No Health Insurance? Leading Economist Blames the Government

Jonathan Gruber of the Massachusetts Institute of Technology is considered one of the nation's bright young health care economists. The former Clinton administration official was a key architect of the Massachusetts universal health insurance plan, which relies on a mandate for individuals to go out and buy health care insurance if their employers don't provide it.

This bias in favor of individual insurance markets comes through in his latest paper, which can be found on the National Bureau of Economic Research website. It reflects the mainstream economics profession view that public programs like state Children's Health Insurance Plans (S-chip) "crowd out" private insurers. According to Gruber, for every 10 people who enroll in a public program, about six lose private insurance.

His data? Between 1984 and 2004, the number of non-elderly enrolled in public programs rose from 13.7 percent to 17.8 percent of the population, while the number of non-elderly without private insurance fell to 62.4 percent from 70.1 percent. Through "robust estimates of crowd-out," he concludes 60 percent of the switching was voluntary.

I am reluctant to pay $5 to download the study since I'm not very good at interpreting those calculus formulas that economists use. But this study defies common sense. Is he including all those people who work for the Wal-Marts of this nation who provide health insurance that's so skimpy that their employees would rather go on Medicaid? (Wal-Mart's family plan has as $3,000 deductible plus numerous co-pays once you've gotten past the six-month waiting period to get into the plan).

And how about the people who work for employers who provide nothing at all? Every survey that has been done among people who don't have insurance shows they simply can't afford the individual insurance market. Here's what a Commonwealth Fund survey conducted in 2005 found:

An overwhelming majority—89%—of working-age adults who sought coverage in the individual market during the past three years ended up never buying a plan. A majority (58%) found it very difficult or impossible to find affordable coverage. One-fifth (21%) of those who sought to buy coverage were turned down, were charged a higher price because of a pre-existing condition, or had a health problem excluded from coverage.

"More workers and their families are losing employer-sponsored health insurance," said Commonwealth Fund Assistant Vice President Sara Collins, lead author of the report. "Most of the increase in the number of uninsured Americans—now upwards of 46.6 million—was due to a decline in workplace coverage. Although the individual market is a last resort for those shut out of employer-sponsored coverage, it is by no means a safe or secure haven for everyone."

Crowding out? Seems more like locked out to me.

(It turns out that even Gruber is backing away from some of the implications of his study. See this letter to House Energy and Commerce chairman John Dingell, where he says his study shouldn't be applied to states' Children's Health Insurance Plans or SCHIP.)

Posted by gooznews at September 5, 2007 03:57 PM