People Who Choose Not To Have Health Insurance

Not all of America’s 46 million uninsured people can be considered victims of a system that excludes them financially or because of pre-existing conditions. According to an unpublished Kaiser Family Foundation analysis of the CDC’s 2008 National Health Interview Survey, 2 percent of uninsured people said they simply didn’t want health insurance. Some experts say others who could – and should – buy insurance choose not to because they perceive the costs as too high.

What makes someone “voluntarily” uninsured ?

Some scholars say the number of people who cannot afford insurance is overestimated. An Employment Policies Institute study found that 43 percent of the uninsured – about 20 million people – earn more than 2.5 times the federal poverty level, or $55,125 for a family of four. The authors – who include June O’Neill, the GOP-appointed head of the Congressional Budget Office from 1995 to 1999 – write “because most people at that income level are able to get insurance, (they) thus may be classified as ‘voluntarily’ uninsured.”

Though some uninsured people may appear well-to-do on paper, other factors could still push insurance costs out of reach. Around 7.5 million uninsured Americans have family incomes higher than $75,000 but premiums may be high because of health status, age, cost of living and geography. While the federal poverty level is the same across the country–$10,830 for an individual and $22,050 for a family of four – premiums on the individual insurance market vary widely by state, according to research by America’s Health Insurance Plans. In Massachusetts, the average annual premium for family coverage was $16,897 in 2007. In Wisconsin, it was $3,087.

It may be difficult to draw a line between the voluntarily uninsured and those with little access to coverage, but it is clear that some who could buy insurance choose not to do so.

What about the “young invincibles”?

A subset of voluntarily uninsured people are young and healthy, who may believe they don’t need health coverage or that it’s a bad deal because of the low probability that they’ll use it. The U.S. Department of Health and Human Services estimates that 44 percent of the uninsured are between 18 and 34 years old.

Though not all young invincibles are playing the odds by choice, about 9 percent of uninsured people between the ages 18 and 24 have received affordable offers of insurance through their employers, said Lisa Dubay, a Johns Hopkins University professor. Another 14 percent could afford to buy coverage on the private market. Dubay, also an Urban Institute scholar, expects to publish a report on the topic soon. Her analysis is based on Census Bureau’s health insurance data for 2008 and the percentage of person’s income needed to obtain coverage. She estimates people earning two to four times the poverty line, for instance, could only afford to spend 10 percent of their income on insurance. “The young people are disproportionately uninsured, but they also have low incomes,” she says.

How will the reform proposals affect the voluntarily uninsured?

The Democratic reform proposals would require most individuals to have coverage or pay a penalty. The House bill calls for a penalty of a 2.5 percent additional tax on their income. The Senate Finance Committee bill would fine families up to $1,900 a year, depending on income.

The Senate Health, Education, Labor and Pensions Committee and House bills also would impose a mandate for employers to provide insurance to workers, which could encourage some uninsured people to join group plans.

All of the Democratic proposals would establish insurance “exchanges” to enable individuals or businesses to compare and buy plans. The Internet-based exchanges are intended to make getting coverage on the individual market easier. One plan type available on the exchange proposed in the Senate Finance Committee would specifically target young people. It would cover only catastrophic and preventive care, and be more affordable. In addition, the health committee would allow people up to age 26 to receive coverage through their parents’ insurance plans.

Many Democrats have pushed to expand subsidies to help middle-income people buy health insurance. All the bills would offer some level of assistance to people earning up to four times the poverty level, or $88,200 for a family of four. For some who could afford insurance, but would rather spend the money elsewhere, the extra help combined with the possible penalties could make insurance a more attractive investment.

Sources:

Employment Policies Institute: “Who Are the Uninsured? An Analysis of America’s Uninsured Population, Their Characteristics and Their Health”

U.S. Census Bureau’s 2008 Health Insurance Data

America’s Health Insurance Plan’s 2006-2007 Individual Premium Survey

HHS Assistant Secretary for Planning and Evaluation’s estimates on the uninsured (2005)

HHS Assistant Secretary for Planning and Evaluation’s federal poverty line chart

Kaiser Family Foundation side-by-side comparison of health reform bills

Senate Finance Committee

Senate HELP Committee

House Ways and Means Committee

House Energy and Commerce Committee