Wednesday, June 17, 2009

Almost 4 Of 10 Uninsured Households Make > $50k Per Year. What's Wrong With Being Self-Insured?

According to this Census Bureau report "Income, Poverty, and Health Insurance Coverage in the United States: 2007" (most recent data available), there were 45.6 million uninsured Americans in 2007. The chart above shows the household income levels of those 45.6 million uninsured Americans.

There are 9.1 million uninsured Americans living in households making $75,000 per year or more, and this represents about 20% of the total number of uninsured. There are 8.5 million Americans without health insurance in households making between $50,000 and $75,000, representing 31.8% of the uninsured. With those two groups combined, 38.6% of Americans without health insurance (17.6 million people) lived in households with $50,000 or more of household income in 2007.

According to The Kaiser Family Foundation, the average annual total premium cost was $4,479 ($373 per month) for single coverage and $12,106 for family coverage ($1,008 per month).

Q: With $50,000 or more in household income, wouldn't many or most of those 17.6 million uninsured households be without insurance voluntarily? That is, couldn't most of those households afford health insurance?

Alternatively, with those income levels (especially the 9 million with income above $75,000), couldn't many of those households choose to forego health insurance in favor of being "self-insured," at least for routine health procedures? Given the widespread availability of more than a thousand convenient and affordable retail health clinics around the country at Wal-Marts, Meijers, CVSs and Walgreens, these households could easily be on the "pay-as-you-go" model of self-insurance for health care.

32 Comments:

At 6/17/2009 10:57 PM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 6/18/2009 12:56 AM, Blogger Milton Recht said...

The percentage with $50k or more is even higher than it first appears. Appendix C of the Census Bureau report, page 59, states that:

"A key finding indicating survey response error in the CPS ASEC was that 16.9 percent of people with an MSIS [Medicaid Statistical Information System] record indicating Medicaid coverage reported in the CPS ASEC that they were uninsured."

Page 20 puts the Medicaid numbers at 39.6 million. So about 6.7 million Medicaid recipients incorrectly said they were uninsured and should not be counted as uninsured.

Most likely Medicaid recipients are in the lowest income bracket and could reduce the 13.5 million in that grouping by 50 percent.

That is almost a 15 percent reduction in the total uninsured just due to misreporting of that group.

 
At 6/18/2009 6:26 AM, Anonymous geoih said...

"What's wrong with being self-insured?"

How do you build a giant bureaucracy on that? That's just crazy talk.

 
At 6/18/2009 6:28 AM, Blogger BDHumbert said...

First, Robert is making the classic mistake of assuming that because he doesn't see it, it is free - or in his case peanuts. Someone - or in his case someones since he says he is double or triple covered is paying for him and paying at a rate that covers a wide range of services he may never need or use.

Which leads to my second point. I would love to see a similar breakout of the costs of the various mandated coverages included in insurance products - things like marriage counseling, plastic surgery, even arguably maternity benefits are not required to "insure" most of us against the kind of catastrophic condition that would seem to be the most important component of an "insurance" plan

I have been very disturbed with two aspects of what is coming, one is related to this post - mandated coverage essentially makes it impossible - or expensive to choose to be self-insured. The next part of what is ahead is as bad or worse - judgmental provisions mandating "healthy" lifestyles - obesity counseling is going to be the first I predict - but more are lined up behind this.

I become more Randian with every passing day...

 
At 6/18/2009 7:32 AM, Anonymous Anonymous said...

Regardless of what you make, it is irresponsible to be self insured because society likely ends up picking up the tab if something really bad happens to you.

There is an inexpensive, high-deductible health insurance plan combined with a health savings account, that is just brilliant for people who want to pay for the little stuff and only have insurance in case the bad tragedy happens.

 
At 6/18/2009 9:42 AM, Blogger bix1951 said...

Our rates on a fairly high deductible policy just went up to $20,568 per year.
Family deductible of $4,800 and out of pocket maximum of $7,200

SO.....
we are switching to a higher deductible
family deductible $10,400 and out of pocket maximum also $10,400

This will cost $11,136 per year in premiums

 
At 6/18/2009 11:21 AM, Blogger Marko said...

I thought Bush had a fairly good plan for this. He wanted to de-link insurance from employment, decrease government regulation so that insurers could compete across state lines, encourage catastrophic or very high deductible insurance plans and reinforce healthcare savings accounts that would carry over year to year tax free. That might have helped.

Don't forget - whenever you hear someone say they want universal healtCARE, we already have that. The law says providers can't turn away people that can't pay. What people are debating now is health insurance, not health care.

Whenever the government provides support, the price goes up. Think of health care, school tuition (because of student loans), etc.

 
At 6/18/2009 11:51 AM, Blogger bobble said...

i've always wondered why health insurance premiums aren't tax deductible for individuals. what interest group is preventing that? this would certainly make health insurance more affordable for the middle class.

 
At 6/18/2009 11:52 AM, Blogger bobble said...

and, why the high exclusion on deducting unreimbursed medical expenses?

 
At 6/18/2009 12:28 PM, Anonymous Anonymous said...

Those self-employed people own their own business, are writers, are consultants or are employed in some other type of freelance employment. Because those people aren't employed, they have to buy insurance from the open market. This drastically RAISES costs. Many of these people can't afford it. And don't point out that 47 bucks a month insurance. That stuff isn't much better than being insured.

Seriously - does anybody really wake up in the morning wishing they didn't have health insurance?? I knew nurses when I lived in the US who told me stories of how uninsured people or families would have to file for bankruptcy - all over a matter of a broken leg!!

People simply not choosing to take insurance has got to be one of the dumbest talking points I've heard in a long time. Good thing you have the AMA, the American Enterprise Institution or Americans for Tax Reform coming up those talking-points. Good thing they’re looking out for the big man’s dollar.

Dan Loyd

 
At 6/18/2009 1:49 PM, Anonymous Anonymous said...

Because those people aren't employed, they have to buy insurance from the open market. This drastically RAISES costs. Many of these people can't afford it. And don't point out that 47 bucks a month insurance. That stuff isn't much better than being insured.

Hey, genius, do you really believe that universal health care will be free?

Here's a excerpt from a 2005 WSJ article:

Canada's public care doesn't save money. As the satirist P.J. O'Rourke once noted, "If you think health care is expensive now, wait until you see what it costs when it's free." When adjusted for the age of its population, Canada vies with Iceland and Switzerland as the highest spender on health care among the 28 most developed nations with universal systems. Dr. David Gratzer, a Toronto physician affiliated with the Manhattan Institute, calculates that a Canadian earning $35,000 a year pays a stunning $7,350 in health-care taxes.

That's right, Canadians, in 2005, paid roughly 21% of their income for "free" health care. And it has only gotten more expensive since then.

But what did they get for that money? Second rate care:

...a majority of Canada's Supreme Court struck down a Quebec law that banned private health insurance and held that the public system inflicted cruel and unusual punishment on many of its patients. The Fraser Institute has found it takes an average of 17.9 weeks between the time a patient makes an appointment to see a general practitioner and when he can then see a specialist. He will then be treated by a system that ranks 13th out of 22 advanced countries in access to MRI technology; 17th out of 21 in access to CT scanners and seventh out of 22 in access to radiation machines. The safety valve in the system is that nearby U.S. hospitals can provide treatment for emergency cases and patients willing to pay.

[...]

Canada's Supreme Court was scathing in its indictment of the system. "Access to a waiting list is not access to health care," the court ruled. "Delays in the public health care system are widespread . . . in some serious cases, patients die as a result of waiting lists."

Wake up. Socialism is a disease.

 
At 6/18/2009 5:51 PM, Blogger Joel Weihe said...

Robert Miller,
Would love to know where you get your health insurance for "peanuts" cause I pay a small fortune for just my wife and I.
Thanks in advance for this most valuable information.
Joel Weihe

 
At 6/18/2009 6:03 PM, Blogger Joel Weihe said...

Marko,
Yes, George Bush had the right idea. With no Government mandates or restrictions health insurance companies would have a chance to compete and make Adam Smith proud.
The problem is that Government gets involved and starts making rules upon rules and bureaucracy inside of bureaucracy that never go away.
What we need is free market with limited Government oversight and regulation just to protect the people from Government and the failed health care system.
Make sense? Neither does our system.

 
At 6/18/2009 6:54 PM, Anonymous Anonymous said...

As a self employed person, I pay $170 a month just for me at just 32 years old. JUST for me. That's not peanuts in my world, and my household earns $53,000 a year. We can afford health insurance but it's not easy to do.

And this is no cadically plan either -- it's $1,000 deductible, $2000 in coinsurance, plus the $30 copays. This means that I'm paying at least $3K out of pocket before my insurance company starts paying 100%

So while this is fine for protecting against catastrophic stuff, it is frustrating when trying to pay for something like chiropractic care or an MRI or something like that. An MRI is $1500 -- which means that it's all out of my pocket and I don't have $1500 sitting around so I haven't gotten it.

So for us, it's not taking care of the flu, which costs a $30 copay, or the serious illness, which would trigger the 100% payment and friends/family could help with the $3000 in a time of serious crisis.

The problem is in the mid range care for tests and hopsital stays that aren't "catastrophic" but also not just colds and need to be taken care of or examined. A one night stay in the hospital for a precaution? $2000. Just ridiculous.

To me, that's the bigger issue than the 40K uninsured. It's insured people who aren't getting problems taken care of because they don't want to shell out the deductibles and coinsurance after already having paid hundreds if not thousands in premiums.

Government should look at these issues rather than creating mass bureaucracies which will make the problem worse. One idea would be to be able to allow Americans a $1000 tax credit to purchase a health savings account to cover the deducitbles and coinsurance. Perhaps they could work with banks to set up health savings account, and each year Americans could put $500-1000 into it, paid for by a tax credit or rebate from the government.

That would make more sense than all the crap we're currently talking about.

 
At 6/18/2009 6:55 PM, Anonymous Anonymous said...

Meant to say "cadillac" plan. Geez.

 
At 6/19/2009 3:39 PM, Anonymous John Galt said...

bobble:
i've always wondered why health insurance premiums aren't tax deductible for individuals. what interest group is preventing that? this would certainly make health insurance more affordable for the middle class.

Libs are behind this. Tax deductibility for employer-based plans require all employees to fall into the same risk pool. So healthy employees carry sickly employees, and companies with a lot of sickly employees pay higher rates than companies with a bunch of young healthy workers.

The libs figured out that if you allowed covered groups to form based on like risk, a bunch of healthy people would escape from having to cover the sick. And a bunch of less-healthy people who think they're paying for their own insurance now would find out how expensive it is to really carry their own weight if they were all grouped together.

Ezra Klein reacted positively when Bush proposed this in his '07 SOTU, and all the Dems declared his proposal "DOA." It was funny because he accurately listed all the conflicts inherent to employer-based coverage. But then some libs took him behind the wood-shed, and a couple of days later Klein was protecting the insane status quo again.

What's funny about this is that a big, big chunk of the "47 million" is young healthy people who would probably buy a plan that accurately reflected their true risk. One of the reasons they're uninsured in the first place is because they don't want to be paying a premium for sicker, older coworkers.

That 47 million uninsured? Yeah, we want to help some of them get insurance. But some of them are just trying to get away from socialized medicine in the workplace, only to have their heads counted as justification for socialized medicine across the land. You will be assimilated.

 
At 6/19/2009 4:21 PM, Anonymous Anonymous said...

I would love to see a similar breakout of the costs of the various mandated coverages included in insurance products

The Effect of State Regulations on Health Insurance Premiums

Regarding Canadian Care costs of 20% of income, French care is 15-20% of income as well depending on your salary.

I'd prefer if we de-regulated health insurance, and concentrated on ensuring poor people get health care rather than people making > $50K/yr.

 
At 6/19/2009 7:22 PM, Blogger John Ives said...

Any kind of analysis (empirical or political) of the CPS data must take into consideration that the CPS categorizes responses as "uninsured" if the responder did not have insurance AT ANY TIME during the year in question. IMHO, policy discussions must examine how long people are uninsured.

Check out the CBO report How Many People Lack Health Insurance and For How Long, May 2003.

Interesting policy suggestion from the CBO: one might think that a program to expand insurance coverage among low-income people would primarily benefit the long-term uninsured. But CBO's analysis shows that 42 percent of uninsured spells among people with income below 200 percent of the poverty level end within four months, while only about one-third last more than a year.

 
At 6/19/2009 8:04 PM, Anonymous Anonymous said...

"Hey, genius, do you really believe that universal health care will be free?"

Twenty-one percent? I think not. Since I live in Canada, I can tell you that you've been feeding off of Limbaugh's oxycontin while faithfully believing the WSJ and P.J. O'Rourke fascist words.

So you think your health care is cheaper? Nope, you yanks pay the most out of any developed country in the world for health care (http://www.voanews.com/english/archive/2006-02/2006-02-28-voa59.cfm?CFID=234893317&CFTOKEN=64235960&jsessionid=88305570c1412d1dabb16149197655714f66). Cannuks dispose 10% of the GDP on health care (http://en.wikipedia.org/wiki/Health_care_in_Canada).

Why is this? Because a government powered by a demanding populace (rather than a demanding corporate clientle) can demand muscle in their government to negotiate lower drug prices, and keep medical costs down (somewhat anyways. Although ours are rising, there no where near yours).

As I mentioned in prior posts, I had a taste of the American health insurance industry. Being back in Canada, I can honestly say I'm glad I don't have to fight with it anymore. 50 million uninsured Americans is more than the population of Canada and Australia combined - a few years ago, it was 40 million something.. What a tragedy for the world’s richest country.

BTW - how many of you uber-patriotic Americans have been paying attention to the fact that over 70% of Americans want a public option? (Though considering your finances, I'm not sure you should take it now. Think of what else you could do besides fight costly, useless wars)

Dan Loyd

 
At 6/19/2009 8:08 PM, Anonymous Anonymous said...

"As a self employed person, I pay $170 a month just for me at just 32 years old. JUST for me. That's not peanuts in my world, and my household earns $53,000 a year. We can afford health insurance but it's not easy to do."

That's exactly what I remember during my experiences in America. It's not cheap and unfortunately, to insurance companies who consider $170 to be peanut money, you get what you pay for.

Dan Loyd

 
At 6/19/2009 10:22 PM, Blogger Scott said...

FYI, for a single person earning $53,000 a year, here in Canada with "free healthcare" you would pay $390 a month more in taxes. Kinda puts that $170 in perspective.

Contrary to popular opinion, not all Canadians like our "free healthcare".

One would think that if 70% of the population thought they weren't getting good value for their money they would just create their own company to satisfy that need. Of course, we know the reason this would never happen is that those 70% couldn't live off someone else's dime then.

That is the problem with simple majority rule. Two wolves and a sheep voting whats for dinner, is only great if you aren't the sheep.

 
At 6/20/2009 5:02 AM, Blogger Aaron H said...

I saw a movie where Michael Moore cut a guy's finger off and he didn't have health insurance. I think that's what happened. Anyway, we need to make sure that poor people who are apt to cut their fingers off have health insurance.

We should also make sure people have flood, fire, and life insurance, because I just think you should have those things. Therefore, everyone should!

 
At 6/20/2009 7:19 AM, Anonymous John Galt said...

Dan Loyd:
"Seriously - does anybody really wake up in the morning wishing they didn't have health insurance?? I knew nurses when I lived in the US who told me stories of how uninsured people or families would have to file for bankruptcy - all over a matter of a broken leg!!"

Okay, now this is what we call a "useful idiot." This guy absolutely, positively knows people shouldn't go bankrupt over broken legs. That's the useful part.

But instead of asking how broken legs came to be ruinous, he automatically demands that government take over the whole damned process. And that's idiotic when you consider the role government plays in making the care so much more expensive than it has to be in the first place.

The truth is that a simple fracture should be so inexpensive to fix that you should be able to pay cash for the visit. It's less costly than the collision deductible on most people's car insurance policies, and it happens less often. Rationally, then, why would you expect to need insurance for it? If you are not questioning this; if you are simply accepting the premise that broken bones should be very expensive to fix, then you are not thinking.

And that makes you a very dangerous person to be advocating a solution, since it's obvious you have no idea what the problem is.

 
At 6/20/2009 10:48 AM, Blogger saynotomichigan said...

Interesting comments. One of the things that I'm pretty sure we want to address is the lowest income uninsured. It has already been mentioned that health insurance premiums are not tax deductible for those who are not covered by their employer (with the exception of certain provisions of the the HSA/HDHP via IRA distribution), but tax deductibility is not a major factor for the low income. So the question becomes, how can we entice the lowest income to buy health insurance? It may interest you to know that buying health insurance does not increase the eligibility/benefit for the food stamp program. To receive food stamps, income is weighed against valid essential living expenses to determine eligibility and benefit. It seems odd to me that health insurance premiums do not offset income for the sake of eligibility and benefit for the food stamp program, but we're being told that health insurance is a necessity.

 
At 6/20/2009 1:25 PM, Anonymous Nancy said...

Does the CBO say there are 45.6 million Americans without health insurance or does it say that there are 45.6 million people living in America without health insurance? It is my understanding that close to 10 million of the uninusred living in America are not Americans. Does anyone agree with me that this decreases the size of the problem by 22%.

 
At 6/20/2009 3:59 PM, Blogger jimengstrom said...

This comment has been removed by the author.

 
At 6/20/2009 5:33 PM, Blogger Craig said...

"So you think your health care is cheaper? Nope, you yanks pay the most out of any developed country in the world for health care "

I don't dispute that.

What we're paying for is accessibility and timely care. About a quarter of Canadians don't have a GP, waits for something as simple as cataract surgery are as long as a year (a week -- maybe -- here) and your largest and richest city has to send hundreds of its worst-off cases to Detroit and Buffalo for care.

These are the poorest and third-poorest cities in the U.S.; yet their hospitals are better-equipped and staffed than Toronto's.

 
At 6/20/2009 5:52 PM, Anonymous Anonymous said...

John Galt,

"The truth is that a simple fracture should be so inexpensive to fix that you should be able to pay cash for the visit. It's less costly than the collision deductible on most people's car insurance policies, and it happens less often. Rationally, then, why would you expect to need insurance for it? If you are not questioning this; if you are simply accepting the premise that broken bones should be very expensive to fix, then you are not thinking."

Nice dream, big buddy. Maybe in Jamica or Mexico, but not in the US - the land of the most expensive health care in the developed world with 16% (I've also read 17%) of GDP devoted. (http://www.huffingtonpost.com/steven-hill/what-obama-can-learn-from_b_173154.html). We Canadians spend 10% - and that’s considered hefty compared to other western countries with universal health coverage.

It turns out the X-ray alone is A LOT more expensive than most peoples' car insurance deductibles. (http://www.cscpa.org/Content/Files/Pdfs/FinLit/Generic/10Healthcare-Student.pdf.) Throw in the emergency room visit, the care, the cast, follow up visits and cast removal, and you're looking at a few grand minimum - and that's for a simple break. Break your leg in a few places and the cost jumps to tens of thousands of dollars. Don't have insurance? Whoops… the bill jumps substantially more.

This is also the reality you have in your land: trolls making 8 bucks an hour with insurance that demands $1,500 deductibles for single-coverage, $4,000 for family. You don't need many brain cells to wrap your head around this shallow concept to understand one better not get sick or injured with this living arrangement.

With your 10% unemployment and still persistent home foreclosures (and unlike other developed western nations, in America, you lose your health insurance upon unemployment if you fail to meet the COBRA payments), you’re telling me a simple matter like a broken leg doesn’t throw Americans into bankruptcy?? Check out how many Americans out of 1771 filed for bankruptcy because of medical costs (http://www.webmd.com/news/20050202/medical-bills-can-lead-to-bankruptcy). America, for all its self-proclaimed health glory, ranks FIFTIETH in life expectancy .(http://www.usnews.com/articles/opinion/2009/04/21/united-states-ranks-50th-in-nations-with-longest-lives.html)

If you don't like the idea of democratic government handling health care, that's fine with me. The big boyz in the big health insurance and pharmaceutical companies will be more than happy to decide your fate. Remember Linda Peeno? (http://www.cchconline.org/issues/peeno596test.php3) Yeah, she might have gotten cold feet about turning down peoples’ health care and ratted out to congress, but I can guarantee there's plenty more where she once sat - all with sharp eyes to spot out any pre-existing conditions. So stay healthy, because greedy eyes don't sleep.

Dan Loyd

 
At 6/20/2009 6:04 PM, Anonymous Anonymous said...

Craig,

"What we're paying for is accessibility and timely care."

Really? What about the uninsured with bad backs or bum hips who need surgery, the ones who have to endure pain for years because they don't have insurance, or their insurance ditches them because of a pre-existing condition? You forgot to mention how many yanks from Detroit and other parts of the country try to sneak up here (illegally) to take advantage of our health care and our drugs because America won't take care of them. As I've said before, America ranks 50TH in life-expectancy despite its self-proclaimed health glory.(http://www.usnews.com/articles/opinion/2009/04/21/united-states-ranks-50th-in-nations-with-longest-lives.html)

While we do have waiting lists for non-critical procedures, this doesn't dispute the fact that America has its own "special," unique form of rationing health care in a rather less scrupulous, less charitable way.

 
At 6/20/2009 7:00 PM, Blogger Milton Recht said...

The US has one of the highest teenage pregnancy rates in the developed countries in the world and some of the best survival rate of high risk births. However, high-risk birth babies have lower life expectancies.

A good part of our lower life expectancy is due to these two categories of births, since life expectancy is measured from birth. Additionally, accidental deaths also affect life expectancy.

In a sense, good medical care, which allows a baby to be born in the US that would not survive in another country, lowers the US life expectancy. These births are also very costly medically.

Teenage pregnancy is a cultural and not a medical issue. Many of these babies also have a lower life expectancy.

Life expectancy comparisons need to control for these and other country demographic differences.

It is not difficult for someone with all the statistics to compare life expectancy by different groups in different countries. That is the relevant comparison, not overall life expectancy, since culture, genetics and other factors affect each country's subgroup's health and life expectancy differently.

That is why when you look at subcategories (such as certain cancer survival rates), the US does better than other categories because it is comparing apples to apples instead of apples to oranges.

 
At 6/20/2009 10:31 PM, Anonymous John Galt said...

Dan Loyd:
It turns out the X-ray alone is A LOT more expensive than most peoples' car insurance deductibles.

Um, the price may be, but the cost is not. Either that, or my veterinarian is giving away x-rays. And people should be even cheaper to x-ray than golden retrievers, since they can tell you exactly where it hurts and they can lie still without sedation.

The rest of your wasted keystrokes rely on the same flawed premise, and are ignored.

If you want to convert people to your way of thinking, you can do one of two things. Either convince them why human x-rays should cost more than golden retriever x-rays, or give them a lobotomy like the one you must have had.

 
At 6/21/2009 7:47 AM, Blogger marketdoc said...

Studies show that if you earn $20,000 yearly you are in the top 11% richest in the world. If you earn $40,000 you are in the top 3% richest. Any uninsured person can walk into any ER and receive care. Try doing that in Haiti. Try waiting to have your knee replaced in Canada. You will probably die of old age first, especially if you have another problem like a cardiac history. Americans need to stop whining! To paraphrase President Kennedy we have turned from "ask not what your country can do for you" to "what can my country do for me?"

 

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