Economist N Gregory Mankiw published a piece in the NYTimes OpEd section calling into question some common perceptions about health care cost, affordability, and the rate of uninsurance.
Mr. Mankiw did make some excellent points; his interpretations on others were either inaccurate or misleading.
Let’s start with this statement “the 47 million (uninsured) includes about 10 million residents who are not American citizens. Many are illegal immigrants. Even if we had national health insurance, they would probably not be covered.”
First, good to see that Mr. Mankiw hews tightly to the “illegal immigrants” talking point. Have to get that into every policy piece.
But is it true?
No. Mankiw’s estimate of the number of uninsured is likely in the ballpark. However, his statement that illegal immigrants would probably not be covered is not.
Any health reform package that includes a universal coverage mandate will have mechanisms to ensure the broadest possible coverage, and will likely include some form of employer mandate or role. Here’s where Mankiw’s ‘if this than that’ logic stumbles. Only 13% of undocumented immigrants are unemployed. I’d stipulate that not all employed undocumented workers would be covered, as no system will be fool-proof, but Mankiw’s conclusion is not supported by fact or logic.
In fact, under most of the proposals now under consideration, a fair guess is 2/3 to 3/4 of undocumented workers would be covered. Just like they are today under workers compensation.
The noted economist’s next logical misstep is this stunner: “The 47 million also includes many who could buy insurance but haven’t.” Well, sort of – if they didn’t want to eat and could sleep in the streets.
Mankiw bases this statement on his claim that many could buy insurance through employers but don’t, and weaves in the note that 18 million of the uninsured have incomes above $50,000; I assume he thinks that this is enough to cover health insurance and other necessities of life.
First, a majority of small employers do not offer health insurance.
Second, outside of Mankiw’s ivory tower, folks actually do want to buy health insurance, but can’t afford it. Surveys indicate that 98% of those without insurance would buy it if they could afford to.
Third, the average family premium is now almost $13,000, and that does not include costs for deductibles and copays. (These out of pocket fees totaled more than 20% of income for 18.8 million people (2003 statistics)).
I suppose an academic could logically state that people don’t ‘choose’ to buy health insurance. In the real world, for folks with modest incomes (Mankiw’s $50k), the ‘choice’ is a bit more stark. Do they pay the utility bill, buy food, pay rent, put gas in the car, or buy health insurance?
Joe: In answer to your question: “Do they pay the utility bill, buy food, pay rent, put gas in the car, or buy health insurance?”, my observation is ‘depends how sick they are’. As an administrator for a physician practice that is also a small business (26 employees), I observe that the employees with chronic illnesses pay for their health insurance, but sometimes, I suspect, they do so instead of paying their utilities (or skip some meals).
Joe:
There you go again!
The Federal Government can afford to pay for health insurance for everybody if they choose to. Of course that means higher taxes, less security, fewer roads, or some other choice because there obviously isn’t an extra couple of trillion dollars in the budget since we are running in the red.
But individuals, well they make choices and forgo health insurance because it is “TOO EXPENSIVE”. Joe it just sounds like you want the “RICH” (making over 50K according to democrats) to pay for eveybodies health insurance.
I have a better idea. Let the government pay everybody a living wage after taxing all companies and investors 100% of their earnings.
Oh wait, thats been tried and failed repeatedly. But lets try it again with Hillary.
Thank you Joe for continuing to bring some common sense to the uninsured debate. Serious questions exist regarding the out-of-control costs associated with health care. We need to examine who benefits (financially) the most from these costs, consider if these personal gains are exorbitant, and then make some dramatic changes to balance the system.
I am self-employed, thus being the owner of a small business and the single employee. I do have health insurance but it takes 10% of the business’ revenue to cover me only. After deducting fica/medicare taxes, deferred earnings for retirement, and health insurance, I get to take home 57% of my ‘total income’ before taxes.
Last year, I ended up paying 84% of my AGI for out-of-pocket medical expenses. After being rejected for a number of assistance programs (non-government), I seriously wondered if I’d be better off WITHOUT insurance since some programs use ‘total income’ to determine eligibility rather than AGI and having insurance results in an automatic denial.
Fortunately, I’m not in danger of being out on the streets since I live with family. But I am draining savings and retirement funds to pay for medical care. This is not right, especially when my income (AGI)has become less than 200% FPL. It angers me that my retirement funds are padding the accounts of pharma stakeholders.
Lisa, first you say
“I do have health insurance but it takes 10% of the business’ revenue to cover me only.”
And later you say
“I am draining savings and retirement funds to pay for medical care.”
I think you are confusing medical insurance with medical care. You have a lot of company in doing so.
Health insurance premiums are indeed high. And they are high because the cost of medical care is high. I can’t offer a solution to the problem of high health care costs, but I know the underlying problem grows worse when ignore its roots and instead try to solve it by fooling around with its symptoms, i.e., the cost of health insurance.
How long would you keep you doctor after you realized she was treating only your symptoms and ignoring the disease that produced your symptoms? Not long, would be my guess.
The high cost of health insurance is a symptom of the problem we face. The problem is the high cost of health care. It’s time the nation began to pay attention to the distinction between the cost of health insurance and the cost of health care.
IMO, until a consensus can be built around the need to solve the problem of health care costs, attempts to palliate the pain through insurance schemes will only end up costing us more and more, and the national discussion will, sadly, continue to go nowhere – just as it has gone nowhere for the past 40 years.
“But is it true? No. Mankiw’s estimate of the number of uninsured is likely in the ballpark. However, his statement that illegal immigrants would probably not be covered is not.”
Joe, are you familiar with the Schengen Convention?
The question of coverage for persons who have entered the U.S. illegally would be subject to intense political contention. There would certainly be a strong faction advocating a rule analogous to Schengen.
While your comment suggests one possible outcome, it seems to me no better than a 50-50 likelihood at this point.
“Mankiw’s estimate of the number of uninsured is likely in the ballpark. However, his statement that illegal immigrants would probably not be covered is not.”
His statement was that even under national health insurance these folks would not be covered. I’m not sure why he is expected to assume that any reform will include an employer mandate that would cover illegals so there is nothing even mildly misleading about his statement.
“Surveys indicate that 98% of those without insurance would buy it if they could afford to.”
The survey indicates nothing of the sort. It indicates that 98% believe they have a need for insurance and that about half of those surveyed would buy it if they could afford it.
“Third, the average family premium is now almost $13,000, and that does not include costs for deductibles and copays. (These out of pocket fees totaled more than 20% of income for 18.8 million people (2003 statistics)).”
The study projects that in 2003 there were 18.8 million people, or 7.3% of the US population under age 65, who spent more than 20% of of family income- which includes premiums.
If his logic is tortured, what’s yours?
Mike – I don’t see the relationship between the EU’s border conventions and employer mandates. Perhaps I’m missing your point.
As to my contention that illegals would be covered under an employer mandate, as noted in the post, this exists in workers comp – for citizens and others, and works quite well.
Alex -I’d refer you to my para above; Mankiw has either made the assumption that undocumented workers would not be covered or that compliance would be low. I disagree with the first for the reasons stated in the post, and acknowledge that compliance may not be universal (also in the post).
As to your characterization of the RWJ study, perhaps we interpret the results differently. My reading of the study indicates the primary reason people do not have health insurance is cost-related.
Finally, thanks for your correction on my misstatement re total cost of health insurance. I would note that the point remains – 18.8 million people spend more than one-fifth of their income on insurance and health care.
This is not sustainable.
“I don’t see the relationship between the EU’s border conventions and employer mandates. Perhaps I’m missing your point.”
One of the Schengen “border conventions” is a requirement that persons seeking an entry visa must have a specified level of medical insurance or a visa will not be issued. The nationals of 134 countries are presently subject to this requirement.
In other words, the Schengen countries have REJECTED the notion that their citizens be obligated (“mandated”) to pay for medical expenses of foreign visitors – even legally-admitted foreign visitors – thru their own nationalized health care systems.
By disagreeing with Mankiw it appeared to me that you suggest it’s likely illegals would be mandated coverage under a universal U.S. health program. I say, not so fast. I say it’s at least 50-50 that the debate here will eventually reach same concerns as Schengen reached, with very possibly the same outcome.
As to some parallel with worker comp – who knows if that’s meaningful? The public knows bupkis about worker comp, especially worker comp coverage of illegals. IMO, the more that the public learns about this fact, the more objections would be voiced to it. So using worker comp as an argument might well backfire. Of course, people who hold jobs and thereby pay into a system have some claim to benefits from the system. That is undisputed in the case of people who are citizens or those who have green cards or visas. What’s much less clear is whether people who are in this country illegally in the first place should earn the same entitlements.
None of this is easy stuff. IMO the likelihood is not that an easy answer will be reached – but is rather that a raucous and divisive debate will ensue whose outcome is very much in doubt.
“Mankiw has either made the assumption that undocumented workers would not be covered or that compliance would be low. I disagree with the first for the reasons stated in the post, and acknowledge that compliance may not be universal (also in the post).”
Right, but your disagreement on the first point stems from your belief that “Any health reform package that includes a universal coverage mandate will have mechanisms to ensure the broadest possible coverage, and will likely include some form of employer mandate or role” which is conjecture on your part. Mankiw referred to national insurance in his article and I’m not sure how anyone, given the context of our debate on illegal immigration, can simply assume any national insurance system will cover illegal aliens or that any mechanism will involve employers.
The RWJ report states the following:
“Nationally, more than half of all adults who do not have health insurance coverage say the high cost of coverage is the reason they are uninsured.”
“The analysis shows less than two percent of uninsured adults said they had no need for insurance.”
Those two statements lead you to conclude that:
“Surveys indicate that 98% of those without insurance would buy it if they could afford to.”
Not sure how you got there. Cost is undoubtedly the leading reason that people don’t purchase insurance. This is why there is no need for you to overstate the figure or assert that Mankiw is being misleading. There are a number of people who can afford to purchase insurance who don’t because they don’t believe their risk justifies the cost. I know quite a few of them.
In sum, there is nothing tortured, misleading, or incorrect about Mankiw’s logic. You may think it is an incomplete discussion of the facts, but nothing you referenced in your response is an accurate criticism.
Alex – I disagree with both your contentions, for the reasons noted earlier. I suggest you review the Democratic candidates’ platforms, as well as those advanced by the CHCR, SEIU/WalMart, Sen. Ron Wyden (and his numerous co-sponsors), and the Big Three. Part and parcel of these initiatives is universal coverage. For Mankiw to argue otherwise is nonsensical; I’m a lot more comfortable with the likelihood of my conjecture becoming reality than Mankiw’s.
In re the 98% number, it is quite clear that the risk/benefit issue is a key driver – it is also another way to say ‘it costs too much”. I stand by my previous conclusion – if insurance was affordable everyone but people who said they had no need for it would buy it.
In sum, Mankiw’s piece was, at best, a superficial glossing over the real issues inherent in the uninsured.
Mike –
I referenced Workers Comp as an example of mandated benefits that works quite well – WC demonstrates that an employer mandate is not only feasible, it is already occurring in every state but one. And yes, undocumented workers are covered.
Re the Schengen Conventions, the EU has adopted numerous laws and regulations, including limits on members’ national indebtedness, many of which appear to be little more than window dressing (like our candidates’ platform planks). Have you ever been asked if you have health insurance upon entry into an EU country?
What is really funny about this is the only OECD country without universal coverage is, you guessed it, the US. It is indeed fortunate that the Conventions aren’t applied.
And if it is, woe is us, as Mexico is well on the way to universal coverage under the Seguro Popular program.
If the Tancrazies actually pass something akin to the Schengen insurance requirement, it is highly likely the ones barred from entry will be Anglos heading south.
“Have you ever been asked if you have health insurance upon entry into an EU country?”
c’mon, that’s no argument. But to the point, you are simply wrong to state that the insurance convention is not applied. It is applied. (BTW, Schengen convention signatories do NOT include all the EU countries, and are not identical to OECD membership either).
In my prior work I had responsibility for our worldwide staff benefits and many times had to help foreign employees who at the last moment discovered they needed the prescribed benefits documentation to obtain a Schengen visa.
Which leaves my earlier points intact:
(1) The question of coverage for persons who have entered the U.S. illegally would be subject to intense political contention. There would certainly be a strong faction advocating a rule analogous to Schengen.
(2) You suggest one possible outcome, that illegals would be mandated coverage under a universal U.S. health program. I say, not so fast. I say that seems to me no better than a 50-50 likelihood at this point. I say it’s at least 50-50 that the debate here will eventually reach the same concerns as Schengen reached, with very possibly the same outcome.
(3) The Schengen countries have REJECTED the notion that their citizens be obligated (“mandated”) to pay for medical expenses of foreign visitors – even legally-admitted foreign visitors – thru their own nationalized health care systems.
“I referenced Workers Comp as an example . . . yes, undocumented workers are covered.”
But I haven’t disputed the facts you’ve presented. I’ve only questioned the degree of certainty you continue to express for your conclusion (or your conjecture if that is what you prefer to call it).
“For Mankiw to argue otherwise is nonsensical;”
No, it really isn’t. That you’ve chosen to read all references to “universal coverage” to include illegals, despite modifiers such as “universal coverage for all Americans” does not make Mankiw nonsensical. That you have assumed that Wyden’s plan to provide subsidies for coverage will be extended to illegals despite lack of any reference to it does not make him nonsensical either. Again, his “tortured logic” is a result of him a) failing to assume that all health reform plans will not cover illegals despite the fact that none of them address it concretely b) failing to assume that all reform efforts will include an employer mandate that will cover illegals (even though Wyden’s actually eliminates ESI), and c) failing to assume that illegals will be covered in some form or fashion despite multiple decades of policy limiting their enrollment in government programs.
“I stand by my previous conclusion – if insurance was affordable everyone but people who said they had no need for it would buy it.”
Your previous conclusion was that 98% of people surveyed stated that they would buy it if they could afford to which is demonstrably false. The survey you reference doesn’t even support your conclusion. If 98% of people believe it necessary and only half indicate that cost is the primary reason, then there have to be other reasons.
Mankiw was not aiming for a full discussion of the uninsured. He was providing an explanation for some of the bullshit numbers that people peddle when discussing the uninsured. There was nothing tortured about it.
Alex – we disagree.
Sorry to just be getting back around to reading comments. Unlike a majority of health bloggers, this is in no way related to my career as a musician.
Mike said…”Lisa, first you say – “I do have health insurance but it takes 10% of the business’ revenue to cover me only.”
Let me reframe the statement of income.
Self-employment net income – $32,964
Wages, taxable interest, tax refunds – $2,052
‘Total Income’ – $35,016
1/2 Self-employment tax – $2,329
SIMPLE IRA (contributed in Jan of year) – $10,000
Health insurance premiums – $3,275
‘Adjusted Gross Income’ – $19,417
Out-of-Pocket Medical Expenses Paid by ME! mostly in 2nd half of year – $15,542
+ my 1/2 of SE Tax – $2,329
Leaving me $1,546 with which to pay state taxes and living expenses. After two years of applications and rejections, this is finally the point at which I qualified for prescription assistance.
Mike said…”And later you say – “I am draining savings and retirement funds to pay for medical care.”
Well, yes. Whether the money withdrawn from the bank is paying for routine living expenses or routine medical expenses, it makes no difference to the bank.
Mike said…”I think you are confusing medical insurance with medical care.
“How long would you keep you doctor after you realized she was treating only your symptoms and ignoring the disease that produced your symptoms? Not long, would be my guess.”
Interestingly, the expensive medication which my insurance will not cover is serving to treat the underlying disease, multiple sclerosis. Treating now should limit future expenses and possible disability. It’s unfortunate that, at 39, I have to sacrifice my chance of financial security for the hope of a preserved physical future.
Mike said…”IMO, until a consensus can be built around the need to solve the problem of health care costs, attempts to palliate the pain through insurance schemes will only end up costing us more and more, and the national discussion will, sadly, continue to go nowhere – just as it has gone nowhere for the past 40 years.”
I don’t necessarily disagree.
Later Joe said…”I would note that the point remains – 18.8 million people spend more than one-fifth of their income on insurance and health care.
This is not sustainable.”
I definitely agree.
Not sustainable at all.
Just think…how would Billy Tauzin respond if you required him to spend 80% of his annual income on out-of-pocket medical expenses above his insurance coverage or beyond any ‘free or nearly free’ drugs available. Now that would be interesting.
If anyone is curious to know any more of my thoughts, you are welcome to come checkout my blog at brassandivory.blogspot.com.
Thanks