How Private Health Insurance Slashed the Uninsured Rate for Americans

September 27, 2011

The latest Census figures show the United States now has 49.9 million uninsured, an increase of nearly 1 million over the preceding year.  Both in terms of absolute numbers and the percentage of Americans without coverage, this is the highest figure recorded since the Bureau began asking questions about health insurance in its annual survey three decades ago.  If fully implemented, the Affordable Care Act (ACA) is expected to cut this number by more than half.  But this is a pittance compared to the dramatic decline in the number of uninsured that occurred before the introduction of Medicare and Medicaid in 1966, says Christopher J. Conover, a research scholar at Duke University's Center for Health Policy and Inequalities Research and an adjunct scholar at the American Enterprise Institute.

Consider:

  • Over 70 years, the uninsured rate has declined by more than 80 percent.
  • In 1940, approximately 90 percent of Americans lacked health insurance coverage, but by 1960 this figure had fallen to 25 percent.
  • There were at least 60 million fewer Americans without health insurance in 1960 compared to 1940, despite a population increase of nearly 50 million over that same period.

This evidence lends itself to the larger point that the private sector is in fact capable, if not better equipped, to increase the breadth of medical insurance coverage in America.  While Medicare and Medicaid undoubtedly contributed to the decline in the uninsured rate to 15 percent in 1970, it must be recognized that these programs worked in tandem with continued expansion of employer-provided coverage.

Furthermore, the expansion of federal programs is almost always accompanied by a significant "crowd-out" factor.

  • For example, when Medicare was introduced in the 1960s nearly 25 percent of those who qualified already had comprehensive health care insurance.
  • Additionally, when Medicaid was broadened between 1987 and 1992 to cover children and pregnant women, nearly half of those who qualified were already insured.

These facts paint a stark picture of what the eventual impacts of the ACA will be.

Source: Christopher J. Conover, "How Private Health Insurance Slashed the Uninsured Rate for Americans: Health Fact of the Week," American Enterprise Institute, September 16, 2011.

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