Occasional commenter WD sent along his analysis of a recent Commonwealth Fund “study,” and it deserves its own post:
One should give credit to the folks at the Commonwealth Fund (CF). The headlines they generate are top-notch: “INSURED BUT POORLY PROTECTED: 25 MILLION ADULTS ARE UNDERINSURED; NUMBER UP 60 PERCENT IN 4 YEARS.”
Their research, on the other hand…well, let’s look at how CF defines “underinsured.” The CF article in Health Affairs states that one qualifies as underinsured if (1) out-of-pocket medical expenditures are 10% of more of annual income; or (2) for low-income individuals (those under 200% of the federal poverty level) out-of-pocket medical expenditures are 5% of more of annual income; or (3) the deductible for health insurance equals or exceeds 5% of annual income.
So, if a couple makes $60,000 annually, they are underinsured if they spend $6,000 or more on out-of-pocket health care or have a deductible of at least $3,000. Spending that amount might be too much if it eats into spending on other necessities like housing or food. To determine that, it is helpful to look at how much that couple spends on things that are not necessities. Thankfully, the government keeps track of these things in the Consumer Expenditure Survey (CES).
The average consumer unit in the CES is two people making about $60,000—$60,533 to be exact. Annually, they spend about 3.9% ($2,376) of their income on entertainment, 0.5% ($327) on tobacco products, and 4.5% ($2,694) on eating out. Thus, they could sacrifice some entertainment, eat in more, and quit smoking (which is healthy anyway) should they have to pay the full deductible. Should they be considering buying a new car, they could forego that too, since they spend 3% of their income ($1,798) on new vehicle payments annually.
Furthermore, they already spend 2.1% of their income ($1,301) on out-of-pocket health care. Thus, based on average consumer habits, there is enough money to meet a deductible. And while spending 10% of income would be difficult, whether it qualifies as “underinsured” is highly debatable.
Finally, the Commonwealth Fund has, by its own definition, severely undercounted the number of underinsured. After all, the average Medicare recipient spends 18 percent out-of-pocket. I wonder why those people were overlooked. Maybe it has something to do with the fact that it would undermine the Commonwealth Fund’s advocacy for government-provided health care?
That pretty much nails it. Unfortunately, objective analysis of its many flaws won’t stop the usual suspects from repeatedy quoting this bogus study.
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