Fixing Health Care I: The Uninsured
Yes, I’ve decided to wade into the health care waters again. One of the problems with the current debate is that it confounds several distinct problems. So I’m planning to briefly address each one individually in the hopes of achieving some clarity. First up, the uninsured.
Most of us don’t want people to die simply because they can’t afford basic health care. So I ran the numbers on what it would cost to solve just this problem. The most cost effective approach I know of is a major medical plan plus a health savings account (HSA). According to this Forrester analysis of eHealthInsurance data, the average annual cost of an individual major medical plan in 2007 was $1896.
Premiums have obviously gone up since 2007. However, let’s be optimistic and assume two points of cost savings: having a very large group and following my recommendation of not using insurance for primary care. Let’s put the optimistic annual premium estimate at $1500. Of course, we’re talking about poor people so a no-primary-care major medical plan isn’t enough. We’ll also give them a $300 per year HSA allowance, enough to cover a couple of office visits and some generic drugs plus save up some to pay for a hospital stay. Not that generous, but I’m trying to figure out the minimum cost. Total cost per person: $1800/year.
So how many uninsured are there? Well, estimates vary. But the Census Bureau released a pretty detailed report in 2007. Looking at Table 6 on page 22, we see that there were just over 28,000 uninsured with household incomes below $50K. Now, if we offered a government program means tested to $50K, we’d probably get some people dropping their private insurance for the government insurance. I think only a 25% cross-over would be optimistic. So we have to cover a minimum of 35,000 people at $1800/year. Total cost: $63B/year.
Call it an even $100B due to my optimistic estimates. It will probably add close to $1000/year to my tax bill. I’m willing to pay that. So let’s just do it and then move on to the next problem.