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Census Numbers: The Trend Toward Government Coverage Continues

September 14th, 2011

Editor’s Note: For more Health Affairs Blog coverage of the new Census Bureau health insurance data, see Henry Aaron’s post.

In its yearly survey of health insurance coverage, the U.S. Census Bureau published figures that underscore the trend toward greater dependence on government for coverage.

The percentage of Americans on government health programs continues to grow, while employer-based coverage continues to decline. According to the latest Census report, 31 percent of the population received coverage through the government in 2010 compared to 23 percent in 1987. In contrast, 64 percent of the population had private coverage in 2010, compared to 75.5 percent in 1987. Employer-based coverage declined from 62.1 percent in 1987 to 55.3 percent in 2010.

Most analysts across the spectrum agree that the traditional employer-based model for health insurance has its shortcomings. No longer is the country in a 1950s labor market where people took a job at 18 and stayed with the same company until they retired at 65. Today people change jobs far more often than the previous generation. Another shortcoming is that when a person loses his job, he ends up losing health care coverage as well. Most analysts, regardless of political views, generally agree that to make the system work better, there needs to be greater portability and continuity in health care coverage.

This, however, is where the philosophical divide occurs. Those on the left generally see a larger role for government-based coverage, while those on the right see a greater role for individuals. One only needs to look at the Patient Protection and Affordable Care Act (PPACA) to see this take shape. The PPACA puts the trend toward government-based coverage on the fast track. The law will add an estimated 26 million people to Medicaid alone.

Then there are the subsidies for those who get coverage from the government exchanges. Some estimates suggest that due to the economic incentives built into the law, that number could reach 38 million—triple the number originally estimated by the Congressional Budget Office. Such a dramatic shift toward government-based coverage raises more questions over the true cost impact of the law.

Even without PPACA, existing government-based coverage (Medicare and Medicaid) is fiscally unsustainable. Depending on assumptions of the Medicare Trustees or the Centers for Medicare and Medicaid Services (CMS) Actuary, Medicare faces long-term unfunded liabilities between $24.6 trillion and $36.8 trillion. And, the states continue to struggle to balance Medicaid with other state priorities such as education and transportation.

Those on the right (including myself) who oppose the government-based model see an alternative path toward portability and continuity based on individual ownership and market-based competition. The Heritage Foundation’s Saving the American Dream plan empowers individuals and families to own and control their health insurance. It establishes individual tax relief for people to buy coverage in a marketplace where insurers and providers are accountable to meeting consumers’ needs of higher quality at lower costs. It also reforms Medicare and Medicaid, putting them on a sustainable path forward.

While discussion of the Census numbers typically focuses on changes affecting  the uninsured, the real story is the slow but steady trend away from private coverage and toward government coverage. Recent estimates by the CMS actuaries project that by 2020, government will control 50 percent of all health care spending in the country. Americans should take note that the health care system is moving to the tipping point where it will be more government-run than private.

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5 Trackbacks for “Census Numbers: The Trend Toward Government Coverage Continues”

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4 Responses to “Census Numbers: The Trend Toward Government Coverage Continues”

  1. Matthew Holt Says:

    I’m really laughing about this one. Only in the bizzarro world of American politics can those on the right, and not just anyone on the right but Nina’s actual colleagues at Heritage design the basics of a health care policy and then declare it something that’s antithetical to their very being.

    Furthermore, it’s only in bizzarro world of American politics that a massive expansion of PRIVATE health insurance legislated in the ACA is called a government takeover, or in Nina’s words puts the “trend toward government-based coverage on the fast track”. If Nina had bothered to check she’d realize that the vast majority of Medicaid enrollees — 66% according to KFF– are in private plans and the rest are being moved there. Yet this is another expansion of government!

  2. sarahweinberg Says:

    Note that the Save the American Dream plan touted by the Heritage Foundation relies on “tax relief for people to buy coverage….” Tax relief is really just another form of government subsidy. So the Heritage Foundation is in favor of government subsidy that would increase the income (and profits) of the private health insurance industry. There’s nothing in this plan to lower costs except the hope that somehow forcing individuals to buy subsidized health insurance will somehow cause the health insurance to be cheaper without skimping on its coverage.

    This is a pipe dream. What really happens is that the policies are indeed cheaper (especially when the premiums are subsidized by the government), but the coverage deteriorates. That’s fine as long as you are healthy, but don’t get sick, or you’ll be bankrupted!

  3. Don McCanne Says:

    Why would health care be fiscally unsustainable when it is paid for through a government program, yet sustainable when it is paid for privately?

    The fiscally unsustainable argument is based on the assumptions that the government would not introduce adequate cost containment measures, and that the government would not impose adequate taxes or tax equivalents to pay for the system. Based on the experience of other nations, both assumptions should be challenged.

    Other nations use either government ownership or robust government regulation to slow the growth in health care costs. They also use government taxing authority or regulatory mandates to ensure that the health system is fiscally sustainable. Directly or indirectly, they function as a public monopsony. Although they may complain about their own rising costs, they certainly spend less money than we do, yet they are able to include essentially everyone in their comprehensive programs.

    How would private control of health spending produce a fiscally sustainable system? The answer is that it would be fiscally sustainable only for the government. With a median household income of $49,000 and average health care expenditures of an insured family at $18,000 (Milliman Medical Index), health care costs for individuals and families are already unsustainable. (Median households and families with employer-sponsored plans are not the same, but these numbers still illustrate the enormity of the problem.)

    Health consumer empowerment is being achieved by shifting more of the responsibility for payment directly to patients, especially through increased deductibles and other cost sharing. At today’s high heath care costs that means that many more patients would be foregoing beneficial health care services, simply because they can’t pay for them.

    Now Medicare and Medicaid are being threatened with proposed reforms that allegedly would put them on the path of sustainability. Again, that might be sustainable for the government, but the proposed changes would shift more costs to patients, further impairing access because of increasing financial barriers to care.

    Many of us were shocked recently during the Republican candidates’ debate when members of the audience shouted, “Yes,” after the moderator asked if a thirty year old, critically ill man should be allowed to die because he was uninsured. But that was only a very few voices from an anti-government Tea Party audience. Not only would citizens of other nations emphatically reject this view, it also decidedly violates American values.

    Nina Owcharenko offers us the choice between consumer empowerment in which we can reject the health care we need but can’t pay for, or our own beneficent government monopsony that would ensure value in our health care purchasing so that all of us could have the health care that we need.

    Although her blog entry and this response may appear to be merely a rhetorical game, the choice really is a matter of our nation’s health.

  4. MBMundorff Says:

    Yes, “individual ownership and market-based competition” worked so well for seniors before the enactment of Medicare, when nearly a third of them lived below the poverty level. I agree, however, that “Medicare for all” is a suboptimal approach, since it does nothing to address cost or the fee-for-service environment, only reimbursement.

    Ms. Owcharenko should be at pains to remind her conservative colleagues that if they are going to channel large sums of government funds to their Big Pharma benefactors through Medicare Part D, they should at least have the political courage to pay for it at the time.

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