I’ve been looking at the new Health Research and Educational Trust paper released this week, authored by Susan Marquis and others at RAND. The big headline, which got USA Today’s attention, is that even reducing premiums for health care by 50% would reduce the uninsured by merely 3%.
Some tried to make this study about the need for an individual mandate, but I don’t see anything here that suggests that. I didn’t see anything in the paper that suggested that the reason people are uninsured is that they don’t want coverage, and other research disputes that notion. As I read the result, a tax credit simply doesn’t go far enough for the vast majority of the uninsured: it’s a 50-foot rope for someone in a 100-foot hole.
Instead, the vast majority of the dollars from a tax cut or credit to those who are more affluent, including those with insurance.
What can we learn from the study? Funded by the California HealthCare Foundation, this survey of uninsured California families, is a complete and utter smackdown of President Bush and other Republican proposals that suggest that all the uninsured need is a good tax cut. Other studies, even those by business and industry groups, show that such tax credits are far less efficient than expanding public programs and other strategies for health reform.
What the study also does is indicate how people reject plans with high deductibles and other cost sharing. Even when the high deductible plans offers significantly lower premiums, they’d rather go for the higher premium, lower-deductible policies. They don’t see the value in the high-deductible plans: What’s the point of having health coverage that doesn’t provide much coverage?
If anything, the study suggests serious issues with the Governor’s proposal, which depends on these high deductible plans, since it requires individuals who aren’t eligible for employer-based coverage or public programs to buy coverage in the individual market. For many of these middle-income folks who would be impacted, the only thing they would be able to afford to buy is the minimum coverage of a $5,000 deductible plan. As a result, the plan would force people to get a health care product that many don’t find meaningful. For this reason, any affordability standard needs to include both premium and out-of-pocket costs.