The “30 million are going to get health insurance” claim that is being bandied about by the Democrats is very, very misleading. It sounds kind of impressive when looking at the current total number of uninsured, which is roughly 50 million. But it is very unimpressive when you look about six years into the future, which is when the 30 million increase is supposed to take place. The big problem for the Democrats is that they are chasing a swiftly moving target when they try to reduce the total number of uninsured in the inefficient and expensive way they are trying to do it.
With no legislation at all and given the nightmarish economic conditions, we can, based on a few known facts and trends, make a rough but useful baseline estimate of how many uninsured there would be if nothing changed:
2009 50 million / 35 million not counting illegal aliens
2010 54 million / 39 million not counting illegal aliens
2011 57 million / 41 million not counting illegal aliens
2012 60 million / 44 million not counting illegal aliens
2013 63 million / 47 million not counting illegal aliens
2014 66 million / 50 million not counting illegal aliens
2015 69 million / 52 million not counting illegal aliens
NUMBER OF UNINSURED BY YEAR PROJECTIONS AND ANALYSIS
As of 2015, there would probably be about 70 million residents with no health insurance if nothing changed. Of this number, first subtract 15 million for newly Medicaid eligible, yielding about 55 million. Second, subtract another 17 million as a rough but reasonably good estimate of the number of illegal aliens there will be as of 2015. Illegal aliens are left out of the new requirement to buy grossly overpriced and dysfunctional health insurance, which may ironically give them an advantage in economic life over US citizens. So at the moment we are down to about 38 million uninsured legal residents as of 2015.
Now let's break down the Congressional Budget Office's (CBO) estimate of the 30 million increase in the number owning insurance policies by 2015 or 2016, which is composed of the 15 million new Medicaid enrollees and 15 million with higher than poverty incomes who buy insurance instead of paying the penalty.
Incidentally, Medicaid is considered an insurance policy by the CBO and the Democrats when they discuss their new laws, but it is clearly not really an insurance policy but rather a Government health care program for destitute people.
And as another “incidentally”, as a very rough estimate, about 30% of the 15 million buying insurance will get partial subsidies and the other 70% with the higher incomes not eligible for Medicaid will buy policies with no subsidy assistance from the Government.
Judging from polling and other evidence, I expect CBO’s 15 million estimate is a little high. I would predict that the number who will buy policies will be more like 13 million than 15 million. But give CBO a lot of credit, because their estimate is in fact conservative (just not as conservative as my estimate). CBO's estimate is close to what will actually happen.
However, for the record, the unexpected confluence between the CBO estimate and the Unity-Progress estimate is probably due to differing assumptions about the economy and the resulting different baseline number of insured (the number of uninsured there would be with no change in the law) instead of differing compliance estimates. CBO very likely has substantially lower baseline uninsured numbers and substantially higher compliance rate estimations than I do.
Using my baseline uninsured number, the estimate from CBO of the percentage of those who are supposed to buy health insurance who will actually buy it is about 40%. But CBO is probably underestimating the baseline number who would lose insurance between 2009 and 2015 because they are probably overestimating the strength of recovery in the real economy and especially in the job market. CBO's true compliance estimate (percentage that buy insurance out of the total who are supposed to) is probably at least 45% and may be close to 50%. My compliance estimate is 13.5/38 = 35.5%.
In any event, the CBO and the Unity-Progress estimates of the actual number of newly purchased insurance policies are very close, and I will use theirs in a sign of respect for the quality work they are known for.
Recall that after we subtracted out the Medicaid enrollees and the illegal aliens we were left with an estimated 38 million uninsured in 2015. From this we subtract the 15 million who will buy insurance due to the mandate. So we finally have a pretty good estimate of how many uninsured legal residents there will still be in 2015: 23 million. So obviously, there will still be a huge number of peoplw with no health insurance.
Now if you add back the illegal aliens, the estimate of the total number of uninsured in the country for 2015 is 40 million, which indeed is 30 million less than the baseline.
So the proponents of the law may not be materially lying when they say that 30 million more will be insured as of 2015; but they are not telling you that the underlying problem will grow substantially between 2009 and 2015, so that the actual number who are still not insured in 2015 after the new laws are imposed will be only about 12 million fewer than it is in 2009! Yes, this monstrous legislation, the Constitutional challenges, all the new bureaucracy, people becoming homeless after they buy health insurance and then lose their jobs, etc. etc. all of the trouble, dislocation and misery produces just a 12 million reduction in the number of uninsured in a country of about 315 million people when you compare 2009 and 2015!.
But wait, it gets even worse. The number of uninsured will still be going up even after this law is in effect, because the population will be increasing and also because, as everyone knows, there is very little real health cost control in this law, so when deductibles, co-pays, uncovered items, and the cost of medications go up by more than overall inflation as they inevitably will, and when most likely inflation adjusted subsidies go down, and when the economy keeps throwing skilled employees into unemployment, and when small businesses keep having to discontinue offering health insurance as a benefit, the number and the percentage for who can not or will not buy the health insurance will be going up.
So that 12 million advantage will shrink and, by roughly 2025 at the latest, there will be just as many uninsured as there were in 2009.
So the bottom line is that the new monstrous law “buys” at the most 16 years of no increase in the total number of uninsured. Then after roughly 2025, the number of uninsured residents will be greater than the number in 2009.
NUMBER OF UNINSURED LEGAL CITIZENS BY YEAR
We can do the same estimates but this time let’s treat the illegal aliens as if they don’t exist:
2009 Number of legal citizens uninsured: 35 million
2015 Number of legal citizens uninsured: 22 million (52 baseline minus 15 million Medicaid minus 15 million who buy private insurance)
Assuming the 22 million in 2015 increases at 5% a year, which would be roughly half the rate of increase of 2007-2009, we have:
2020: Number of legal citizens uninsured: 28.3 million
2025: Number of legal citizens uninsured: 36.2 million
With these assumptions, the number of legal citizens uninsured will reach the 2009 number by 2025, so in effect the new law will have “bought” 16 years of no increase in the number.
I hope you can not see that overall, this new law not only does not solve the problem, but does not really come close to doing so. This new law is not even remotely a true national health program, or even merely a national health insurance policy. A good analogy is that this is like a football team that can not make a first down has decided to punt the ball downfield.
A FEW OBSERVATIONS ABOUT THOSE WHO WILL NOT COMPLY
You know the old saying: you can lead a horse to water, but you can’t make him drink? With 2/3 of the population overall against the mandate, this means that it is likely that at least 85% of the non-insured are against the mandate. The Republicans in particular are very fiercely against this and there will be resistance in bulk from them. Many of these people will find a way to not comply.
Moreover, consider also that there will be a reverse effect. There will apparently be at least close to two million people in total who indefinitely drop, or whose employers indefinitely drop, health insurance after this passes, some because their premiums will go up when they are forced to buy a plan in compliance, some for ideological reasons, and some due to the one-two punch of the new taxes and the depressed economy. These people and businesses will either gladly pay the penalty or in some cases will try to dodge even the penalty.
The above was in response to this articleat Common Dreams.
Tuesday, December 22, 2009
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