How Not to Help the Uninsured

Megan McArdle:

With Obamacare in train, who is buying insurance?

Half of uninsured adults have looked for insurance online, according to an Urban Institute survey cited in the Washington Post. But only 10 percent of them have actually bought it, according to a different survey from McKinsey & Co. Overall, McKinsey says, just one quarter of the people who bought insurance on the exchange were previously uninsured.

The positive way to look at this is to note that the number of uninsured people who had purchased insurance increased dramatically by February:

 

The negative way to look at this is to note that, even so, the majority of activity in the market comes from the previously insured, who are mostly replacing prior coverage.

With one month to go, most of the uninsured still hadn’t done anything. Worse, the number of previously insured people who had not enrolled in a qualified health plan by the end of February was almost twice the number of previously uninsured people who had. That’s the opposite of the effect this law was supposed to have.

Of course, this does not include Medicaid, which has signed up some number of people who were previously uninsured. Although we do not yet know how many, it’s almost certainly somewhere north of 2 million, and possibly well north of that number. And the McKinsey numbers are just one survey.

Two reasons have been offered for why McKinsey might be wrong. For starters, Charles Gaba asks why, if McKinsey is correct, these numbers are so different from the numbers in New York, which collects data on prior insurance status and has found that a majority of purchasers are the previously uninsured.

Actually, I can answer that: New York had almost completely destroyed its insurance market by implementing guaranteed issue and community rating (insurers have to sell you a policy at the same price as they’d sell one to anyone else), but not a mandate. Prior to Obamacare’s implementation, policies in New York’s individual market were astronomically unaffordable for all but the very rich and very sick. It’s actually pretty unlikely that what is happening in New York will be a good guide to the rest of the country.

A better reason to question McKinsey is the monthly Gallup poll, which showed sharp declines in the number of the uninsured after the exchanges opened.

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