Short-Term Uninsurance: The Problem No One Is Trying to Solve – See more at:

The Treasury report is consistent with the observation that uninsurance, like unemployment, happens to lots of people for short periods of time. This is particularly true during recessions, when changes in insurance status are likely to be tied to changes in employment and, therefore, to changes in income.

Now for an unwelcome surprise: None of the health reform bills before Congress actually deals with the problem of the short-term uninsured. In fact, it’s probably fair to say that no one is even seriously thinking about it. One of the amazing features of health policy discussions is how often they initially focus on the uninsured before quickly shifting focus to everybody else. By the time solutions are put on the table, the uninsured typically have been long forgotten.

Almost all the proposals before Congress assume that people have stable incomes, stable jobs and stable insurance problems. That allows the plan designers to sort people into convenient categories: the poor go into Medicaid; employees of large firms go into an employer plan; people with no employer plan go into the Exchange; people get subsidies based on their stable annual income; etc.

Now, it is certainly true that most people do have a stable job and a stable income. But this is typically not true of the uninsured. Nor is it true of many low-income families.

Take Medicaid and SCHIP. It is estimated that a fourth of the uninsured are eligible for these two programs, but not enrolled. Part of the problem is there is an income test that causes people to be eligible and ineligible as their incomes rise and fall. In fact, it is probably fair to say that these two programs were not designed at all for people whose incomes fluctuate.

A similar problem arises with proposals to subsidize premiums with vouchers or tax credits. These are attractive solutions until you realize that the people you are trying to help have unstable incomes. Take someone making $80,000 a year who loses his job and has no income for six months and then finds a new job paying $60,000. What health insurance premium subsidy should this person get during the period when he had zero income? The answer is not obvious.


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