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  • Steve Grant

Health Insurance Decision Making

https://www.twincities.com/2019/09/15/karl-w-smith-the-good-news-about-income-inequality/


In this article the economist Karl Smith makes the argument that people are moving off of Medicaid because the economy is getting better. It's an appealing idea.


"Medicaid is available only to those making less than 138% of the poverty threshold. Yet nearly half of the increase in the uninsured came from households making more than 400 percent of the poverty line. That group expanded by more than 2.3 million. These numbers suggest that a rising number of higher-income people are deciding not to purchase health insurance.


The upshot is this: The number of uninsured is growing because more people are moving out of poverty and thus losing Medicaid coverage."


Everyone wants to for data to reveal positive story but the article just doesn't smell great. Mr. Smith may be 100 percent right on this - but whats with the word "suggest." Is it or isn't it? We do not get to suggest things in software code - its 1 and 0s. Is the whole argument a suggestion or does he know it?


The other aspect of this argument that seems odd from an economist is that he is saying that people move out of Medicaid-level poverty and "decide" to become uninsured as a pretty simple good. Yes the increase in income is good but isn't everyone a rational actor and doesn't everyone want to hedge catastrophic risk - even those of less modest means? The healthcare system can be a brutal creditor, which makes one wonder about the decision Mr. Smith is describing in super simple terms. We were at a presentation last week where the presenters suggested that people just above the poverty line are totally aware of the catastrophic risk of a healthcare emergency - and want to be insured agains that risk.






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