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Not having Health Insurance Coverage is Risky Business

By       Message Seymour Patterson     Permalink
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Honestly, I don't know if everyone is acquainted with someone else who has no health insurance. I know some friends and acquaintances who don't have coverage, and I cringe at the thought of what would happen to them if they faced a serious (catastrophic) illness. Yet, quite a few Americans don't have health insurance coverage. Some argue not to worry--there's always the emergency room, the sick will never be denied medical care in this great country. Without casting aspersion emergency rooms, they are not free (not really) and they are not cheap. The emergency room has to be the least efficient venue to care for the poor and the sick--it discourages visits to the doctor till the illness offers the patient no other recourse. However, by then the disease could have progressed beyond where it is more difficult to treat and cure.

The number of Americans without insurance is in the neighborhood of fifty million. To be a little more precise, according to Census (Table 7) data, 48.6 million Americans or 15.7 percent of the population were uninsured in 2011. This was down from 49.9 million uninsured or 16.3 percent of the population in 2010. Part of the drop in the number of uninsured was due to the Affordable Care Act, which allowed children to remain on their parents insurance till age 26. This is an oversized problem for the country--other industrialized countries have already dealt with this issue. Here, people lack coverage because they are unemployed--many are not even in the job market, having given up trying to find work because they would not find work. They have wandered into a job market cul-de-sac. They are the discouraged workers who face the further indignity of being removed from the official government statistics on unemployment; that is, they get deleted from the labor force.

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And even if you could purchase health insurance coverage, and try, you quickly find that insurance premiums can be insufferably high as are deductibles. Premiums on health insurance can run the gamut from $148 to $588, with deductibles in the neighborhood of $2,066 to $3,194, respectively, depending on age. (See Finance) But a $10,000 deductible with a $1,164 a year premium is also available based on a premium/deductible tradeoff. (See ABC News) Who can afford that! Not average poor folks. So, confronted with such premiums some working folks and some self-employed opt out of getting health insurance altogether. It's just too expensive. And they are prepared to take the chance that they will not be victims of a seriously difficult visit to the doctor that might force them into bankruptcy court. These people, you see, have tossed the dice, covered their eyes with the hands hoping all along for the best possible outcome from lack of insurance and condition of personal health. If in your gut you sense there's something perverse about this, you might be on to something. You see, it might be comforting to ignore a nagging thought--we are one catastrophic illness away from bankruptcy.

There are high socio-economic costs to society of unemployment--the potential foregone production makes for lower GDP since fewer people are employed. Humans want to work and contribute to their household and to the larger society of which they are apart. At least this is what Maslow's hierarchy of needs research outcome tells us. Some of the needs people have include the need for self-actualization and self-esteem. Widespread extended unemployment coupled with depleted unemployment compensation can lead into a descent of human maladies that manifest themselves in drunkenness, wife abuse, child abuse, drug usage, theft, and even suicide. Fortunately, for the most part and a large swath of the population that's unemployed have the support of family and friends and church and government (SNAP, Social Security, Medicare) that tamp down these negative proclivities.

As alluded to before, Americans are aware that with insurance they are one catastrophic illness away from total bankruptcy. Having insurance, however, can mitigate this outcome. I offer this thought about Americans without empirical support. But I believe that it is not possible for citizens of a country who have been socialized by family and the educational system into its their country's mores understand how that country's political, economic, and healthcare system work. Some of this understanding and learning must also be by osmosis. Even the most illiterate among us understand how the economic system works: the use of money, the need for gainful work, the economic advantages of education, etc. And they also by this same process understand insurance: why they need it, and how expensive both insurance and doctor visits are--from experience--and how precarious life is without insurance. It does not help when Congress strips Food Stamp out for the Farm Bill, and increases subsidies for big farm while cutting funds for the poor. It sends a message--you're on your own. If your worldview allows you to separate people into makers and takers, what Congress has done makes sense. But people whose meager resources have been cut are more likely to get sick physically and/or mentally, and require medical care. However, medical care might be elusive--if they don't have insurance.

People without insurance hesitate to visit the hospital when they are sick. And when they can't hold out any longer they pay a visit to the emergency room. This is immediately "free" because the hospital cannot turn you away.  But they ask you a ton of questions to determine if you can pay for the medical treatment. If they determine you can't, the hospital bills taxpayers, or the overbill paying patients--that is, people with insurance pay a premium for hospital visits. Putting off visiting the doctor when you're sick is a rational result from the weighting of costs and benefits for people without money. But this delay also means sicker people go to hospital emergency and the costs of treating sicker people--requiring more aggressive treatment--tend to be higher.

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Obamacare attempts to address some of these issues by trying to bring more people under insurance coverage. A move intended among other things to bring costs down. Why? Because like any actuarial system, the revenue stream will exceed the payout stream from the players. More people paying into the system would bring costs down for everyone. Absent that the system collapses.

There's an aggressive effort out there bent on denying uninsured Americans the basis security of health insurance. The effort appears to be ideological in tenor. It, this ideology, wants to protect the profits of insurance providers' CEOs, by sanctioning or legitimizing the disproportionate share they skim of the top of premiums relative to what goes to cover the costs of the medical care of their members. But insurance providers are not the only ones with pretentions of being aggrieved by the costs of insurance coverage; many businesses seem to recoil from having to cover their workers, alleging these costs are prohibitive.

Wal-Mart increases hires of part-time workers in response to the Affordable Care Act (ACA) a.k.a Obamacare. But Wal-Mart is not the only company that has a beef with Obamacare. The club of detractors includes the Cheesecake Factory, MacDonald's, Hardee's, Whole Foods, among others. And with the exceptions of the governor of Florida, Rick Scott, and the governor of Arizona, Jan Brewer, red state governors appear generally opposed to Obamacare and are prepared to see large swaths of their own constituents go without health insurance coverage, based on some extraordinary coordinated plan heavily imbued with ideology that defies reason. I say this because they all (the governors) seem to be on the same page on this issue. It's as if they read the same memo. And the goal is the see Obamacare fail. There have been 39 House votes to repeal parts of Obamacare, 3 of which to fully repeal it. What is the definition of insanity? This must be it--collective insanity at that! This is obviously a futile effort by the Republican controlled House of Representatives to repeal Obamacare--which is, according to the Roberts Supreme Court, constitutional. It is the law of the land! It is time to obey the law, try to make it work, extend Medicaid to people who need it, and celebrate the $1.6 billion insurance companies gave back to policyholders.  You ain't gonna to hear about the 6.3 million seniors who have saved $6.1 billion on their prescription drugs. (See Ethan Rome) And nary a word will be said about the projected 50 percent drop insurance costs to New Yorkers next year under Obamacare. (See Money) To the opponents of ACA, these inconvenient truths are better swept under the rug.

Naysayers have trumpeted before objections to government-mandated policies whose overtone is promotion of society's welfare. These objections were against catalytic converters, against banning smoking in public places, against seat belts, etc. The arguments against these mandates have a tendency of being diffused--but perhaps at their core is the idea that the implementation of these mandates would increase the cost to business. If this is true, then the objections imply a willingness to trade people's health for corporate profits. Similarly, the thrust to repeal Obamacare is driven by the same notion, i.e. it, the argument goes, will increase the cost of doing business. This is the rhetoric that is part of an ongoing fear-mongering campaign to obfuscate the positive about ACA. We should be touting the payback to policyholders and the premium savings, which are evidentiary. Rhetoric, to the contrary, and fear mongering have no evidentiary support, and the ranting of men whose ideology is all the evidence they need.

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Seymour Patterson received a Ph.D. in economics from the University of Oklahoma in 1980. He has taught courses and done research in international economics and economic development. He has been the recipient of two Fulbright awards--the first in (more...)
 

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