Study: Subsidies don't greatly boost insurance coverage

A RAND Corp. study says government subsidies to cut health insurance premium prices by 50% for those without insurance would only cut the number of uninsured Americans by 3%.

RAND officials said their study contradicts suggestions that large numbers of people without health insurance would sign up for coverage if the government provided subsidies or tax credits to reduce health insurance cost.

"Insurance policy prices aren't going to be the tool that solves the problem of the uninsured," said RAND senior economist M. Susan Marquis, one of the study's authors. "Price is not the only barrier people face in deciding whether to purchase insurance. A lot of people who don't have insurance are young and healthy and would rather spend their money on something else."

Those surveyed for the RAND study cited numerous other factors that influenced whether they purchased individual health insurance policies, including personal attitudes toward risk, whether they believe they can get good health care without insurance, perceived difficulty in selecting a health care plan, and even a concern that insurance companies require too much personal information for individual plans compared with group insurance plans.

"One implication of our findings is that if you really do want to get universal health insurance coverage, voluntary solutions that rely on financial incentives aren't going to get you there," Marquis said. "Government is probably going to have to mandate it."

The study found that among people who decide to buy nongroup health insurance, price is an important factor in their decision to choose one policy over another. The researchers said people who buy health insurance prefer policies with more benefits and lower deductibles, even if they have to pay higher premiums. Those in poor health are particularly willing to pay a higher price for a low deductible, and are more likely to prefer insurance plans that feature mental health and prescription drug benefits. The researchers said newer types of individual plans with high deductibles may be attractive to healthy people, but are not likely to help reduce the total number of people without health insurance.