Uncompensated care doesn't come free
■ Much of the cost of providing care to the uninsured is passed on to people who pay for health insurance.
By Joel B. Finkelstein — Posted June 27, 2005
Washington -- Uninsured patients run up tens of billions of dollars in unpaid medical bills every year, much of which is passed on to those with health insurance, according to a new report from Families USA.
The average family pays $922 and individuals $341 more a year in health insurance premiums to help subsidize the cost of providing uncompensated care to the uninsured, the study found.
"The large and increasing number of uninsured Americans is no longer simply an altruistic concern on behalf of those without health coverage but a matter of self-interest for everyone. The stakes are high both for businesses and for workers who have health insurance because they bear the brunt of the cost for the uninsured," said Ron Pollack, executive director of Families USA.
In 2005, uninsured patients will rack up an estimated $43 billion in unpaid medical bills. One-third of that amount is picked up by federal, state and local governments, but the rest is shifted to the insured through higher plan premiums, the study found.
Wide variation exists among the states. For example, the added cost to families' premiums exceeds $1,500 a year in six states -- Arkansas, Montana, New Mexico, Oklahoma, Texas and West Virginia. By comparison, families in states such as Alabama, Connecticut, Iowa, Massachusetts and Minnesota pay less than $500 in additional premiums, while Rhode Islanders pay only $50 more per family.
Those states with high extra costs generally have more uninsured individuals and also tend to have fewer residents covered by public insurance programs. They also have the highest levels of uncompensated care.
"These extra costs place unacceptable burdens on all families, as well as our small businesses and our medical providers," said Kansas Gov. Kathleen Sebelius. In her state, uncompensated care adds $1,169 to family policies and $365 to individual policies.
The findings suggest that the United States is already paying a lot for the care of the uninsured, without ever having a real discussion of where the money is coming from, said Ken Thorpe, PhD, chair of the department of health policy and management at Emory University in Atlanta.
"There is $43 billion in uncompensated care we're paying for, but the way were paying for it ... is not a very progressive way to finance this," said Dr. Thorpe, who compiled the Census Bureau data on which the report is based.
Spreading the cost
Meanwhile, a new study by researchers at the Commonwealth Fund found that businesses spend an estimated $31 billion a year on health benefits for workers employed elsewhere.
There are 35.9 million workers who don't get health insurance through their jobs, 16 million of whom are covered by the employer of a family member. Of the rest:
- 3.7 million are covered by public programs at a cost of $8 billion a year.
- 3.2 million purchase private insurance on their own.
- 13 million have no insurance.
The authors suggest that targeted strategies, such as offering tax credits or premium assistance for low-wage workers, stabilizing premiums for small businesses or setting up state purchasing pools could help strengthen employer-sponsored coverage.
The AMA supports tax credits and other market-based strategies for expanding health insurance access.