Question

Economic influences that might affest enrollement in health insurance programs

Answer 1

For certain people and depending on where you live, health insurance can be cost prohibitive -- too expensive -- for people to maintain. It comes down to whether people want to pay for it or not, or have the ability to do so or not.

It's true that not everyone can afford health insurance depending on who you are talking about. In the US, for example, you can opt not to have health insurance. If you decide to get it, you'll likely need to pay for the privilege of having it. There are services that are funded by the government, such as Medicare, Medicaid, and veteran's services for military personnel, but most everyone else will have to decide whether or not they want it based on what they choose to or can afford.

However, employers can offer you health insurance (through paycheck deductions) -- not every employer does -- but enough do to make it an important part in deciding whether or not to sign on with a particular company. They can even extend that insurance to the employee's spouse and children. If you're still in high school or even in college, you might be covered under your parent's plan. Signing on with a company with a good health insurance program is often a big incentive for job hunters.

In socialized systems, however, such as Canada's and Great Britain's, everyone is automatically covered in the most general sense. Health care is paid out through public funding -- taxes -- in those systems to provide care for everyone, so cost isn't so much of a factor in deciding whether or not you want health insurance in countries like those. You just have it.

Answer 2

While it's a frequent "everyone knows" talking point of those who would like a national health service, such as that in England or Canada, the evidence does not support the claim that there are a significant number of people who cannot afford health insurance.

Almost all businesses with more than a handful of employees offer extremely tax-advantaged health insurance plans to their employees, where the premium is set on a group basis -- it doesn't matter your own health -- and where the premiums can be paid before taxes. That is, the premiums are deducted from your pay before your income tax is computed, so that not only do you not have to pay taxes on the income you use to buy health insurance, but buying health insurance lowers your taxable income and therefore your taxes. For lower income folks, the advantage of this outweighs even the famous mortgage interest deduction on your income taxes.

The average annual premium in 2012 for an individual worker was $5615, or $468 per month:

http://ehbs.kff.org/?page=charts&id=1&sn=6&p=1

The average salary in the United States is about $43,000:

http://www.ssa.gov/oact/cola/AWI.html

So average health insurance costs represent about 13% of average salary.

Additionally, most firms will pay some or all of the premium for you, in the sense that it is added to your base salary. Studies conducted before "health care reform" became a political hot button issue routinely showed that Americans were very satisfied with their health care insurance plans:

http://www.gallup.com/poll/122663/Private-Public-Health-Plan-Subscribers-Rate-Plans-Similarly.aspx

For those who work in very small companies, or are individual entrepreneurs, or have part-time jobs, insurance plans are available in the individual market for pretty reasonable premiums. For example, you can go here:

http://www.ehealthinsurance.com/individual-health-insurance

If you look for a plan for a single man, age 23, nonsmoker, employed, you will find you can get a pretty good plan, with $40 doctor visits, $250 hospital ER visits, $15 generic drugs, unlimited lifetime maximum, out of pocket max of $5000 per year, all for about $160 a month. That's not peanuts, but considering it's less than what most young men are willing to spend on the monthly cable TV and/or smartphone data plan bill, and it will cover the $2 million or more you might need if you have a terrible accident, need a heart translant, or get some terrible cancer, it's hardly what I'd call unaffordable or a cripplingly bad deal.

If you are quite poor, and not working, or have poor children, then all states have Medicaid, which is a public charity program the costs of which are split between the Federal government and the states that gives you medical converage for free. Some states have additional programs that cover you at a higher level of income for a reduced fee, like Medi-Cal. Of course, Medicaid, like all charity programs, does not give you the same quality of experience that paying for it yourself does, just like food stamps don't pay for your choice of steak or hamburger. The medical care isn't any different, but the general experience is -- you'll have to wait in line longer, be subject to more conditions and restrictions in who you see, have fewer choices in who you can see, have to drive longer distances, and so forth.

Serious studies of the uninsured tends to come up with the conclusion that a substantial fraction are uninsured by choice:

http://epionline.org/study_detail.cfm?sid=122

To quote from the Executive Summary of this study, done by a pair of professors at CUNY: "More careful analysis of the statistics on the uninsured shows that many uninsured individuals and families appear to have enough disposable income to purchase health insurance, yet choose not to do so, and instead self-insure. We call this group the “voluntarily uninsured” and find that they account for 43 percent of the uninsured population."

As for why people would do this: why not? People also don't wear their seat belts, they smoke, climb mountains without ropes, ride motorcycles without helmets. It's a free country, and some people feel their personal risk profile is so much better than the average that they're better off not buying insurance, because insurance is priced according to the typical risk profile. It isn't much cheaper if you yourself are unusually careful, healthy, et cetera. So financially it may not actually make sense -- or they think it doesn't.

That said, there is one group of people who have attracted steady attention from all sides in the debate, and whose plight appears to be very real: those with "pre-existing conditions." For these people, health insurance can truly be unaffordable by any reasonable standard.

There are two ways this can happen, one in which the blame lies with the individual, and other where it doesn't. In the first case, someone could buy no health insurance, even when his risk profile isn't so benign. Let's say he's a middle-aged man who smokes. Now he gets heart disease, which is kind of predictable -- and NOW he has a "pre-existing condition" that makes it extremely expensive for him to buy health insurance. For the obvious reason: the insurance company already KNOWS that he's going to require a lot of very expensive care. Of course they're going to charge him a much higher premium than before they found this out. It's like trying to buy fire insurance after your house is already on fire -- it will be very expensive!

You could say this problem is the individual's fault. You don't try to buy accident insurance after you've had the accident, and you wouldn't expect anyone to sell it to you cheap. To expect otherwise is unfair, actually. The whole idea of insurance is "risk pooling." We all pay premiums in, and whoever gets sick gets the benefit of the accumulated pool. If you aren't paying premiums in while you're healthy, why should you expect to share in the pool's resources when you get sick?

The second case is much harder, and it stems from the fact that most people get their health insurance through their employers. Let's say you are sensible, and you do buy health insurance, through your employer, while you are healthy and young. But now you develop heart disease. Your insurance covers you, fair enough. But now you are so sick you can't work, and you must quit your job. Here's where the problem comes in: your health insurance is going to go away, because you aren't working for the company through which it's offered. Only in rare circumstances can you continue to pay the premium and continue on the insurance plan indefinitely. In most cases, sooner or later, you have to leave the plan, even if you can still pay the premiums.

That strikes most people as unfair. You haven't been an idiot, you thought about the future, you're willing to pay the premium -- but because the plan is based on the employer, not you, and you're not employed any more -- out you go. There have been various attempts to fix this, e.g. HIPAA and COBRA, but they haven't been fully satisfying. One of the biggest problems is that the tax code is structured to make it much cheaper to buy insurance through an employer. So step #1 would be reforming the tax code, but that's always a can of worms.

In short, to the extent there is an affordability problem at all -- and it isn't just individual bonehead decisions, or people kvetching about the fact that top-quality health care is a bit more expensive than a good cable TV package plus your cell-phone bill -- the problem seems to be centered on the fact that health insurance is tied to your job, and that if you lose your job at the wrong time, when you are seriously ill, you can suddenly become uninsurable through no fault of your own. The best healthcare reforms focus on this ugly fact, about which something could actually be done, rather than attempting to promise everyone top-notch healthcare for free, which is of course in the same category as promising that every child can be above average, or you can get something for nothing -- a swindle.