‘Why aren’t there more uninsured?’

Published in POLITICO

The U.S. uninsurance rate didn’t soar last year even though the poverty rate hit the highest level seen since 1993, and health experts are just beginning to make sense of this seeming paradox.

According to the Census Bureau report released early Tuesday, “Income, Poverty and Health Insurance Coverage in the United States,” the poverty rate rose almost one percent from 2009. That meant 2.6 million more people were below the poverty line.

But the percent of the population without health insurance held steady at 16.3 percent, a statistically insignificant change from 2009. The number of uninsured increased by just more than 900,000 — not nearly as many as analysts expected given the poor economy.

It was also a stark contrast with last year’s report. Between 2008 and 2009, the number of people in poverty increased by 3.8 million, and 4.2 million joined the ranks of the uninsured.

“Generally, [the uninsurance rate] is a measure that follows economic conditions,” said Rachel Garfield, assistant director of the Kaiser Commission on Medicaid and the Uninsured. And the economic conditions are still poor.

In 2009, as the economy struggled through job losses and the recession, 11 people became uninsured for every 10 people who became poor. But as poverty rose the following year, fewer than 4 people became uninsured for every 10 who fell into poverty.

These numbers take into account revised data the Census provided this year to correct for historically overstating the number of uninsured.

Explaining this discrepancy will require a detailed analysis of the data. But experts offered a couple of possibilities:

1) Most workers losing jobs didn’t have insurance to begin with.

There was a less than 1 point decrease in the percentage of Americans covered by employer sponsored insurance between 2009 and 2010, a decline that is 3.5 times smaller than between 2008 and 2009.

Low-wage workers and those in small companies are unlikely to get health insurance in the first place, pointed out MIT economist Jonathan Gruber. If they lose their jobs, their families become poorer, but they can’t lose health insurance they never had. Perhaps, he speculated, “we’ve settled to the point that the people who are losing their jobs don’t have health insurance.”

2) Wages are being cut to preserve health insurance coverage.

Many economists believe rising health care costs have been eating up wage gains. Employers are pouring dollars into increasingly expensive health benefits that otherwise would have gone into wages.

Mark Pauly of the University of Pennsylvania’s Wharton School suggests the smaller than expected drop in employer-sponsored insurance could have contributed to the drop in household income. Median earnings fell 2.3 percent in 2010.

“If people do value insurance as a fringe benefit, even though their company may be in trouble [and] they may not get much of a wage, the ultimate recourse is to say, ‘Boss, keep up my insurance but pay me a dollar less in wages,'” Pauly said.

If that were the tradeoff, it could be a rational choice, he suggested.
“Generally speaking, you get a much better deal if you get insurance through your job” than trying to purchase it on your own, Pauly said.

3) The Affordable Care Act reduced the decline in people who are covered by employer-sponsored insurance — but not necessarily the decline among workers.

Most of the ACA’s coverage expansion provisions won’t go into effect until 2014. But the Obama administration wasted no time in touting an aspect of the law that may have kept the 2010 uninsurance picture from looking worse: a half-million young adults covered on mom or dad’s policy.

“Today, a new report shows that the Affordable Care Act is working,” HHS Secretary Kathleen Sebelius wrote in a blog post. She attributed a 500,000 increase in the number of insured young adults to a provision allowing dependents to stay on their parents’ coverage until age 26.

So if those young adults are getting covered on a parent’s employer-sponsored plans, they would boost the numbers of people covered through these plans in the census count, said Kaiser’s Rachel Garfield.

4) Poverty may have deepened among those who already qualified for government coverage.

People may be poorer in 2010 — but many may have already been poor enough to have gotten covered under such programs as Medicaid.

The census report found no statistically significant change to the number of uninsured children (7.3 million) nor the number of people covered by Medicaid and the Children’s Health Insurance Program (48.6 million), which the Census reports as a single number.

But, Garfield pointed out that nearly 1 million of the people who had fallen into poverty were children. Since all states cover children above the federal poverty line — 24 states and D.C. cover kids at 250 percent FPL or above — these young people could have already had government coverage, which they would take with them even if they fell further down the income scale.

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