Will ObamaCare Really Insure the Uninsured?

The further I get away from Washington the harder it is to communicate with reporters. My time these days is spent mostly with working people. Some are small-scale entrepreneurs like store owners, insurance agents, and guys that help people with computer problems. Some are low-level managers, medical technicians, a dentist or two, home repair guys, mechanics. You get the drift.

These days when a reporter calls, it is these people I’m channeling. Not professors, not lobbyists, not corporate executives. I’m not in daily touch with that type anymore. So when a reporter for a major national publication wanted to talk to me about the Affordable Care Act I knew it wouldn’t go well.

She said they were going to publish a major piece showing all the opinions about the law, pro and con. She especially wanted to quote someone who opposed the law and would refuse to purchase coverage under it.

I sent her an e-mail explaining that I’m now on Medicare so I personally wouldn’t be affected by the mandate. But I went on to explain –

I spent 18 months uninsured before becoming eligible for Medicare in June. I did have individual coverage in Maryland, but premiums went up 19% on Jan 1, 2011, so I dropped it, in part because I took early Social Security and simply couldn’t afford it. Some of this increase was due to the ACA, Hard to tell how much, but certainly the new mandates played a role.

I also realized that if I got sick I would be able to enroll in the new high-risk pools — but only if I had been uninsured for six months or more. So I had a strong incentive to get uninsured ASAP to start the clock.

All of this is by way of introducing the real topic. The calculations I made will be made by almost everybody. Why bother paying for insurance if you can get it instantly if and when you need it? That is just money down the toilet. Why would anybody do that?

The tax penalties of the ACA are trivial, the subsidies are complicated, and the available plans will provide little value to most people. I don’t need coverage for psych counseling and in vitro fertilization.

This is how many (most?) people think. So, I therefore believe the ACA will result in FEWER people being covered, not more.

We know, for instance, that one-third of the uninsured are already eligible for free coverage through Medicaid or SCHIP. Yet they do not enroll. What has changed to get them to enroll now?

We know that mandates never work. Typically 15% of the population ignores them. This is true of helmet laws, auto insurance laws, child support laws, even taxes. In some cases the penalty for violating them is severe, including jail time for the latter two. Yet still people violate them.

Finally we spoke on the phone. She really wanted to talk to someone who would refuse to sign-up. I told her I know several people like that but there is no way they would talk to a reporter.

For instance, I know one fellow, let’s call him Sam, who makes a living reselling trucks he buys on e-Bay. He is mostly underground. I don’t think he reports his transactions to the IRS and he operates strictly on cash. He is uninsured and plans to stay that way. Interestingly, he is a big fan of Obama. Sam didn’t vote for him because Sam is not registered to vote. He isn’t about to do anything to bring attention to himself. And he is unconcerned about the regulations and mandates Obama is passing because he has no plans to comply with them.

Sam had a heart attack a couple of years ago. He went to the hospital and they inserted some stents, which he has no intention of paying for. They recommended he take certain drugs, so he buys them from a woman he knows who is on Medicaid and can get them for free. The doctors gave him a prescription to get some blood tests. He didn’t realize he had to use his own initiative to go and get the test done.

Do you think Sam will talk to a reporter? Do you think he will enroll in ObamaCare before he needs a service? Do you think Sam is unique?

I know a bunch of people like this around here. I knew even more when I lived in Maine (part of the reason Maine ranks low on income scales is because so many people live on cash and barter. It never gets reported.) I knew them when I lived in California.

Not a single Washington bureaucrat, and certainly not a single reporter, has any idea these people exist. Their operating assumption is that everyone is just like them — employed at a regular job and able to respond to new mandates or incentives for fear of being on the wrong side of the law.

They aren’t. Even if you put an insurance card in their wallet they wouldn’t know what to do with it. They won’t read the contract. They won’t keep appointments. They won’t take their meds as prescribed.

This is part of the reason I am a big fan of John Goodman’s approach to health care vouchers. Everyone gets one. Those that don’t use it for health insurance have their voucher put into a safety net system of direct delivery. It is a fine way of making sure that Sam and several million people like him get the care they need.

We need to get over this obsession with universal health insurance.

Comments (14)

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  1. Carl Johanson says:

    There will always be people outside the govt “net”.

  2. Devon Herrick says:

    Why would the Affordable Care Act insure the uninsured? Medicaid was intended to insure low-income families. Yet, 10 million of the uninsured are thought to be eligible for Medicaid but unrolled. The PPACA was intended to insure 32 million uninsured individuals. But the penalty for being uninsured is unenforceable. Moreover, people can always wait until they need costly care before they sign up. I don’t believe the PPACA will actually insure the uninsured because there’s really very little incentive to sign up.

  3. Nichole says:

    Just because we have an underground society of American that like to stay under the governmental radar and choose to not draw from Medicaid or PPACA doesnt mean we should rule them out of the system. Theres going to be cases where money needs to set aside as a safety net for medical expense for this sub group of Americans.

  4. Whitney Brown says:

    Vouchers are a wonderful idea!

  5. Jane Orient says:

    1. If the eligibles sign up for Medicaid managed care it will cost more money, even if they never get care. The Plan collects up front. What a bonanza for the Plan to get the folks who generally shun doctors!

    2. How is Sam going to collect his voucher? And how will it help him?

  6. Alex says:

    I agree with the author and with Devon. There’s simply no way to force people to do something they don’t want to in this situation. What are they going to do? Throw us in jail for not having insurance?

  7. Bonnie says:

    I have yet to see how a middle class person will be able to afford the so-called affordable insurance premium, voucher or no voucher. If affordable and you have low tolerance for risk, you will buy coverage. If you are on the edge, you won’t until you have to. If you are really poor or just ornery, you’ll show up at the hospital and they will treat you, just like your friend, Sam. If you have chronic conditions and are in the middle, you will tough it out. When folks get the premium bill, they will really know it IS a tax.

  8. Harv Randecker says:

    I get a “kick” out of how the Socialists believe that the only reason people do not like the PPACA is that they didn’t explain it well enough. Obviously, they do not now and never will understand the American DNA.

  9. Greg Scandlen says:

    Jane,

    The idea in Goodman’s plan is that Sam doesn’t have to collect his voucher. That money will go towards local safety net care if he doesn’t. This part of it needs to be worked out more, but the idea is sound.

  10. Baker says:

    I’m not sure I agree.

    “The tax penalties of the ACA are trivial, the subsidies are complicated, and the available plans will provide little value to most people”

    1) I don’t think a fine that could amount to 1%-2% of income is trivial. 2) Insurance plans will provide healthcare, which can be quite valuable.

  11. Don Levit says:

    How is a voucher different from a subsidy, from a sheer cash flow perspective?
    For example, there has been talk recently of people receiving $9,000 vouchers for buying Medicare insurance from private insurers.
    Doesn’t this simply reduce the premiums by $9,000?
    Seems to me vouchers or subsidies are designed to artificially increase demand for a pricey insurance product.
    Unfortunately, these artificial inducements will cause real price increases, much higher than without the vouchers (subsidies).
    Don Levit

  12. Ian Duncan says:

    I have seen the number 12 million on Kaiser Family Foundation’s website as eligible for Medicaid and not enrolled. In Massachusetts with the Reform we spent an enormous amount of money and energy (plus an individual mandate) to get these people covered. The largest single subset of newly-enrolled people under Massachusetts reform is the formerly unenrolled Medicaid-eligible.

    Medicaid expansion in Massachusetts costs about $5,000 per covered individual, the bulk paid by the state (with a 50% or so Federal match). The problem with the ACA is that there is no higher authority to provide the offset.

  13. Robert says:

    Whatever price controls you want to implement, for some it is still simply too much and they will forego care.

  14. Bob Hertz says:

    I also know quite a few persons like Sam, who live on cash and avoid the ‘gubmint’ whenever possible. They resist taking free health care, because getting registered might later force them to pay income taxes, license fees, child support, etc.

    These individuals live more or less like 50% of all Americans did through the 1930′s, and up into the 1950′s especially in the South and Mountain West.
    Illegal immigrants mostly live this way right now.
    Their life expectancy is probably about 10 years shorter than the national average. If they do live past age 65, then they make up the most expensive ‘dual eligibles’ on Medicare plus Medicaid, because they have years of untreated illness plus no money plus that lifelong distruct of doctors.

    I auppose that the top priority should be to get their children insured. This is similar to the goal of public schools in the 19th century, which was to get the children into school even if the parents were too suspicious and stubborn to allow this.

    As for the adult uninsureds, it would be cheaper to just let them stay uninsured, and then pay hospitals to treat them for emergencies. We should have done this when EMTRALA was enacted over 20 yrs ago. If 50 million adults are uninsured, then about 2 million each year will have a car accident or lose a finger or have a heart attack and really require hospital care. If we gave hospitals $15,000 per admission, this would solve the problem for $30 billion which is like a rounding error in Washington. No mandate and no bureaucracy either.

    This would not help our national life expectancy rates, but public money is getting scarce and maybe this is something we can tolerate.

    Bob Hertz, The Health Care Crusade