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The Uninsured in the United States: What the Drop to 45.7 Million Means

November 2008

Public Citizen Health Letter

Last August the U.S. Census Bureau released its most recent data on the uninsured. The number of uninsured went down from 47 million to 45.7 million, reducing the percentage without coverage from 15.8 in 2006 to 15.3 in 2007.

This election year the numbers have particular resonance and must be seen in context. Economic volatility, rising housing foreclosures, fluctuations in the cost of oil, and dwindling jobs have all affected health care spending. Eroding insurance coverage and mounting health costs have created new pressures on household budgets. But the data do not fully capture this: they reflect 2007 numbers, before the economy took a marked downturn. The data reported in August is therefore a rear-view mirror image of the recent past, after which the situation has become increasingly precarious. Moreover, the numbers do not address the fact that coverage has become skimpier for those that are insured.

By the end of this year and, even worse, next year, the uninsured numbers will unfortunately soar.

This temporary drop in the uninsured reflects the fact that government stepped in to cover some of the emerging gaps. While the number of people covered by private health insurance remained stable, their percentage dropped slightly from 67.9 percent in 2006 to 67.5 percent in 2007. And the percentage of those covered by employment-based insurance went down from 59.7 in 2006 to 59.3 in 2007. These declines were more than offset by an increase in the number of those relying on government health insurance, which rose from 80.3 million to 83.0 million between 2006 and 2007. As a result, the proportion of those relying on government-funded coverage rose from 27.0 percent to 27.8 percent.

Medicaid and Medicare were instrumental in checking the prior decreases in the number of people insured, at least over the short-run. And some state-based programs made a dent in the number of uninsured. Massachusetts’ health reform, whatever its limitations, provided coverage for some of the uninsured: by May 2008, about 350,000 residents (5.5 percent of the state’s population) were newly insured. As a result, this one state accounted for over 20 percent of the decrease in the number of uninsured.

Despite a reversal in the previous trend, these data confirm what other economic indicators suggest: a growing proportion of employers are finding it too expensive to offer health coverage to their employees and public financing of care is playing a more prominent role in health coverage. Moreover, even those who have insurance are struggling to meet medical expenses because of higher premiums, less coverage, and heftier deductibles or co-payments.

As in previous years, those who perceive themselves as being at lower risk of illness may opt to go without coverage. As a result, young adults between the ages of 18 and 34 represent the largest proportion of the uninsured, accounting for 40.1 percent of those without coverage.

State-based efforts to increase coverage for children through the State Children’s Health Insurance Program (SCHIP) had an effect. In 2007, 11.0 percent of children under the age of 18 were uninsured, down from 11.7 percent the previous year. Nevertheless, the U.S. still has more than 8.1 million children without health coverage.

The breakdown by race and ethnicity shows that the decrease in the uninsured was experienced by all groups other than Asians. Among whites, the uninsurance rate went down from 10.8 to 10.4 percent. Among Blacks, the corresponding rate declined from 20.5 to 19.5 percent. For Hispanics, who have the lowest coverage, the rate of uninsured went from 34.1 to 32.1 percent. For Asians, however, the rate rose from 15.5 to 16.8 percent, reflecting the yearly ups and downs that have affected this population.

The proportion of the uninsured has a marked income gradient: fully 24.5 percent of those with a household income of less than $25,000 were uninsured, and this proportion declined as income rose. Among those with a household income of $75,000 or more, 7.8 percent were uninsured. Interestingly, when the data are broken down by income group, only those with the highest income experienced a statistically significant drop in their uninsurance rate, largely as a result of increases in military-related coverage. This made the gradient steeper.

Because each state has its own characteristics, resources, and ways of addressing health coverage, the percentage of uninsured varies greatly across the country. Two-year averages of the state-specific rates indicate that Massachusetts has the lowest proportion of uninsured (7.9 percent) while Texas has the highest (24.8 percent).

The United States is often described as a “mosaic” because of its cultural and ethnic diversity and the many differences that distinguish one state from the other. When it comes to health care, the metaphor is apt. But the current health mosaic consists of ill-fitting shards and crumbling grout. The most recent data reflect a numerical improvement that is ephemeral and inadequate. As unemployment rises, we can expect a decrease in the rate of employer-sponsored insurance. We cannot continue to rely on a ‘safety net’ that catches only some of the population for some conditions some of the time. We therefore continue to advocate for a single-payer system that would pool all our current health care payments and use them to leverage a fairer and more efficient system that is comprehensive in coverage, that husbands resources, and better allocates health care expenditures. Until we have health care that covers all and is equitable in access and cost, we will not have a society that honors life, secures liberty, and promotes the pursuit of happiness.