Health insurance doesn’t impose nearly as great a financial burden on Americans as Senator Sanders and his ideological fellow travelers would have you think.
Health insurance doesn’t impose nearly as great a financial burden on Americans as Senator Sanders and his ideological fellow travelers would have you think.
S enator Bernie Sanders, the tireless champion of “Medicare for All,” has just assumed the chair of the Senate’s powerful Health, Education, Labor, and Pensions Committee. Unfortunately, that means we can expect to hear more bogus statistics about the supposed failures of the American health-care system.
Lately, Sanders has been asserting that “85 million Americans are uninsured or under-insured.” That figure comes from a September 2022 study by the Commonwealth Fund, which claimed that 43 percent of working-age Americans — 85 million people — are “inadequately insured.”
More than half of the people in that group are “underinsured,” per the Commonwealth Fund’s definition of the word. And that definition makes little sense.
A person is “underinsured,” according to the Commonwealth Fund, if (1) their out-of-pocket costs over the previous year, excluding premiums, exceed 10 percent of their income; (2) their income is 200 percent or more below the federal poverty line (just over $55,000 for a family of four in 2022), and their out-of-pocket costs over the previous year, excluding premiums, exceed 5 percent of their household income; or (3) their deductible is 5 percent or more of their income.
Let’s put some hypothetical numbers behind those criteria. A household with a $100,000 income would be considered underinsured if its deductible were $5,000 or more.
Though a deductible like that is nothing to sneeze at, it’s barely $100 more than the average deductible for most of the mid-level “silver” health plans offered on Obamacare exchanges this year. The majority of exchange enrollees choose such “silver” plans. But about a third choose less-generous “bronze” plans, which have higher average deductibles, opting for lower monthly premiums and accepting the trade-off of a higher deductible, perhaps because they’re comfortable taking the risk that they won’t face high medical costs in the year ahead.
And that might be a good bet! According to data from the Peterson-Kaiser Family Foundation Health System Tracker, the bottom 50 percent of Americans by health-care spending account for just 3 percent of the nation’s total tab. Average health-care spending for people in this group in 2019 was $374. That year, about one in seven Americans had no health-care expenditures whatsoever.
By contrast, the top 5 percent of the population by health-care spending accounted for almost 50 percent of all such spending in America in 2019, per the same data, with the average individual in that group spending $61,000. That’s a hefty sum, well beyond the point where even a high-deductible plan would pick up the tab for a person’s health-care expenses.
Counting households with deductibles greater than 5 percent of income as “underinsured” is also a questionable choice. In fact, Americans spend a greater share of their income on extras such as entertainment and dining out than they do on health care, according to the Bureau of Labor Statistics. Together, those two categories account for about 7.5 percent of the average household’s pre-tax income in a given year, while health-care expenditures account for about 6.2 percent.
Are tens of millions of Americans facing a crisis in the affordability of entertainment or eating in restaurants?
The Commonwealth Fund study also includes within the ranks of the inadequately insured anyone who has had a gap in coverage in the past twelve months — which is to say, 11 percent of Americans ages 19–64. But the study’s authors admit that a majority of people in this group incurred a gap in coverage “of relatively short duration.”
Perhaps they were uninsured for a few days or weeks while between jobs, or while moving from exchange coverage to an employer-sponsored plan. But for the purposes of the study, they all count as underinsured.
For most Americans, paying for health care is, at worst, a nuisance. The Kaiser Family Foundation’s 2022 health-care-debt survey found that only 16 percent of Americans report that it is “very difficult” to afford health-care costs.
So health insurance doesn’t impose nearly as great a financial burden as Senator Sanders and his ideological fellow travelers at the Commonwealth Fund would have you believe.