Why Are So Many Americans Uninsured?

How does one go about explaining how the most expensive healthcare system in the world leaves about 18% of its population without the economic and psychological benefits of insurance coverage? Perhaps the most succinct analysis is found in Uwe E. Reihnardt's review (see sidebar) . The major points are:

1. The phenomenon of the uninsured is an inevitable by product of our employment-based health insurance system.
2. The nation has not seriously addressed the problem - and it is not likely to any time soon because the uninsured represent a politically and economically marginalized socio-economic class with no leverage in the commercial marketplace.
3. The public's distaste for bold policy initiatives leaves incremental reform as the only practical alternative, which typically results in chronic policy paralysis.
4. Although the incremental costs of rendering charitable care are picked up by the insured through various hidden cross subsidies, it is a bargain for insured Americans, because the uninsured receive only a fraction of the healthcare that insured Americans get.

Dr. Reinhardt's fifth point is perhaps the most interesting...

"We are embarking upon yet another round of studies, policy conferences andCongressional hearings on the problem of the uninsured. Although this activity may be perceived as "action," it can be doubted that much more than new bodycounts of the uninsured and some rehashed old proposals will come of the effort."

This quote appeared in the Spring of 2001, when the number of uninsured stood at 40 million.

The 2005 number stands at 46.6 million and will likely top 48 million in 2006.

So where do we find the healthcare system today?

As uncomfortable as the idea may be, America is essentially rationing healthcare coverage by income class. We may never have universal coverage, because that requires cross subsidies from the haves to the have-nots. Through our collective inaction, we are allowing a four tier system to be cemented in place:

1. For the uninsured, whatever they can obtain in the role of healthcare beggars (often zip)
2. For Medicaid recipients and low-wage earners in business firms that do offer health insurance, tightly managed HMOs with cost-conscious gate keepers, and if need be, yesterday's technology.
3. For middle and upper-middle income classes, PPOs with varying degrees of restrictions and costs sharing.
4. For high-income families...the traditional open ended, completely non-rationed fee-for-service system

And of course, Medicare beneficiaries are being distributed among the upper three tiers.

I forecast that the public debate on the uninsured will increase as the number approaches the 50 million mark, perhaps during the runup to the 2008 Presidential elections. And if recent history is any guide, what do you believe will change?

I think America can do better. So if we want to help those who are marginalized by and disenfranchised from the American healthcare system, what can be done?