Who Is Insured or Not Insured by Government?

One of the many dilemmas surrounding federal health care policies is that the government only partially insures most people when it subsidizes health care, but we want to pretend that once “insured” we are all entitled to the maximum health care available. This puts a lot of weight on the definition of “insurance” and creates misunderstandings about what the government does and does not do.

This issue came up in a column by Bruce Bartlett, who notes that Republicans may now oppose an individual mandate, but they do support (directly or indirectly) a mandate on hospitals to provide emergency care. Moreover, while ignoring their effective support of this mandate, and the effective taxes necessary to pay for it, Republicans maintain that the emergency-care mandate means that everyone has some amount of insurance coverage, however partial it may be.

This debate raises the question of what it means to be “insured.” No government plan covers everything. For those soon to have access to the exchange subsidy available through Obamacare, the “silver” and “bronze” plans that could be subsidized still cover only some costs. Medicaid, in turn, generally pays providers less than do other insurance plans; as one result, the more highly paid (and, often, more highly skilled) providers are less available. Similarly, Medicare does not cover all health services, including long-term care, and some doctors now refuse new Medicare patients, though that system’s payment rate is still higher than Medicaid’s.

You may argue that you want equal coverage—if some people get Cadillac coverage, everyone should. However, no elected official from either party seems willing to raise the taxes necessary to pay for such an expensive system. The reason is obvious: such health care would absorb all the revenue currently raised by the federal government and then some, leaving nothing for other government functions.

Even then, some people would step outside the system and buy a Mercedes policy, so inequality in health care would remain. Thus, the notion that everyone gets the same health insurance coverage, even in the most nationalized health system, is pure myth. But if people are not going to receive the Cadillac or Mercedes coverage from government that others obtain privately, how should Congress design policy with those multiple gaps in mind?

I don’t think there is any easy answer, but I do think that researchers and analysts should be more precise when reporting on “insurance” coverage. For example, the Congressional Budget Office produces counts of how many people would be insured under various options, but such estimates by themselves are misleading. Insured and not insured for what? For instance, if everyone received a simple (say, $5,000) voucher, with few restrictions other than that it must cover health care, almost everyone would buy at least a $5,000 insurance policy. On the other hand, if government dictated that the voucher had to be used to buy an expensive plan that many people couldn’t afford, then supplying a voucher would not produce fairly universal (yet partial) coverage.

Alternatively, one can’t assume that a highly regulated system will automatically provide whatever care is specified, since what it pays affects which providers participate in the system. The implicit assumption—and I am not judging it here—may be that many providers are so overpaid that cutbacks would have only limited effect on the care provided or the quality of the doctors and nurses who would accept a lower-paying career.

The ideal but difficult approach for researchers and budget offices, I think, is to note as best as possible what coverage is provided by regulation or subsidization of emergency rooms, Medicaid, Medicare, exchanges—indeed, of each government engagement in the health care economy. Note the expected gaps, whether in preventive care, higher-priced doctors, drugs, or other services. Finally, compare the extent to taxpayers and insured individuals avoid coverage gaps by paying higher taxes or more for their insurance.

In any case, a dichotomous count of who is “insured” or “not insured” is too simplistic. Almost any government health insurance policy is partial in care and cost. If Republicans want to claim that emergency room care is a type of insurance, then they should also acknowledge what is not insured through that mechanism and the implicit taxes on those who end up covering the emergency room cost. If Democrats want to claim that vouchers provide less insurance than a more regulated system, then they, too, should specify just what additional insurance they claim will be covered, at what cost to whom. Both parties should also make coverage comparisons for systems that are equally cost constrained.


4 Comments on “Who Is Insured or Not Insured by Government?”

  1. Mark Pauly says:

    No one, not even a Republican, would argue that EMTALA provides good coverage, only that it is better than zero coverage. But we know what good coverage is. It is catastrophic coverage where the deductible or cost sharing is lower the lower the person’s income. Not only will this provide financial protection, but the results of the Rand experiment (as interpreted by economists, not people in public health) showed that for everyone but the small fraction of the population poor at high risk, this kind of coverage provided nearly as good a health outcome as more generous coverage. My support for the ACA is based on the observation that, despite its other flaws, it provides roughly this pattern of coverage for people above Medicaid. We can still discuss where the “dials” should be set on the bronze plan–does Bill Gates have to have it? But we can stop posturing about the overall pattern of ideal coverage.

  2. This is what I wrote about Bruce’s piece in Economix:

    If it weren’t for Emalta, there would be no need for the Affordable Care Act – which still does not solve all the problems of people coming to emergency rooms for primary care. We also need sick leave reform so that all workers can get paid time off to take loved ones for care or get care themselves. The odd thing is that mandates are necessary in a free market because without them, good actors are penalized if they extend better benefits while those who shirk their responsibilities can build their lack of charity into their cost structures (although good actors are often also able to take advantage of economies of scale). Medicare for All, (aka Single Payer) would be the solution that treats all businesses equally, as well as all patients.

    Since writing that, I bought a limited care policy through my temp agency, which I quickly blew through (so I am no longer paying the premiums). I will be glad when such care is banned next year, as to even offer it borders on fraud.

  3. Jacinto says:

    Insurance companies call it” fronting”, happens where a lower-risk,
    usually older, driver insures a vehicle in their name, although the
    main driver, the cheapest premium for a new driver insuring
    a Ford Focus 1. Anyone can drive my car as I was planning to get my insurance, get an online quote with and without the cover, with premiums soaring by 82.

    The Consumer Council has said research shows premiums in Northern Ireland it could be £65,
    000 to get insurance on a small Ford Fiesta.


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