Wednesday, September 18, 2013

Obamacare Individual Mandate - Inside the Numbers

Ask any supporter of the President's Affordable Care Act (aka Obamacare) and they will tell you that the individual health insurance mandate is critical to lowering health insurance costs to an affordable level for the 40 million uninsured Americans [1].  The president has waived or postponed the insurance mandate to big corporations and big unions, but to date has refused to do so for individuals because he states that mandate is essential to providing affordable care to all Americans.

To understand how this claim is patently false we need to first take a closer look at who has health insurance and who doesn't.  So let's start with the facts.

  • Current US population - 316,705,592
  • US residents with health insurance - 268,095,592 (85%)
  • US residents without health insurance - 48,610,000 (15%) [2]
Fig 1 - US residents covered by health insurance
Now that we know what percentage of the population is uninsured, we now need to look at who makes up that group.
  • Total Uninsured US residents - 48,610,000 (15%)
  • Uninsured ages 34 and under - 22,409,210 (46%)
  • Uninsured with household incomes $75,000 per year and up - 9,381,730 (19%)
  • Uninsured illegal aliens - 15,000,000 (31%) [3]
Fig 2 - Percentage of Uninsured US residents
The first problem with the mandate hypothesis is that the number of uninsured includes the nearly 18 to 20 million illegal aliens estimated by National Association of Former Border Patrol Agents living in the US.  The reason this is a problem is that these aliens are not covered by the insurance mandate and are barred from participating in the health care exchanges [4].  This means that you can immediately exclude them, lowering the number of uninsured by nearly one third.

The next problem comes when we start looking at the ages of those who are uninsured.  Nearly 46% are age 34 and under and ages 18 to 34 make up the largest group of uninsured.  Typically these people have voluntarily elected not to purchase health insurance because they simply do not get sick nor use healthcare services at the rate of older adults.  Those in this group age 19 to 25 became eligible to be covered by their parent's health insurance in 2010 as part of the Affordable Care Act, despite this the number of uninsured among them only dropped by 2%.

The last group of uninsured are those the left would deem rich or upper-middle class, those making $75,000 per year or more.  This group comprises more than 19% of the number of uninsured Americans.  With the wide availability of high deductible, low cost PPO health insurance plans, one can easily assume this group has also chosen not to purchase health insurance and instead spend that money in other ways they deem more important.

The simple truth is the remaining group of uninsured who are over the age of 34 and make less than $75,000 per year is so small you'd be hard pressed to find any reporting agency willing to disclose the data.  That is because there are so few of these individuals, that even if everyone opted to sign up for insurance on the Obamacare exchanges, the money derived from those customers would be so small it would have a negligible impact on the overall costs of healthcare.  In fact, the costs associated with complying with the Affordable Care Act that are being absorbed by insurance companies likely drastically out weigh any additional revenue they would generate from the exchanges.  These include provisions like accepting all pre-existing conditions, covering young adults up to age 26 on their parents plans, and limiting administrative costs to 20% of total revenues.

To put things simply, there is no sound business case for the individual health insurance mandate, that despite the recent 5-4 Supreme Court ruling, is clearly unconstitutional.

1 comment:

Anonymous said...

So for 15% of the population we are screwing over the majority. Throw in the fact that a third of that 15% are illegals, and this is ridiculous. If this legislation were about saving money and stretching our health care dollars, they'd crack down on illegal. But since they are about to amnesty millions of them, mostly poor BTW, it doesn't take a genius to figure out that saving money is not their goal.