The goal of many of those involved in the recent”Cover the Uninsured Week” is not merely to secure health insurance for the uninsured, but to use the issue to establish a system of government-run healthcare (also called a single-payer system) here in the U.S. For example, the National Medical Association, one of the partners in Cover the Uninsured Week, “supports the provision of Universal Health Insurance Coverage for all individuals and families.” Steven Schroeder, former CEO of the Robert Wood Johnson Foundation, which started Cover the Uninsured Week, wrote that in “achieving universal coverage, government functions as a legitimate public servant…. Given the potential importance of government in financing and implementing any significant health insurance expansion, public attitudes about the validity of government’s role pose a significant barrier to decreasing the number of uninsured.”
But the days of the uninsured as a potent issue for single-payer advocates may be numbered. There are two reasons.
First, it is becoming increasingly clear that the uninsured are over counted. For years, single-payer advocates have relied on the statistic produced by the Census Bureau, which now stands at 45 million uninsured. Yet a recent study by the Urban Institute–not exactly the free market’s best friend–claimed that the Census Bureau number was overstated by 4 million. Another study by the Department of Health and Human Services found it was too high by 9 million.
However, these studies looked only at those eligible for Medicaid who are either not enrolled or are enrolled but do not report their eligibility to the Census Bureau. Another factor that inflates the number is the uninsured who are not citizens, which amounts to about 9.5 million. The BlueCross BlueShield Association also examined this problem recently. That report found that the number of uninsured eligible for Medicaid was 14 million. It also found that there are 9.3 million uninsured people in households making $50,000 or more a year—i.e., those who can afford insurance but do not purchase it. When all of those factors are subtracted from the Census Bureau statistic, the number of uninsured is just over 12 million.
While a revised measure of the uninsured almost certainly won’t dissuade single-payer advocates from their agenda, it will make it harder for them to convince the public that a government takeover of the healthcare system is needed. What will make it doubly difficult is the blossoming of health savings accounts (HSAs).
An HSA is an insurance plan in which the policyholder pays for medical expenses out of a savings account until he reaches the policy deductible. Under current law, an individual HSA policy must have a deductible of at least $1,000, while a family policy must have a deductible of $2,000. HSAs have two big advantages. First, with a higher deductible, policyholders save on the cost of monthly premiums, thereby making health insurance more affordable. Second, the HSA turns the individual into a healthcare consumer. Because the holder of an HSA spends his own money directly, he becomes more cost conscious of medical expenses. That results in more competition among medical providers which, in turn, puts downward pressure on prices.
Though introduced just recently–on January 1, 2004–HSAs are booming. The Washington Times reported last week that while only 438,000 Americans had signed up for HSAs as of last September, by March of this year the number had reached over 1 million. And the market for HSAs looks set to grow by leaps and bounds. According to a recent article, John Reynolds, a senior vice president of Wells Fargo & Co., “predicts there will be an HAS boom on Jan. 1, 2006, when many large employers go live with HSA-qualified health plans.”
The lower cost of HSAs is apparently attracting a good many people without insurance. Last year Assurant Health found that 43 percent of those purchasing its HSA plans were previously uninsured. More recent data released by America’s Health Insurance Plans showed that 37 percent of those purchasing HSAs had previously been without insurance.
Nor are HSAs just for the healthy and wealthy, as some critics have charged. The same Assurant Health survey found that 70 percent of those purchasing HSAs were over 40, and almost one-fifth had incomes under $40,000. A report from eHealthInsurance yielded similar results. The average age of the HSA purchaser was 40, while for non-HSA plans it was 35. Almost 20 percent of purchasers had incomes under $35,000.
HSAs point the way for policymakers who wish to deal with the uninsured. First, we need less government involvement in healthcare. Give the market the freedom to design more health-insurance products that meet individual desires and needs. Second, give the individual more control over his healthcare. Move away from the current employer-based system by giving more of the tax break for healthcare to the individual. By doing this, not only will we cover more of the uninsured, we will move a long way toward fully discrediting the terrible idea of a government-run system.