The good news and the bad news

By Megan McArdle

Peoples' incomes improved markedly in 2006; the poverty rate dropped, and household income marched upwards.

On the down side, the percentage of Americans with health insurance dropped rather precipitously, from 84.7% to 84.2%. What happened?

Well, the numbers do tend to jump arund, especially with the business cycle. But we're in the very late phases of an expansion, if not a recession; why should insurance coverage still be falling? Forget the fluffy AP stories; let's go to the tape.

The percentage of Americans covered by private insurance has been falling for a while, now. That's not some grand conspiracy of business owners. In part it's due to companies dropping people, but a sizeable chunk of the change is simply due to programmes like S-Chip, which encourage families to drop their coverage; and an ageing population transitioning into Medicare.

The public sector dropped pretty sharply last year, but not nearly as steeply as the government. After rising steadily since 1999, the percentage of people with government coverage dropped by 30 basis points. Out of a total increase in population of roughly 3 million, the private sector, which usually insures about 800,000 new patients a year, only insured a little over 500,000 new patients last year. That's a big drop. Meanwhile, the government, which generally insures a million or more new patients last year, this year took on . . . about 53,000.

The big slowdowns were in military healthcare, and in Medicaid. So at a glance, we're looking at two factors: state governments cutting back on Medicare spending, and the recruitment and retention shortfalls in the military, which mean fewer soldiers and dependents in the military healthcare system.

The other interesting detail confirms an ongoing story: immigrants. The percentage of native born americans with coverage dropped by 40 basis points last year; but the percentage of the foreign born without coverage dropped twice as fast.

This article available online at:

http://www.theatlantic.com/business/archive/2007/08/the-good-news-and-the-bad-news/1814/