What Do People Buy When They Don't Buy Health Insurance?

ROCHESTER, NY (02/02/2009)(readMedia)-- Why do some people go without health insurance? The answer may lie in their spending patterns.

Households that have no health insurance tend to spend more on housing, food, alcohol and tobacco than households that purchase coverage, according to a new study in the winter issue of INQUIRY.

The analysis, "What Do People Buy When They Don't Buy Health Insurance and What Does that Say about Why They Are Uninsured?" suggests that prices and personal preferences - as well as income - may help explain why some people do not buy insurance. The findings also raise the possibility that the uninsured make difficult trade-offs, and thus lack health coverage, in part, because they face higher prices for basic needs such as food and shelter.

The study used 2004, 2005, and 2006 data from the Consumer Expenditure Survey, an annual, nationally representative survey of 17,000 households. Results showed uninsured households to be much poorer, with an average spending outlay of about $28,800 -- nearly half the $55,480 outlay of insured households. Compared to the insured, both low- and high-spending uninsured households spend a significantly larger portion of their budgets on housing, food at home, utilities, clothing and tobacco; high-spending uninsured people also spend more on alcohol and transportation. Besides health insurance, the uninsured spend a much smaller share of their budgets on other goods --particularly pensions and retirement accounts.

"If some households are uninsured because high prices for other goods squeeze health insurance out of their budgets, then many of the policies that states have pursued to increase coverage, such as rate regulation in the small-group health insurance market, are doomed to fail," write authors Helen Levy, of the University of Michigan, and Thomas DeLeire, of the University of Wisconsin-Madison. "Indeed, our results may help to explain why these policies seem to have had so little effect."

The authors support policy recommendations that take into account geographic location, since the amount of money left to buy health insurance clearly will vary for families living in New York City, compared to Michigan. "Policies aimed at reducing the number of uninsured people should consider more than just the price of insurance and ideally be coordinated with other anti-poverty measures," they conclude.

Also in the winter issue of INQUIRY:

"Are Adults in Poor Health More Likely to Enroll in Public Insurance?" by Susan H. Busch and Elizabeth Richardson Vigdor - This study found that low-income mothers in poor physical and mental health were significantly less likely to report unmet need after the 1996 Medicaid expansions; however, the considerable increases seen in insurance coverage rates did not differ for those in good and poor health.

"Does Managed Care Improve Access to Care for Medicaid Beneficiaries with Disabilities? A National Study," by Teresa A. Coughlin, Sharon K. Long, and John A. Graves - This analysis showed that relative to fee-for-service Medicaid, access to care was somewhat better for disabled beneficiaries under Medicaid managed care, though most of the gains were limited to beneficiaries in urban areas with HMOs.

"Costly Hospital Readmissions and Complex Chronic Illness," by Bernard Friedman, H. Joanna Jing, and Anne Elixhauser - This study illustrates potential savings from reducing total inpatient costs and readmissions for people with the most complex health problems.

"Measurement Error in Health Insurance Reporting," by Joanne Pascale -- This research identified some features of the Current Population Survey, such as the questionnaire structure and wording of questions on public coverage, that are problematic and ultimately could affect reports of health insurance.

"Accuracy in Self-Reported Health Insurance Coverage among Medicaid Enrollees," by Kathleen Thiede Call, Gestur Davidson, Michael Davern, E. Richard Brown, Jennifer Kincheloe, and Justine G. Nelson -- When surveyed, Medicaid enrollees are fairly accurate reporters of their insurance and type of coverage, though some do report being uninsured, according to this analysis. The authors say, however, the Medicaid undercount should not undermine confidence in survey-based estimates of the uninsured.

Other winter features:

"The McNerney Forum: Helping Those Most in Need," by Wayne M. Lerner - This piece suggests strategies for saving and bolstering safety-net hospitals so they can continue to serve our communities' vulnerable populations. (open access article available at http://www.inquiryjournalonline.org/inqronline/?request=get-document&issn=0046-9580&volume=045&issue=04&page=0362 )

"The View from Here: Some Unanswered Questions on the Road to Health Care Reform" - Editor Alan Monheit discusses four issues the new administration must consider when designing health reform: needs of the growing elderly population, cost containment, "smart regulation," and intergenerational equity. (open access article available at http://www.inquiryjournalonline.org/inqronline/?request=get-document&issn=0046-9580&volume=045&issue=04&page=0357 )

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INQUIRY, the journal of health care organization, provision, and financing, is a peer-reviewed scholarly publication. Now in its 45th year, it is published quarterly by Excellus Health Plan, Inc. Press releases and article abstracts are available on the Inquiry Web site at www.inquiryjournal.org under "Current Issue Table of Contents."