What follows has been excerpted from an essay by Jon Shreve, the first portion of which ran yesterday.
For many years, conventional wisdom assumed that barriers such as price or underwriting restrictions accounted for the large number of uninsured Americans. Remove the barriers, the reasoning went, and the problem would disappear. So there was reliance on subsidies to lower the entry cost to access—from government for low income individuals, from employers for employees, from the young for the old.
A number of states have introduced low-cost options for low income people (sometimes at four times the federal poverty level), only to capture a very low percentage of the uninsured. Even free expansions of Medicaid have often experienced take-up rates of only 60% or less. Others imposed restrictive rules on medical underwriting and/or community rating, with similar results—little change in the uninsured rates. Our own research of health consumer behavior shows that offering an affordable insurance option to the uninsured does not necessarily compel them to purchase insurance.
But reform enacted in Massachusetts accomplished the unexpected: Take-up rates skyrocketed. Why? The economic incentives, by themselves, were insufficient to induce the widespread purchase of health insurance that occurred, because the tax penalty was below the cost of insurance. Perhaps the most important factor that drove large numbers of individuals into the system was acceptance of the expectation that every individual should have insurance. People without health insurance decreased by 324,000 in the first year of the legislation (2006).
Whatever the details of the routes to greater access, progress begins with adoption of the expectation that each individual has a personal responsibility to carry health insurance.