Census Numbers: The Trend Toward Government Coverage Continues

Nina Owcharenko Schaefer / September 15, 2011

In its yearly survey of health insurance coverage, the U.S. Census Bureau published figures that underscore the trend toward greater dependence on government for coverage.

The percentage of Americans on government health programs continues to grow, while employer-based coverage continues to decline. According to the latest Census report, 31 percent of the population received coverage through the government in 2010 compared to 23 percent in 1987. In contrast, 64 percent of the population had private coverage in 2010, compared to 75.5 percent in 1987. Employer-based coverage declined from 62.1 percent in 1987 to 55.3 percent in 2010.

Most analysts across the spectrum agree that the traditional employer-based model for health insurance has its shortcomings. No longer is the country in a 1950s labor market where people took a job at 18 and stayed with the same company until they retired at 65. Today people change jobs far more often than the previous generation. Another shortcoming is that when a person loses his job, he ends up losing health care coverage as well. Most analysts, regardless of political views, generally agree that to make the system work better, there needs to be greater portability and continuity in health care coverage.

This, however, is where the philosophical divide occurs. Those on the left generally see a larger role for government-based coverage, while those on the right see a greater role for individuals. One only needs to look at the Patient Protection and Affordable Care Act (PPACA) to see this take shape. The PPACA puts the trend toward government-based coverage on the fast track. The law will add an estimated 26 million people to Medicaid alone.

Then there are the subsidies for those who get coverage from the government exchanges. Some estimates suggest that due to the economic incentives built into the law, that number could reach 38 million—triple the number originally estimated by the Congressional Budget Office. Such a dramatic shift toward government-based coverage raises more questions over the true cost impact of the law.

Even without PPACA, existing government-based coverage (Medicare and Medicaid) is fiscally unsustainable. Depending on assumptions of the Medicare Trustees or the Centers for Medicare and Medicaid Services (CMS) Actuary, Medicare faces long-term unfunded liabilities between $24.6 trillion and $36.8 trillion. And, the states continue to struggle to balance Medicaid with other state priorities such as education and transportation.

Those on the right (including myself) who oppose the government-based model see an alternative path toward portability and continuity based on individual ownership and market-based competition. The Heritage Foundation’s Saving the American Dream plan empowers individuals and families to own and control their health insurance. It establishes individual tax relief for people to buy coverage in a marketplace where insurers and providers are accountable to meeting consumers’ needs of higher quality at lower costs. It also reforms Medicare and Medicaid, putting them on a sustainable path forward.

While discussion of the Census numbers typically focuses on changes affecting the uninsured, the real story is the slow but steady trend away from private coverage and toward government coverage. Recent estimates by the CMS actuaries project that by 2020, government will control 50 percent of all health care spending in the country. Americans should take note that the health care system is moving to the tipping point where it will be more government-run than private.