Why Worry about Health Insurance?

The latest estimates of health insurance coverage generated by the National Center for Health Statistics can be found in Health Insurance Coverage: Estimates from the National Health Interview Survey, January-September, 2005 (warning: PDF download), and at first glance the numbers appear reassuring. Between 1997 and 2005, the percentage of Americans without health insurance at the time of the survey declined from 15 to 14 percent. Among adults aged 18 to 64, the percentage without insurance stood at 19 percent in both years. Among children under age 18, the percentage without insurance fell from 14 to 9 percent. (Virtually everyone aged 65 or older is covered by the federal government's Medicare system.)

But if you dig more deeply into the report's tables, the alarms start to go off. Health insurance coverage rates have remained stable only because a growing share of people are getting their insurance through public rather than private plans. The percentage of children covered by public health insurance climbed steeply between 1997 and 2005, rising from 21 to 30 percent. Among working-age adults, the percentage covered by public insurance rose from 10 to 12 percent.

Dig even deeper and you arrive at the crux of the problem. Adults with incomes near the poverty level are flooding the public health insurance system as the cost of private health plans spirals beyond their reach. The percentage of near-poor adults aged 18 to 64 with private health insurance coverage plummeted from 53 to 44 percent between 1997 and 2005 (the near poor are defined as those with incomes between 100 and 200 percent of the poverty level). The percentage of the near poor with public health insurance climbed from 15 to 21 percent during those years. (Among their poor counterparts, the percentage with public health insurance grew more slowly, rising from 34 to 37 percent).

Among the non-poor (those with incomes more than twice the poverty level) private health insurance coverage rates fell only slightly, from 87 to 85 percent between 1997 and 2005. But how long will it be before even the middle-class cannot afford private health insurance? With the federal government threatening to pare back spending on public insurance, millions of Americans may soon join the ranks of the uninsured. The near poor may be the canary in the coal mine, signaling the imminent breakdown of our health insurance system.