Increasing the Number of Uninsured

| Thu Feb. 16, 2006 11:40 AM PST

The Center on Budget and Policy Priorities has released a new study by MIT economist Jonathan Gruber showing that President Bush's proposal to expand Health Savings Accounts (HSAs) would actually increase the total number of uninsured people in the United States. While 3.8 million people would gain coverage, another 4.4 million would actually lose coverage as a number of employers responded to the new tax breaks by dropping their insurance plans. So on net, more people are uninsured. And this all comes at a cost of $156 billion over ten years. Absolutely brilliant.

Now from what I understand, it seems like Gruber's arguing that those 4.4 million would actually see little or no change in real compensation—what will happen is that many small businesses will just prefer to pay their workers in wages rather than health insurance once the tax advantages towards doing the latter disappear—and those 4.4 million would simply choose not to buy insurance. So it's not clear that the situation is entirely catastrophic. (Although those 4.4 million would all likely be relatively healthy people, and their exit from the insurance pool would raise premiums for everyone else.)

Still, we know that HSAs won't reduce total health care costs (how could they, when 80 percent of costs in this country are due to 20 percent of all patients, and that small minority simply can't and won't control their costs by taking out a high deductible?). They do virtually nothing to address the main health care problem in this country: that 60 million people go uninsured in any given year. Besides which, they transfer the costs of health care from the healthy and wealthy to the sick and the poor. In what universe is this a good use of money? We already have a perfectly good single-payer system in this country—Medicare—that, despite Republican efforts to screw it up, does a wonderful job of controlling costs and achieving universal among a vulnerable and expensive population group. A serious health care proposal might look at expanding that rather than tinkering around with frivolous tax breaks at the margins.

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