Healthcare Questions and Answers

UPDATE below:

Commenting on my previous post about Greg Mankiw's NY Times healthcare Op Ed, Amicus, the host of the Bootstrapping Andrew Sullivan blog, asks three questions keyed to Mankiw's "Statements":

For Statement #1
I doubt that the WHO isn't aware of these criticisms ...

Can we also adjust numbers another ways, ranking the U.S. lower because it has less of a 'health-care' gradient to face than nations who cannot afford clean water systems, for instance?

For Statement #2
What is the source for this claim, do you know? "About a quarter of the uninsured have been offered employer-provided insurance but declined coverage"

Also, I'm unaware that the Census Bureau records a statistic for those who could be enrolled for medicaid but are not - where did that supplemental estimate come from, do you know?

Statement #3
This is a conjecture about health care expense growth, not economic analysis.

My responses:

1. Mankiw's critiques of trans-national healthcare statistics are indeed well-known, including to the WHO. Yet, as I've detailed here, here and here, there is no single satisfying formula for ranking differing national healthcare systems. (I note, however, that some anecdotal evidence tends to elevate the United States). The lack of any agreed, universal healthcare metric reflects, in part, the fact that the various measures and rankings embody value judgments inextricably linked to culture and preferred policy goals. So merely "deflating" for water purity, as Amicus suggests, wouldn't make the differences converge.



2. Mankiw doesn't cite a source for his statement that 25 percent of the uninsured were offered employer-sponsored health insurance but decline coverage. The Congressional Budget Office discusses a slightly different, but related, statistic: "Research has found that about 75 percent of the uninsured in working families do not have access to insurance through their employer, the dominant form of coverage among the nonelderly, while the other 25 percent have access to employment-based insurance but do not accept it." A recent Commonwealth Fund study cites (see Table 11) decline rates that vary between large and small firms and says (see Table 13) that 28 percent of those declining coverage are uninsured. Another theoretical paper estimates (at 33) the probability an eligible employee would accept coverage as 71 percent. I've seen at least one 2002 state survey showing a 80 percent "take-up" rate, suggesting that 20 percent of Minnesota employees who were offered employer-sponsored health insurance declined, which is of the same order of magnitude. The Commonwealth figure seems on point, but I'll try to research further.
   
   UPDATE: the Medical Expenditure Panel Survey reports that "The percentage of private sector employees who worked where health insurance was offered who enrolled was 62.6 percent in 2004."
   
   SECOND UPDATE (11/10): Professor Mankiw emailed affirming he relied on the CBO findings quoted above, as well as page 197 of the 2004 Economic Report of the President, which states, "Researchers believe that as many as one-quarter of those without health insurance had coverage available through an employer but declined the coverage." As Chairman of the Council of Economic Advisors when that report was released, Mankiw elsewhere elaborated on the characteristics of the uninsured.
   
   The so-called "underreporting bias" (Americans enrolled in Medicaid but who forget the fact when responding to the Census) is unquestionably real. A Heritage study found that although "the Centers for Medicare and Medicaid Services (CMS) reported Medicaid enrollment of 51 million in 2002, the Census reported only 33 million, a difference of 18 million people."
   
   Still, more generally, there is no doubt that some Americans choose to forego health insurance--indeed, the CBO reports that almost 11 percent of non-elderly uninsured adults claimed not to need insurance or not to believe in it. I reiterate -- as does Mankiw -- that, according to the Census Bureau, about 38 percent of the uninsured are in families earning over $50,000 per year. Also a sizable percentage of Americans without coverage are young people who knowingly may be "betting" on their good health and/or adults and children eligible, but not enrolled, in government insurance programs.
   
   Mankiw's overall point is that focusing solely on the number of uninsured may be misleading, because static data mask what is a dynamic process. As I've argued:

   the [47] million vastly overstates the extent of the problem,² thus possibly prompting over-dedicating scarce resources to healthcare. In particular, according to the Congressional Budget Office, the figure represents those "who are uninsured at a point in time during the year." Being less stratified than Europe, Americans enjoy substantially more income mobility, and commensurately greater insurance fluidity. Census Bureau data show (figure 11) that gaps in family health insurance last, on average, only 5.6 months. Indeed, in the late 1990s, CBO estimated that about 84 percent of the uninsured were covered again after two years." Only 21 to 31 million were uninsured all year.

   Since then, the duration of coverage gaps apparently has dropped: 2003 data from the Medical Expenditure Panel Survey showed that "only about 10 percent of the non-elderly population has spells of two or more years without insurance."



3. I'm not sure I understand your final point. Healthcare and health insurance issues -- like all public policy questions -- have an economic component. Remember, taxpayers fund government healthcare/insurance, and about 30 percent of the costs of "private sector" employee coverage are paid out of Federal tax revenues--specifically, the outmoded tax break for employer-sponsored health insurance. Overall, government pays for, and taxes fund, about half of current American healthcare expenditures.
   
   Plainly, "economic analysis" is one factor in deciding which healthcare programs, or tax breaks, are best. Surely you agree that some entitlement expansion ideas are unwise or overly expensive. And both Federal and state governments constantly "reassess budgetary priorities," especially if the estimated expenses are increasing, as they are in healthcare.
   
   Thus the question of how to get the most for our money is equally applicable at the grocery store and the Congress. Moreover, defining the appropriate reach of the state into private conduct and choice make health insurance policy particularly complex and controversial. So why should Mankiw, or anyone, forego the economics of healthcare cost growth? On that path lies Social Security.

Conclusion: U.S. healthcare and health insurance isn't perfect--but not nearly as flawed as some claim. I'm not advocating ignoring the uninsured. But we need to assess the scope of the problem, set goals that can be achieved, and agree on effective and efficient aid to the needy. Given that the population most at risk is far smaller than headlines suggest, it's wrong to presume a systemic flaw in U.S. healthcare or to confine remedies only to the radical and far-reaching. As Mankiw cautions, "[T]he magnitude of the problems we face is often exaggerated by those seeking more sweeping reforms."

Mankiw's "Statements" seem sound and -- subject to further investigation as addressed above [UPDATED above] -- supported. Amicus, to the extent you disagree, I invite follow-up questions. And I'd be interested in Amicus's healthcare/health insurance ideas. I hope they heed a practical policy principle: "Don't let the best be the enemy of the good."

MORE: here.