Where are All the Sick People Who Can't Get Insurance?

Approximately 300 million Americans face a serious risk of being killed in an auto accident.  Which is to say, there are auto accidents, and the entire population of the country is at risk of being one of the thousands of people every year who are killed on our nation's highways.


That statement is about as useful as a new report from HHS, presumably timed to undercut the GOP as they debate their fruitless attempt to repeal the health care bill.  HHS says that millions of people--about half the country, in fact--either has, or has a loved one with, a condition that could cause them to have difficulty securing insurance.

As with the catchy opening sentence on auto deaths, this turns out to be much less interesting when you examine it.  I don't really want to know who could be conceivably affected by a problem--after all, even someone with no medical conditions now could presumably develop one.  What I want to know is, how many people this problem affects.

To belabor the obvious, liberals think the problem is much bigger than conservatives do.  John Goodman mounts the conservative case, using some pretty blistering language:


We now know how many people have the problem most often cited as the reason for last years' health overhaul legislation. Answer: 8,000

No, that's not a misprint. Out of 310 million Americans, only 8,000 people have the problem given as the principal reason for spending almost $1 trillion, creating more than 150 regulatory agencies and causing perhaps 150 million or more people to change the coverage they now have.

Alert readers will remember the White House summer of 2009 invitation to all Americans to send in their horror stories describing health insurance industry abuses. Although the complaints were many, the vast majority were about pre-existing condition limitations. Then, on the eve of the ObamaCare vote, every member of Congress who appeared on television to defend the legislation was able to cite by name an individual or family in his or her state or Congressional district with a heart wrenching story.

Gone was any interest in "universal coverage" or "insuring the uninsured" or "helping poor people get health care." The case for change was focused almost exclusively on protecting the middle class from miserly insurance companies. . . .

It's been like giving a party to which no one comes. The Medicare program chief actuary predicted last spring that 375,000 would sign up for the new risk pool insurance in 2010. But by the end of November, only 8,000 had done so. As Amy Goldstein reports in The Washington Post, this includes 75 in Virginia, 80 in New Hampshire, 97 in Maryland and a whopping 700 in North Carolina.

While a lot of people are surprised by these numbers, I am not. Here is why. Don't you think it is a bit odd for the White House to send out an appeal to victims so they can identify themselves? That's not normally how the political system works.

The more usual scenario is: victims unite and form interest groups; they lobby Congress, write letters, testify, etc; and eventually the pressure become so great that Congress legislates.

When have you ever heard of that entire process in reverse? When has Congress ever before decided it wants to do something and then conducted a nationwide search to find people who will benefit?

Harold Pollack is on rebuttal duty:

Leaving aside that "150 million or more" number, I'm puzzled that Goodman would take low initial enrollment as a sign that problems of the medically uninsured were "hyped and exaggerated from the get go."


My own work and the work of others documents that a significant number of Americans face the dual challenge of uninsurance and serious illness. For example, data from the 2005-2006 National Health and Nutrition Examination Survey (the most recent complete data available when this research was done) indicate that 440,000 uninsured Americans have been diagnosed with strokes. Almost 1.3 million have a history of cancer. More than 500,000 were diagnosed with congestive heart failure. In many cases, such conditions pose obvious obstacles to obtaining affordable health insurance coverage.

Several million other Americans who successfully obtain health coverage through the individual and small-group markets report they experience higher premiums, coverage denials and personal economic hardship related to their own or a loved-one's pre-existing condition. Then there are the hundreds of thousands of Americans deemed sufficiently ill or injured to qualify for federal disability benefits, yet who are currently uninsured during the two-year waiting period for Medicare coverage.

Across a diverse population of Americans facing serious illness or disability, many hundreds of thousands of people are waiting for 2014, when they will become eligible for subsidies and regulatory protections through health insurance exchanges or Medicaid. The health law's preexisting condition insurance plans are simply too limited, too new and too complex to address these huge economic, medical and administrative challenges.

And yet ... I can't help thinking that the initiative is taking some unfair political hits. In evaluating its trajectory thus far, it's important to note that the program faces inherent administrative challenges. On a short time-frame, HHS needed to initiate complicated partnerships with insurance providers and regulators in 50 states in an environment of fiscal crisis, political acrimony and uncertainty.

The medically uninsured are an inherently varied and complicated group. You may find it perverse that these high-risk pools are under-subscribed in many places, given that their funds can only cover a small fraction of the underlying needy group. Yet this, too, is not hugely surprising. Precisely because resources are so constrained, states and the federal government face difficult challenges tuning outreach, eligibility criteria and premiums to make this thing work. Does one focus on a small number of high-cost hospital ICU patients? Does one focus on the cheapest people to attain the largest feasible enrollment? Does one focus on patients at the most financially-stressed providers? Does one hold back a bit on the initial outreach given uncertain expenditures and budgets? Each of these choices is reasonable. Each has its own implications for enrollment and cost.

I have great respect for Pollack's work, but he is either missing the core point, or dodging it.  The fact that the program is serving fewer people than expected and yet still seems to be massively underfunded is certainly remarkable, but--other than the red flags it should raise about cost estimates for health care programs--it's really a side issue. The really interesting question, which Pollack doesn't actually answer, is this:  if the problem's so big, where are all the victims?

I'm not saying that they don't exist, but if they do, we should really be trying to find them.  We're not talking about a program that isn't serving quite as many people as expected.  We're talking about a program that was supposed to serve almost 400,000 people, and is instead serving around 2% of that number.  Nor have these people been turned away due to budget constraints; they don't seem to have applied in the first place.  This leads us to one of two conclusions:

  1. Pollack's study, and others like them, have massively overestimated the population of patients who would like to purchase insurance at market rates, but cannot do so due to their pre-existing conditions; most people with pre-existing conditions who needed coverage were managing to find it one way or another under the old system.*
  2. There are huge numbers of people out there who cannot access critical services, yet for some reason, they have not been able to negotiate their way into the new program.
If the former is true, I think you have to acknowledge that Goodman is at least partially right:  we just passed a massive new health care entitlement in large part based on appeals to the plight of people who do not exist--at least, not in anything like the numbers that we were told. If the latter is true, then shouldn't HHS be stepping up their efforts to get folks enrolled in the program?

I confess, I am shocked by the underutilization, though perhaps Goodman is right and I shouldn't be.  I find it very hard to believe that the number of people who were actually dinged from insurance because of a pre-existing condition was really that small.

And yet, if it's larger, where are they?  The Washington Post suggests one possibility:

Wilson, a tourist trolley guide, now gets help from the federal AIDS Drug Assistance Program, but he has no coverage for other kinds of care. 

Wilson remembers tears streaming down his face in February 2009, the night that he watched Obama vow to Congress, "Health-care reform cannot wait, it must not wait, and it will not wait another year!"

Wilson became an activist for health reform, circulating petitions, going to demonstrations. And the day after the president signed the bill into law, a Chicago Sun-Times column quoted him as saying, "I've had a grin on my face all day" at the prospect of the high-risk pool he could join. That was before the rates were announced in July and Wilson discovered that the premium - nearly $600 a month - "was almost as much as my rent. It was like, no way! I was floored."

On one level, it's surprising that he was surprised; health care is expensive.  But people are surprised, and indeed, indignant.  If you think health care is saving your life, then it doesn't seeem outrageous for it to cost as much as your rent, or your car payment.  But because the cost is disguised for so many people--hidden in employer accounts or taxes--people don't understand that it actually is quite costly.  Especially in the individual market, where both adverse selection and very high administrative costs take their toll.  

So it may be that the people who we expected to be covered by the high risk pools either can't afford it, or won't afford it--simply won't pay what they think are outrageous prices.

And yet neither of these explanations is very satisfying.  People with disabling chronic conditions are indeed often too poor to afford health insurance, but they're also disproportionately likely to end up on disability and thus Medicaid.  Certainly, I wouldn't be surprised to hear that uptake had been depressed by the pricetag of insurance in the individual market.  But I don't think this explains why 98% of the potentially insurable population is missing.

So where are the rest?  Are they simply choosing to have a nicer lifestyle, rather than buying insurance--ranking nice cell phones, decent cars, and another bedroom in the apartment over paying hundreds a month for health insurance?  Possibly, but this too has problems.  There must be some people out there whose monthly out-of-pocket expenses exceed the premiums in the high risk pools.  Why aren't they buying?

I don't know the answer.  But I sure hope we figure it out before 2014.

Update:  In the comments, a reader suggests that the problem is that the implementation of the program is screwy:

I looked in to the high risk pool in Virgina a couple of weeks ago, as I'm currently uninsured due to getting laid off, and my wife is Type I diabetic. You have to be uninsured for the previous six months, and show proof of uninsurability to even be eligible. We are not uninsurable. I can get private insurance on the family. Or I can pay the mortgage. But not both. So even if I didn't have the six month gap to deal with (only been uninsured since the beginning of the year) I still could not put my wife on the high risk plan. They've designed it so that nobody can qualify, except the long term uninsured and/or poor, who probably can't afford the $350 a month premium anyway.
That explains why there are fewer people enrolled than could use the program--but not why there are fewer people enrolled than the CBO and HHS expected. Those agencies presumably knew that the restrictions would discourage some number of people who would like to use the program.



* This would be less surprising than it sounds; people are surprisingly resourceful at finding outs to problems like this.  Note that some of those "outs" probably include qualifying for Medicaid coverage, and one could still argue that whatever solution they found is sub-optimal to being able to buy subsidized insurance in the new system.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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