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News of the Day ... In Perspective

09/5/2006

Census Bureau insurance figures criticized

The Census Bureau has released figures showing that the number of persons without health insurance has risen from 45.3 million in 2004 to 46.6 million in 2005. The number of insured persons grew from 245.9 million persons in 2004 to 247.3 million in 2005.

The Bureau itself acknowledges that the estimates are very rough, stating: “Health insurance coverage is likely to be underreported on the Current Population Survey (CPS).” Moreover, underreporting is worse on this survey than on other national surveys. As Greg Scandlen, founder of Consumers for Health Care Choices observes, the CPS even underreports the number of persons enrolled in Medicare and Medicaid, although there is a national data base of the number of persons actually enrolled in these programs.

Exaggerating the number of uninsured “suits the political agenda of many people who crave national health insurance and ‘universal’ coverage,” Scandlen notes.

Because the CPS is very large and has been around for a long time, it does provide some interesting comparative information. The only category of coverage that has not grown in total enrollment over the past 12 years is non-group or “direct purchase” coverage, which declined from 31 million in 1994 to 27 million in 2005. Other data suggests that these numbers have been dropping since 1987, when the tax changes of 1986 went into effect, raising the threshold of the medical expense deduction from 5% to 7.5% of adjusted gross income.

“This dramatically reduced the tax benefit for people who buy their own insurance coverage,” Scandlen writes. “So, while Medicare, Medicaid, and employer-based coverage all receive massive and growing subsidies from the federal government, people in the non-group market receive next to nothing—fulfilling every economist’s prediction that we get more of what we subsidize.”

In 1987, 62.1% of the population had employer-based coverage. This dropped every year until 1993, when it was 57.1%, then climbed to 63.6% in 2000, falling gradually since then to 59.5% in 2005. Scandlen attributes this to broad economic trends, rather than a new crisis. One trend is the growth of the Hispanic population from 19 million in 1987 to 43 million in 2005. This group has historically had a low rate of insurance (30.7%were uninsured in 1987; 35.3% in 1998; 32.7% in 2005).

In an interesting sidebar, Scandlen cites an Aetna survey of 1,000 workers aged 18 to 25: 44% of them thought it was more important to pay their cell phone bills than their health insurance premiums (Consumer Power Report #47, 8/31/06).

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