood Johnson Foundation, which wants everyone covered, claims that the 2006 Current Population Survey data indicates that 14.7% of Idahoans are uninsured. That's actually better than the national average (although not by much).

Here's a report put together by Mathematica Policy Research for the Joint Legislative Oversight Committee last year. It estimates that 16-18% of the "non-elderly population" of Idaho was uninsured as of 2005. (People over 65 are covered by Medicare; hence the discrepancy with the 14.7% figure.)

Characteristics of the uninsured are unsurprising: the 18-24 and 25-34 populations seem to be especially prone to being uninsured, while only 10% of the 0-17 population are uninsured. This is probably, at least in part, because large numbers of Idahoans graduate either high school (and don't go on to college) or graduate college, and lose eligibility under their parents health insurance plan.

While no report gives a breakdown of illegal immigrants versus legal residents, the combination of low pay and lack of knowledge of our system means that illegal immigrants in California are disproportionately uninsured. I would be surprised if that is not the case in Idaho as well. Fixing the illegal immigrant problem would certainly make some progress on fixing this problem, too, both by encouraging illegal immigrants to leave Idaho, and because doing so would drive up the wages of legal workers who compete with illegal immigrants for low-paying jobs. We should not overemphasize the part that illegal immigrants play in this problem. Federation for American Immigration Reform (an advocacy group) estimated in 2007 that there were about 35,000 illegal aliens in Idaho. Even if none of them were insured (which seems unlikely), this would be, at most, about one-seventh of Idaho's uninsured population.

I'm not thrilled that 10% of the 0-17 population are uninsured, but that also means that 90% of children are insured, either privately, or through governmental insurance programs such as Medicaid or SCHIP.
Why are there Idahoans who are uninsured? I was uninsured for a few months, back when I was 19 years old, mostly because I wasn't thinking about it. I worked for an employment agency with no benefits. Ijust never thought about the need for health insurance--I was in good health, and seldom saw the doctor. After a few months, I did start to think about it, and I went out and bought individual health insurance that covered just hospitalization. I figured that I would pay everything else out of pocket. It made the cost of coverage a lot more reasonable.

I'm guessing that many of Idaho's uninsured are in that situation because of poverty. The statistics in that Mathematica Policy Research study shows that 45,000 adults with incomes below $15,000 per year were uninsured--or 49% of that income group. I would expect that most of these couldn't afford health insurance, and were too well off to qualify for Medicaid. Ditto for the roughly 70,000 uninsured adults with incomes in the $15,000 to $25,000 per year range (48% of this income range).

When I looked into this last year (when I was considering retiring), I found that a basic individual health insurance policy will cost about $300 to $400 a month for an adult, with deductibles in the $2500 per year range. You should consider such a plan to be coverage for serious things that go wrong--and you will be paying for your prescriptions and office visits. I'm told that if you can tolerate a $9000 per year deductible, you can get coverage for $99 per month (at least in some parts of Idaho).

Still, while much of the under $25,000 per year group may not be able to afford health insurance, there are still uninsured adults making more than $50,000 a year. Not as many, or as high a percentage--but whatever is causing 4% of people in this income bracket to be uninsured, poverty isn't likely the reason. That's a net income of at least $3000 per month. You can afford to buy health insurance with that kind of income--and if you can't, that's a foolishness problem, not a poverty problem.

Much of the uninsured problem seems to be with unemployed people, those living in rural areas, and working for small employers. Of employers with less than 10 employees, only a bit more than 30% offer health insurance to their employees. Part-time employees, also unsurprisingly, are disproportionately uninsured. Most group health insurance plans are only available to full-time employees (either 30 or 32 hours per week, depending on the plan).


What can Idaho government do? I'm still scratching my head about this, but I can see several possible solutions:
  1. What can be done by the state government to faciliate the development of group health insurance pools that are not dependent on one's employment? I am not talking necessarily about a governmental subsidy for such insurance--just investigating what would be required to make group health insurance not dependent on your employer. This could be an alternative for those working for small firms that don't have a group insurance plan, part-time employees who are ineligible for coverage with their employer, and the unemployed. Since so many of the uninsured in Idaho are ages 18-34, and this is among the healthiest part of the population, such group health insurance might be less expensive than an insurance pool consisting of the entire population.

  2. Television advertising reminding those that can afford health insurance, but don't have it, that this is really, really foolish.

  3. In California, because illegal immigrants are disproportionately uninsured, the financial strain of treating illegal aliens has caused at least 84 hospitals to shut down. Because illegal immigrants are generally poorly paid, they are likely disproportionately Idaho's uninsured. A vigorous enforcement of laws prohibiting the knowing hiring of illegal aliens would reduce the number of uninsured Idahoans from 14.7% to perhaps 13%.

  4. Pretty clearly, there are a lot of young adults who are not insured, and in many cases, may not be able to afford to pay for their own insurance. I'm not thrilled at the idea of the government going into the health insurance business. On the other hand, being uninsured just results in hospitals transferring costs from uninsureds that can't pay their bills to people who have insurance, or to government for publicly operated hospitals. I would consider this a last resort after all other attempts to solve the problem have been given a fair try.

  5. We may need to rethink our goals. The figures from the Mathematica Policy Research survey suggest that the uninsured are largely young people without children--people who usually don't need a lot of medical care. It may be that for people in this situation, the best choice would be a very high deductible policy with low monthly premiums. Unless you get very, very sick, or have some chronic condition, for most people in their 20s and 30s, their out of pocket expenses are going to be $500 to $1000 for the year (including the cost of prescriptions). An advertising campaign to alert this target population that they have alternatives would probably persuade some to obtain individual health insurance.

  6. For those making less than $30,000 a year, the cost of out of pocket expenses plus monthly health insurance premiums is likely to exceed the 7.5% Adjusted Gross Income limitation of Schedule A, allowing at least part of these costs to be a deduction on their federal income taxes. This would make insurance a bit more affordable. Many of the uninsured may not realize this--it would be relatively inexpensive to produce television ads and a website informing this target population about this. Again, it isn't going to cause vast numbers of the uninsured to buy insurance, but it will cause some of the uninsured who can afford health insurance to buy it.

  7. Perhaps provide an income tax credit to encourage Idahoans to purchase health insurance. A loss of tax revenues is bad--but hospitals with uncollectable emergency room bills is also bad. Children who don't end up receiving medical care until they are so sick that they end up in the emergency room is also bad.

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