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Government Subsidies Would Cut Number Of Uninsured By 3%

Armen Hareyan's picture

Government subsidies that reduce health insurance premiums by 50% woulddecrease the number of uninsured U.S. residents by 3%, according to astudy published online Monday in the journal Health Services Research, USA Today reports. The study, conducted by RANDresearchers, gathered information from the records of 19,500 Californiaresidents who purchased health insurance between 1997 and 2001 from thethree largest nongroup insurers in the state; U.S. Census Bureau data;and a telephone survey in California conducted between 2002 and 2003 of4,000 people with health coverage and 400 families with at least oneuninsured adult (Appleby, USA Today, 7/17).

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Thestudy shows that people who purchase health insurance would likepolicies that include more benefits and lower deductibles, even at thecost of higher premiums. Lead author Susan Marquis said, "It's evidenceof risk aversion. People would rather pay a little more now and reducetheir risk of having a bigger loss in the future. If that weren't true,you probably wouldn't buy insurance" (RAND release, 7/16).

Thestudy also showed that reducing a policy's deductible by 20% wouldincrease the likelihood of uninsured residents purchasing that policyby less than half of one percent. Marquis said, "Price does matter, butit matters less than many people would hope." The study found thatbarriers to acquiring insurance include the "hassle factor" of buying apolicy, the desire to spend one's money on other things and the beliefthat one does not need coverage -- either because they do not thinkthey will get sick or think they can get affordable care withoutcoverage, USA Today reports. According to Marquis, thestudy suggests that requiring people to obtain insurance might be theonly way to achieve universal coverage.

Len Nichols, an economist with the New America Foundationwho was not involved in the RAND study, said the uninsured fit into twogroups: the low-income and the "immortals" -- those who do not expectto get sick. He said, "The humane thing to do is have subsidies for thelow-income, and they'll buy, and then mandate coverage for theimmortals" (USA Today, 7/17)

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