Myth #2: Our biggest problem in health care is that we have 46,000,000 uninsured people who either can’t get insurance or can’t afford it.

The Census Bureau estimates we have 47 million Americans with no health insurance. Most pundits seem to think all these folks either have no access to coverage or simply can’t afford it. That is not true. Many reform advocates claim that this is our biggest problem in health care. That also is not true.

My own analysis of the data indicates that nearly two-thirds of the 47 million uninsured actually have access to affordable insurance, but have chosen not to purchase it, due to indifference, lack of perceived need, or different personal priorities. They include 13.9 million who are eligible for Medicaid, but haven’t signed up. There are another 9.9 million who are eligible for individual health insurance and able to afford it. Finally, there are 6.9 million workers who are eligible for employer-subsidized coverage, but who haven’t opted for it. These people, some 31 million strong, are the voluntarily uninsured.

That leaves 16 million people who are involuntarily uninsured. And only 7 million of those are truly the hardcore uninsured. That’s because the 16 million includes another 9 million people who would be able to afford insurance if the states dropped their laws that require health insurance to cover services of doubtful medical necessity--such as chiropractors, social workers, massage therapists, dental anesthesia, infertility treatments, acupuncture, wigs, and drug and alcohol abuse treatment. These benefit mandates increase insurance premiums by 20% to 50%, depending on the state. We don’t need radical national health care reform to solve this problem. The states can do it themselves, if they stand up to the special interests that demanded these additions in the first place.

The 7 million hardcore uninsured Americans (2.4% of the population) either don’t have access to insurance on any basis or couldn’t afford it even if the states were more reasonable about mandates. If this were the only problem in health care, it could be readily resolved by a judicious expansion of existing government health programs that already cover well over 100 million people.

Unfortunately, our dysfunctional health care system suffers from much deeper problems, including rapidly escalating and uncontrolled costs; unreliable quality that is killing more than 300,000 Americans every year; a looming pandemic of preventable diseases of people who refuse to live healthy lifestyles; and the uninsured. Any attempt to reform health care that deals only with the uninsured--without simultaneously addressing these larger issues--will be like replacing a leaky faucet on the Titanic.

There is a way to fix these problems, but it won’t come from any of the proposals you’ve seen coming from presidential candidates, congressmen, newspaper columnists, or any of the other reform proposals you’ve seen to date.

Copyright 2008 by Stephen S. S. Hyde. All rights reserved. Quotation of excerpts permitted with attribution.

Myth #1: Everyone must have health insurance.

A NY Times article last week reported that "Democrats and Republicans appeared to agree on this much: All Americans should be insured.” Alas, both parties are wrong. The requirement for universal health insurance as a condition of effective health care reform is a myth.

It is not necessary that every American be insured, only that everyone have access to available, affordable, portable health insurance in a way that avoids the risk of adverse selection.

There are numerous reasons why people may rationally decide not to purchase health insurance. Here's a baker’s dozen:

1. Their religious beliefs lead them to shun modern medicine (like Christian Scientists) or health insurance (like the Amish).
2. They have sufficient personal resources not to need it; particularly if they are savvy enough to negotiate prices and even shop overseas for much lower cost health care.
3. They believe that alternative medicine, lifestyles, and therapies are a better option, and they have no truck with conventional allopathic medicine.
4. They’re principled live-free-or-die libertarians who thumb their noses at governmental, nanny state, you-have-to-do-it-because-it’s-good-for-you mandates, and they are willing to live with the consequences, including being denied care if they can't pay for it.
5. They value their privacy and don’t believe that the government or their employers should know their health status or history.
6. As in Massachusetts, mandatory insurance purchases would need to allow exemptions, thus requiring people to divulge private information on such personal issues as lack of adequate income, evictions, disaster losses, and utility shutoffs. Anyone failing to successfully petition the government would be subject to financial penalties. This in unjust.
7. Many don’t like the limited choice of health benefits offered by their employers or the government, and want to decide for themselves what they will buy and how much they will pay to get it.
8. Even for people who can afford it, a mandated plan may not be worth its price. That is certainly the case for many young employees who are discriminated against by their employers’ community rating of employee contributions, thus forcing them to subsidize their older co-workers who usually make more money.
9. Many things can be more important than having health insurance, such as food, housing, heat, a job, and reliable transportation. People should be free to choose how they spend their money.
10. The government has never required the purchase of a privately sold good or service as a condition of American residence. (No, car insurance is not an exception.) Nor should they now.
11. Many people will validly object to being forced to financially support an inefficient, but often immensely profitable, health care delivery system.
12. If one's health insurance premiums continue to rise faster than one's income (as they have for the past 40 years), then no matter how inexpensive government-mandated insurance may be initially, it will eventually become unaffordable. Why should people have to support that?
13. Mandates are unconstitutional on the basis of taxation without representation, a violation of the takings clause of the Fifth Amendment, and lack of due process.

The best argument against mandates is that they are not necessary. The trick is to make universally available health insurance voluntary, but without letting people game the system by opting out when they're healthy and then buying in when they're sick. Such behavior creates adverse selection that will render any health insurance system unsustainable. Fortunately, that's not hard to fix. It just requires the use of strictly limited open enrollment periods and punitive late enrollment penalties. Nothing else. If you’re interested, I’ll describe how that could work in a later posting.

Copyright 2008 by Stephen S. S. Hyde. All rights reserved. Quotation of excerpts permitted with attribution.