Health Care Costs and The Uninsured

I had the uncomfortable experience of having a statement I generally agreed with evaluated by Politifact Georgia. (link below)  The statement made by State Senator Judson Hill as that a “one percent increase in the cost of health insurance today causes about 30,000 Georgians to be uninsured.” When I was called by Politifact about that statement I responded with the appropriate caveats about the difficulty in arriving at that precise relationship given all the confounding factors determining health insurance coverage but that “If someone put a gun to my head, I’d say he’s pretty close.” Politifact went ahead and rated Sen. Hill’s (and by extension my) statement as “mostly false”.

It does not require a sophisticated economic analysis to see that the basic relationship is true: cost increases lead to fewer people with coverage. Politifact argued that the Senator Hill’s stated magnitude of the effect was too large. They cited some national studies and then did some back of the envelope calculations to apply those national statistics to Georgia and estimated the effect may be around 10,000 Georgian’s using coverage for every 1 percent increase in insurance costs. They might be right.

The basic truth in both statements is that health care costs are increasing and health insurance coverage is decreasing. The Great Recession contributed to the decline in coverage of course: between 2008 and 2010 just under 300,000 fewer Georgians had private health insurance, those on Medicaid increased by more than 200,000 and over 250,000 more Georgians were uninsured. However, the recession simply aggravated trends that had been evident since the turn of the 21st century. In 2000 more than 75 percent of Georgians under the age of 65 had private coverage. That number had falling to 61 percent by 2010, declining during times of economic growth as well as economic downturns.

Annual increases in health care costs during the last decade have ranged from a high of 9.4% in 2002 to a low of 3.8 in 2009. While health care costs drive average health insurance premiums the relationship is not one to one for any given year More importantly different groups and individuals see different rates of growth in health insurance costs in any given time period. Small groups and individuals often see larger cost increases year to year than larger groups.

The result is that cost increases are eroding the private health insurance market. That erosion is occurring faster among small employers, but is evident in the larger group plans as more individuals offered coverage are declining it.

Senator Hill made his statement in support of legislation he proposed to change the insurance market for smaller groups in an attempt to halt the erosion of coverage. The Patient Protection and Affordable Care Act (ACA) also attempts to reform insurance markets to make insurance more affordable especially for individuals and small groups. While attempt to reform the health insurance market may make the costs of health insurance more equitable, other efforts are required to moderate health care cost inflation.

A number of studies have found that investments in cancer treatment, in heart disease and in a number of other conditions have yielded significant improvements in both life expectancy and the quality of life. There are also a wealth of other studies have found that the price we pay for the same set of services varies widely, and we pay more than other systems with the same outcomes. The real issue facing Georgia and the Nation is retain those health care investments that have bought us increased health, while moderating health care cost inflation.

One comment Add your comment


May 4th, 2012
12:02 pm

I can’t state the insurance laws of Georgia but pterty much the rules and regulations with most of the major insurance companies are alike. First of all your a fool for not getting a lawyer if you were involved in a auto accident. The lawyer works for you in getting top notch dollar in sueing the insurance company on your behalf. True you probably could settle without an attorney but the insurance can take advantages of you of all kinds and not even tell you about it. They may make you an offer where as if your greedy, you will sign an affadavit of not taking them to court. Someone who acts as their own lawyer is a fool. They can even sue the opposing party to which you had an accident with. They can get you lost wages as well if your out of work for any length of time. Do not make demands upon any major insurance company as for it wouild be like sticking a knife in your own heart. As far as paying for your medical bills, yes under the no fault act which all drivers must carry, they are responsible to pay the hospital and the doctor directly for your medical bills. Don’t be greedy and stay cool and get an attorney as for he is there looking out for your well being and your best interests.