What are the Financial Risks of Being Uninsured?

Previously, Chris Conover showed that the medical risk of being uninsured is small:

…[T]he evidence that having health insurance will reduce mortality risk by any significant amount is pretty thin…even if we assume that having coverage reduces the chance of early death by 22 percent, this is comparable to a half dozen other risks that people face. For the same amount as we are spending to expand coverage under ObamaCare, we could save eight times as many lives by focusing on other causes of death such as smoking.

See also his analysis of the claim that failure to expand Medicaid kills people and Linda Gorman on the same subject at this blog.

In his latest post, Conover shows that the financial risks are small as well:

I have calculated the medical bankruptcy risk facing those with continuous coverage at 1.25 per 1,000. Eliminating this difference would evaporate the risk of medical bankruptcy for 1.89 people out of every 1,000 uninsured Americans every year.

…[I]f having coverage could reduce bankruptcy risk by 1.89/1,000, what would that mean? First, the overall difference in bankruptcy risk (inclusive of medical and non-medical causes) between those with health insurance and those without is 10.7 per 1,000, so eliminating the “excess” risk of medical bankruptcy that we are assuming can be attributed to lack of health insurance coverage would shrink this difference by less than 20%. Perhaps more astonishing, such a reduction would shrink an uninsured person’s overall bankruptcy risk by a mere 11% (from 17.9 to 16.1 per 1,000).

Comments (6)

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  1. Thomas says:

    Being uninsured does not substantially increase chances of medical bankruptcy by very much. Seems like there are more factors that cause individual bankruptcy than healthcare.

    • Perry says:

      But yet we had to implement a convoluted, confusing new law and perhaps have worse care nonetheless.

  2. Devon Herrick says:

    Public health advocates assume everyone wants health coverage. Were you to ask the uninsured, they would probably agree. Yet, economics posits that people reveal their preferences through their actions. The truth is: many people say they want coverage but use their money on other things. It makes sense. Why would a young healthy person spend, say, $300 per month on a health plan when they will only see the doctor once or twice during the year. Many understand the trade-off and take the chance. When I was in grad school I did as well.

  3. Anne says:

    Could this have something to do with the fact that, according to this blog, hospitals collect an average of only $300 from uninsured patients? (http://healthblog.ncpa.org/good-news-for-the-uninsured/)

    You’re not very likely to go bankrupt if you aren’t really expected to pay in the first place…

  4. Erik says:

    I know my treatment for cancer was $186K. If Chris Conover can take a hit like that more power to him.

    Then again Shame on him for trying to convince others to do the same!

  5. Bob Hertz says:

    Conover is a great contributor as always.

    I want to expand on what Devon said regarding the uninsured.

    a. A large portion of the uninsured do not buy any insurance — life, auto, home, etc. They are either too broke, or too disorganized, or too stubborn, or too off-the-grid to spend any money that is not on the here and now.

    b. Many of the policies that are offered to the uninsured have been pretty darn unattractive. Even among the minority of uninsureds who want coverage, the numbers are not good.

    Say that an uninsured person is offered a policy (like my wife was) that cost $450 a month for a $7500 deductible.

    First you stretch your budget to pay the premiums, and then if you go into the hospital you crash your budget again.

    The ACA mitigated this for those who are under about 300% of poverty. But that is putting lipstick on a pig. The policies “cost too damn much.”

    Incidentally,

    It takes very little in extra debt to go bankrupt when you have no savings. I declared bankruptcy in 1990 with $21,000 in debts. ($900 of which was for health care)