Daily News Updates - Health Insurance News

Major 'Underinsured' Sector, Pt.2 -- Is this an even spread?

Previous…

The reason this distinction is so important was well accounted for by the Commonwealth Fund and proven out in some of their most successful proposals. They created a new segment of those families that fell between 200% and 300% above the Federal Poverty-Level standard. A very important concept is explained in statistics by separating the ‘mean’ from the ‘median’. For example, if we consider a segment of families earning more than $40,000 a year and the segment contains 99 families earning $40,000 per year and one family earning $40 million a year we may think we have a meaningful picture. So if we just take the average pay of the segment (the ‘median’) we may assume that the average income for that group is $439,600 {($40,000 X 99 + $40,000,000) / 100}. We would think that 50 (half of the 100 people) earn less than $439,600, and the other 50 earn more. But do they? Are there about the same number of families earning between $40,000 to $60,000 (200% to 300% of the $20,000 Federal Poverty-level Standard) as there are between, say $200,000 to $220,000 (1000% to 1100% of the Federal Poverty-level Standard)? If we simply take the average of our segment, which is $439,600, we would conclude ‘Yes’. But does that ring out right? Because of our simple model, we can do the math in our heads. There are far more people in the 200% to 300% range, in fact 99% of the whole group. The Commonwealth Fund are very wise and have shown proof of this significance repeatedly. The pilot test model used in Massachusetts is a perfect example of the success and significance of considering that important 200% to 300% segment. The goal in Massachusetts was to drastically reduce the number of those without health insurance. 24% of this segment had no health insurance. By addressing this, the percentage of those still without health insurance dropped almost in half (to only 13%). Contrasting this original 24% segment against the segment of families with incomes higher than this range, only 5% needed help. Almost five times as many people were helped from this category. (For more on this study, please refer to my series of articles entitled  “Mass Success, Pt.5 -- How does it all work?”, found in the June 2008 Archive of this site.)

 Continued…