The uninsured are frequently vilified as “free riders” who receive care but shift the cost onto others—when they are not being portrayed as victims who don’t get as much medical care as some think they should.
Thus they deserve punishment by higher taxes if they don’t accept their “individual responsibility” to buy costly insurance—or else public subsidies to buy “coverage” (instead of public payment for care actually received).
The problem is purportedly magnified by overuse of the more costly emergency room by uninsured patients who delayed care they should have gotten sooner from a lower-cost primary physician.
In fact, the Congressional Budget Office (CBO) finds that “uncompensated care is less significant than many people assume.” Citing a study by Jack Hadley and others in a Health Affairs web exclusive for Aug 25, 2008, the CBO noted that the $35 billion in uncompensated care provided by hospitals in 2008 constituted less than 2% of total expenditures, and the estimates are much smaller for other providers. The amount potentially associated with cost-shifting from the uninsured is at most 1.7% of private health insurance costs, conclude Hadley et al.
The amount supposedly lost because of uncompensated care is, moreover, likely calculated from grossly inflated “chargemaster” prices.
The uninsured paid $30 billion out of pocket for medical care in 2007. According to a California HealthCare Foundation study, 50% of uninsured residents with incomes at least twice the federal poverty level obtained some medical care in the past year for which they were charged; 80% paid in full, and 10% were paying in installments. About 8% received pro bono care (Wall St J 11/21/08).
A much more serious cause of cost-shifting is underpayment by government programs, Medicare and Medicaid. The “leech therapy” that these programs use to hold down their own costs by sucking about $90 billion from the private sector adds some 11% (or $1,800 for the average family) to the cost of private plans, writes Shikha Dalmia (Forbes 6/17/09).
Additionally, two-thirds of all medical bad debt is caused by insured patients, who decline to pay their copayments and deductibles, leaving thousands of uncollected balances averaging $500 to $1,000 (WSJ Market Watch 9/9/08).
As to the burden on emergency rooms, uninsured patients are underrepresented there (JAMA 2008;300:1914-1924)—after all, they worry about the cost. In Massachusetts, despite the decrease in the number of the uninsured, there has been little change in ER use for routine problems (Kevin Sack, NY Times 5/28/09). One reason might be that expanded insurance coverage leads to expanded demand, and nothing was done to increase available supply.
Hadley et al. estimated the increased demand that would come from insuring all the uninsured: an increase of some $112 billion in medical spending.
The experiment has already been done north of the border. An ER physician in Thunder Bay, Ontario, estimated that nearly half of the residents of his town could not find a family physician and thus flocked to the ER for every medical need, reports Dave Racer.