Monday, June 22, 2009

The Uninsured and Static vs. Dynamic Assumptions

Although 70% of insured Americans rate their health care arrangements good or excellent, radical reform of health care is supposedly necessary because there are 45.7 million uninsured. That number is, however, a "snapshot" of a nation in which more than 20 million working Americans change jobs every year. Many of them are briefly uninsured between jobs. If all the uninsured were assembled for a group photograph, and six months later the then-uninsured were assembled for another photograph, about half the people in the photos would be different.

~George Will

MP: Many of those discussing the "problems" of income, wealth or wage inequality often must be troubled because they are making the underlying assumption that individuals and households in the U.S. are permanently stuck in a certain income or wealth quintile (bottom or top) or income percent (top or bottom 10%), without acknowledging the dynamic movements up and down the income and wealth quintiles over time. Those who are troubled by the 45.7 million insured Americans are probably making a similar flawed, underlying assumption about the uninsured: that those individuals or households insured in a certain year remained permanently insured, and those individuals or households who are uninsured in a certain year remain permanently uninsured with no possibility of ever getting insurance without government intervention, with no interaction between the two groups.

As George Will reminds us, the "uninsured" are often temporarily, not permanently uninsured, and the composition of the 45.7 million uninsured changes all the time, i.e. it's not like a private club closed to new members.

The unrealistic assumption of static group compositions over time (for income, wealth, or the uninsured, wages, etc.), and a rejection of the more realistic assumption of dynamic group changes, generally and inevitably leads to one policy conclusion: government intervention. Or at the very least, the assumption of static group compositions strengthens the case for government intervention and the assumption of dynamic group compositions weakens the case for government intervention.


At 6/22/2009 11:24 AM, Blogger Hot Sam said...

COBRA rules allow many of those people between jobs to keep their insurance.

However, they must foot the entire bill, including the portion previously paid by their former employer.

That bill is immensely high, so these people choose not to purchase it. Since they are unemployed, I can't say I blame them.

But how much preparation did they make in the good years? How much did they save for the days when they might be unemployed? Do they need that previous "Cadillac" insurance or can they buy a cheaper gap insurance?

Those are rhetorical questions, by the way.

The high price of company medical insurance plans are the result of having to insure pre-existing conditions and the deep pockets of employers. Now Obama wants to tax those benefits, transferring even more costs to the backs of those who earn their insurance through productive labor and entrepreneurship.

As many critics of his plan have stated, he will price private insurance out of the market so that only the government-run program operates. He will price them out the same way predatory-pricing monopolists do - by running a deficit. The difference is that the monopolistic predator eventually raises prices and makes a profit. Government will run deficits in perpetuity.

Mark, do you have stats on the annual deficits run by each of these socilaized medicine countries? I can't find it. I think the governments intentionally obscure them.

At 6/22/2009 12:16 PM, Blogger Milton Recht said...

The inaccuracy of the Census Bureau number of 45.7 million uninsured is well known by anyone who has looked at its reliability. Even the Census Bureau, which created the 45.7 million number as part of its Current Population Reports, says, in Appendix C of its report, that the report overestimates the number of uninsured. According to Census, almost 7 million Medicaid recipients alone are counted as uninsured and there are other areas of under reporting of health insurance. Additionally, there are legal aliens, and there are about 7-10 million illegal aliens counted in the 45.7 million, who for their fear of government do not avail themselves of government heath insurance, such as Medicaid. The Census Bureau also recognizes that it is a point in time estimate and that the 45.7 million grossly overstates the number of uninsured over a longer time period.

Modifications to our health insurance will not change the number of illegal and legal aliens who are uninsured because of fear of government, nor will it improve the accuracy of the numbers of Medicaid recipients who, for various reasons, have insurance but report themselves as uninsured. Plus, some of the uninsured are those who can afford insurance but are voluntarily choosing to self-insure and not buy health insurance.

What is surprising is that the Census Bureau continued to produce the uninsured number for many years while questioning its accuracy.

It is also surprising the Administration and the media continue to use this highly inaccurate number including the recent, June 2, Council of Economic Report, "The Economic Case For Health Care Reform" as a justification for health care reform. The public media accepts the uninsured number without any fact checking or explanatory qualifiers. The public media allows politicians and the Administration to use the 45.7 million uninsured number without ever questioning the number's ability to explain the need for a health insurance modification.

As you mention, there is also tremendous mobility in the US among the various income quintiles, with people from the lower and lowest quintiles moving into higher quintiles and people from the higher and highest quintiles moving into lower quintiles. Additionally, wealth does not correlate very well with income so some of the wealthy are in the lower quintiles.

Both the call for a change to health insurance and the need for more income equality are based on faulty numbers and analysis. It is surprising that many who know better would propose an expensive and fundamental change to health care based on such inaccurate analysis, including economists who work for the current Administration.

At 6/22/2009 1:42 PM, Anonymous Anonymous said...

Yes, But Many of them Remain the Same.

We have Millions of Americans that Cannot Buy Health Insurance at Any Price. They have NO access to "Specialists," which means, in reality, They Cannot be Cured.

This means, in reality, They Cannot Work. It's a vicious (and Deadly) cycle.

Did you know that many of the so-called "insured" have little $3,000.00 Limit policies? Do you know how ineffective they are if you truly develop a health condition? Millions.

The Republicans are mad because they're Not Governing. I've got news for you. You might not ever "Govern" again. Who is left to "Vote" for you? A white girl under the age of 30 would have to have a head transplant to "Vote Republican." A Black Person? Surely you jest. A young male? Why?

A poor person who has a family member suffering from Krohns that can't get treatment? Why would they even consider it?

Folks, in the most primitive societies the Shaman treats all villagers. If he doesn't he becomes the ex-shaman.

Right now, the Republicans are becoming the "Ex-Governors."

At 6/22/2009 1:59 PM, Blogger juandos said...

"We have Millions of Americans that Cannot Buy Health Insurance at Any Price. They have NO access to "Specialists," which means, in reality, They Cannot be Cured"...

Well rufus here's YOUR chance to man up with YOUR WALLET and help those poor, downtrodden folks out...


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