In the comments on my earlier post on "How to Fix American Health Insurance in 4 Easy Steps", Vic asks the following question:

I didn't quite catch how this was going to help with covering the 64M people in the US without insurance. Isn't that the real problem?

Now I have no idea who Vic is, or what his intent was in raising the question.  Was this a truly serious question, or was this a backhanded way to suggest that this wouldn't help the uninsured?  Either way, I figured it was worthwhile devoting a post to the topic instead of just adding my own response in the comments.

First of all, it's important to realize that the "64 Million" number that is often quoted is quite an exaggeration.  But more importantly, in order to answer the question regarding why my plan will help these people, it's important to understand who they are and why they're uninsured.  Most liberals who attack that number see them as one large bloc who need nationalized health care or they'll all die.  One problem, one solution.  What could be simpler?  The reality is that there are a whole host of reasons why these people are uninsured.  Take a look at this report from the HHS which goes into some pretty decent statistical detail about the demographics of the uninsured.

64 Million is the number of people who were uninsured for at least one month.  The more accurate number to consider is 46 Million, which is the number of people who are uninsured for at least one year.  Still a very large number, but not as large as 64 Million.  So that means that 18 Million people are uninsured for a relatively short period of time.  More than likely this is due to a change in employment.  They lost their insurance when they left one job, and either haven't found a new job yet, or they have, but there is a blackout period before the insurance kicks in.  Now imagine if Step 1 were in place, and your insurance wasn't tied to your job.  When you decide to switch employers, you don't magically become uninsured.  Or imagine that you could still pay for your insurance with pre-tax dollars (Step 2, and weren't paying the obscene and wrong COBRA rate).  That's 18 million people who could remain insured when right now they can't be, or more likely, choose not to be.

OK, but enough of the low hanging fruit.  Let's look at some of the other detailed demographics.  21% of all uninsured people are under 18, and 41% are between 18 and 34.  57% of all uninsured are also childless adults.  Arguably these are the healthiest years of a person's life who have the lowest insurance risk.  More importantly, when compared to the adjusted rate that they'd have to pay in a Group Underwritten plan... it's much more expensive for them compared to an individually underwritten plan.  In other words, this is the group of people who are getting screwed by group underwriting.  So why aren't they getting cheap insurance on their own then?  A couple reasons.  First, they are young and healthy, and so they are making the decision that they'd rather take the risk on no insurance in order to pay for things such as rent or food.  If you never have to go to the doctor, and are generally healthy, this isn't necessarily a bad decision.  It's a decision I myself made at one time.

Secondly, they're probably scared by the COBRA rate they were given when they left their earlier job.  It's a legal requirement that they be given the option to continue their current coverage.  But when shown the incredibly high cost they'd have to pay themselves, with after-tax dollars, they probably think that's what they'd have to pay anywhere.  The reality is that going to get an individually underwritten plan would cost them significantly less than what it cost to cover them in a group underwritten plan... but they don't know that.  By removing group underwritten plans as the norm, it would help to educate people as to the differences.  This means more people would likely pay for an IM plan.

Finally, it's important to realize that 46% of all the uninsured have full time jobs during a full year, and another 28% are at least part time employed.  However, they are not allowed to pay for health insurance with pre-tax dollars unless their company offers a group underwritten plan.  That means that their insurance cost is automatically increased by the tax rate, and is disproportionately higher.  Simply removing this restriction would lower the barrier to entry, and immediately make insurance more affordable.

There is still one more important point to take away from this discussion.  Some people will always choose no insurance as a risk in order to pay for other things.  This has always been a choice that the poor have had in an effort to make themselves not poor any more.  By saving that money, or putting it towards something else, they're hoping that later on they will be able to move up their station in life.  This is not necessarily a bad thing to do, and I'm certainly not going to be the one to tell them that their level of acceptable risk is wrong.  That's an individual choice that everyone should be able to make.