Why Are So Many Texans Uninsured?

Commentary by John C Goodman

One in four Texans does not have health insurance, the highest percentage in the nation. One reason is that a lot of families cannot afford health insurance. But many Texas families who can afford it simply choose not to buy it. As a result, many Texans are uninsured by choice.

Why? Texans choose to be uninsured because in general the lack of insurance is no barrier to health care. According to a report by the State Comptroller, public and private organizations spend about $1,000 per uninsured individual per year on charity care, on the average. That equals $4,000 for a family of four-an amount that would buy adequate private insurance in most Texas cities.

In this way, our health care system is encouraging Texans not to have health insurance. There are more than 40 federal programs that fund health care for the uninsured in the state. The largest program-the disproportionate share hospital payment program-spends more than $1.5 billion dollars a year to compensate hospitals that serve indigent patients. Since 1985, federal law has made it illegal to turn away hospital emergency patients in every state.

There are health care programs for residents of public housing, seasonal farm workers, legal immigrants, and even undocumented immigrants. Texas law requires counties to have programs to serve the medically indigent, and also requires non-profit hospitals to provide indigent care equal to five percent of revenues. Then there's care provided by charities and non-profit organizations, and free care provided by physicians.

The alternative to free care is purchasing private insurance. But most uninsured Texans get no government subsidy if they choose to buy coverage. Federal tax subsidies for employer-provided health insurance total about $125 million per year; but the uninsured get virtually no tax relief when they purchase insurance on their own. As a result, they must purchase insurance with after-tax dollars.

In a report issued last week, the Blue Ribbon Task Force on the Uninsured recommended expanding enrollment in the state's Medicaid program. As a member of that task force, I disagreed and submitted a minority report. Several national studies show that the growth public programs tends to be at the expense of private insurance. So when Medicaid expands, private insurance coverage contracts. The number of uninsured remains largely unaffected.

Further, there really isn't much difference in Texas between being uninsured and being on Medicaid for many families. In most major cities, Medicaid patients and the uninsured enter the same emergency rooms, see the same doctors and are admitted to the same hospital rooms. Those who have signed up for Medicaid do not get more, faster or better care.

State officials estimate that more than 1.6 million Texans qualify for but are not enrolled in Medicaid, and hundreds of thousands of children are eligible but not enrolled in CHIP (children's health insurance program). The reason? Families perceive it's not worth the bureaucratic hassle. The best way to reduce the number of uninsured in our state is to subsidize private insurance as generously as we subsidize free care for those Texans without health insurance.