Is a lack of health insurance in America a problem? According to Washington, it is. The Census Bureau has released the 2010 report on poverty in America. Table 8 on page 26 covers some of the data on those without health insurance. Here’s what caught my eye.

The Census Bureau estimates that 16.3 percent of those living in the United States have no health insurance.

45% of all non-citizens have no health coverage. Of the 49.9 million people in the United States without health insurance, 19% are non-citizens.

792,000 people over age 65 have no insurance. Why not? Medicare is designed for that age group.

16.2 million people earning less than $25,000 per year have no health insurance. Why not? Medicaid is designed for low income folks. 28.5 percent of those uninsured did not work at least one week in 2010, again the people Medicaid was designed for.

2.6 million calling themselves “disabled” have no insurance. Why not? Both Medicare and Medicaid are available to those folks.

Table 10 on page 29 shows the breakdown by type of plan. 14.5% of Americans were on Medicare and 15.9% on Medicaid.

9.5 million people earn $75,000 a year or more and have no health insurance. It’s just an assumption, but shouldn’t many of those people be able to afford coverage IF THEY WANT IT?

49,904,000
less non-citizens 9,667,000
less half of those eligible for Medis 8,479,000
less top earners 9,473,000
= 22,285,000

Over half of those that the Census Bureau reports as without health insurance coverage are eligible for coverage and don’t have it or don’t want it, or are non-citizens. Do we have a health insurance coverage problem in America?

[Stand up and shouts] Health care and health insurance are not the same thing!

If you think about it, you know it’s true. But it is not in the interests of the people advocating universal health insurance for you to think.

Health insurance, like any other insurance, is a wager between you and the insurance company. They are betting that, on average, you will need to pay for less health care than your insurance premiums total. You are betting on having the big one, or some ghastly cancer, and using far more benefits than your premiums could ever total.

The health insurance company has several ways to hedge their side of the bet. Like very other insurance policy, a health insurance policy has a maximum. Sometimes it has both a yearly max and a lifetime max. It’s right there, in the fine print, and is usually a large enough amount that nearly everyone will never reach it.

Another way they hedge their bet is to restrict coverage for pre-existing conditions. If you have a condition on a pre-determined list, you cannot receive benefits for treatment of that condition for a set time, six months, two years. It prevents a policyholder from obtaining coverage after they find out that they are ill. Think of it as collision coverage on your car. You can’t get last year’s damage repaired under your brand new policy.

The various states have battered the health insurance companies pretty good over the years. Lots of tests and treatments have become mandatory pays for insurance companies. A woman can go out and obtain health insurance in her 39th week of pregnancy and be covered for the birth.

Health insurance has not existed in a free market in decades. Each state regulates those carriers that offer health insurance in that state. Companies cannot operate in more than one state, and each state’s required coverage varies.

In much of the nation, the Blue Cross / Blue Shield family of insurance companies is the largest health insurer. They are not-for-profit corporations, and their profits roll back into the company to “hopefully” reduce premium increases. Companies such as Aetna also provide health insurance. They are for profit and any of their profits go to their owners, the stockholders.

Health insurance companies make money in several ways. By negotiating charges with health care providers, companies reduce their costs. By managing their pool of insureds, attracting healthy people and declining coverage for the very sick, they can increase the ratio of income to outgo. Lastly, and this is a dirty little secret for many health insurance companies, they can contract with Medicaid and Medicare to manage their programs for a fee.

Yep, when Medicare refuses to pay grandma’s bill, it is probably being turned down by an insurance company that Medicare pays to manage those claims. Because they are acting on behalf of Medicare, those denials do not get recorded against their company nor are they reviewed by the various state insurance departments.

In an entirely free market, health insurance companies could operate nationwide. A larger pool of insureds would mean that the companies could rate every insured and offer a premium commensurate with that actuarial assessment. Young, health people would pay very little. People with increased health care needs would pay more. The companies could offer a variety of deductibles that could lower some rates. They could offer a variety of benefit caps, that would again allow them to offer a spread of rates.

And, absolutely none of this has anything to do with a patient’s ability to receive health care.

The record keeping for health insurance coverage is slimmer than for the other data in the Census Bureau’s report titled Income, Poverty and Health Insurance Coverage in the United States: 2008. The data has only been kept for about a decade, and that decade has seen major changes in the American economy and the workforce. I am doubtful that the data is sufficient to support major policy decisions without a great deal of supplemental work.

The following table from the report illustrates three issues quite well. click for a larger image.

Table of American health insurance coverage for 2007 and 2008

1. The total number of Americans without health insurance in 2008 is 46.3 million. The percentage of those without insurance is 15.4%, up one tenth of a percentage point from 2007. The health care plan controversy is about 85% of the population providing coverage for 15% of the population.
2. This item points to the ethnic group with the highest rate of uninsurance, Hispanics. 30.7% lacked health insurance in 2008, but that was an improvement of 1.4% from 2007. 212,000 Hispanics gained health insurance in 2008.
3. Related to item 2, this piece of data points out that 20% of the uninsured are not U.S. citizens, 9.5 million people. For the category of non-citizens, 44.7% of them were uninsured in 2008. 226,000 more non-citizens did not have health insurance in 2008 as compared to 2007.

Graph by age group of Americans without health insurance for 2008

19 million Americans in the age range 18 to 34 have no health insurance. This is the age group frequently cited by pundits as usually not needing coverage. They’re generally young and healthy. Requiring them to all carry insurance is just redistribution of the cost burden. Adding all these healthy individuals to the health insurance rolls means that their premiums can be used to offset the health care costs incurred by other age groups where their premiums do not cover their costs.

The provision of health care coverage above and beyond any social safety net by the government must take into account several factors. The major factor is that only 15% of Americans are uninsured. What is the responsibility of society and our government to the overwhelming majority of people with coverage versus those without?

The issue of non-citizens is another important part of the health care coverage discussion. 20% of those without insurance are non-citizens. Do we provide coverage to these 9 million people?

The final issue is that of people who choose to not have health insurance coverage. This data does not reveal that statistic, but the sheer numbers of people in the 18-34 age group suggests that the number is fairly high. Requiring that people who don’t want it carry health insurance is merely a way to involuntarily supplement the premiums paid by those who use the coverage.