Paying for Health Care for the Uninsured

We are getting near the end of the presidential election season and, as is often the case, healthcare costs are in the news. This election cycle, questions often circulate around “Obamacare”; some folks like it, some folks don’t. We don’t have a crystal ball that tells us what might happen under this plan, but it looks like no one else does either. There are some facts we can look at that may help people draw their own conclusions about healthcare in general.

We got to thinking about this when statisticbrain.com published some recent data about the number of uninsured people in our country. According to their statistics, the number of uninsured people in the United States is now over 16%. Since the Medicare system provides insurance for people 65 and over, that overall number doesn’t tell the whole story. A little over 18% of people under 65 are uninsured and if you slice the data a little different way, 32% of people who live below the poverty line are uninsured. There is also a disparity by states. The state with the lowest percentage of uninsured people is Massachusetts (4.4%) and the state with the largest number of uninsured is Texas (26.1%).

This many people without health insurance is a real problem. First, it is a problem for them because people who are uninsured tend to get less care and people who are insured. Kaiser did a study in 2004 that indicated that people without insurance spend about half of what people with insurance spend on medical care and that included uncompensated care. According to their study,” Compared to persons who have health insurance, the uninsured:

  • receive less preventive care,
  • are diagnosed at more advanced disease states and
  • once diagnosed, tend to receive less therapeutic care and have higher mortality rates. “

So what happens when people don’t have insurance? Well, you can infer from the Kaiser study that they delay getting care as long as they can and some probably avoid care completely. Some others pay their bills out-of-pocket, but it is difficult today for anyone to pay a major hospital bill out-of-pocket. So people who need medical care and receive it through hospitals receives what is known as “uncompensated care” sometimes called charity care.

Many hospitals provide a lot of uncompensated care – millions of dollars’ worth each year in individual hospitals and billions of dollars across the nation’s hospitals. Locally, Olympic Medical Center reported providing $9.4 million in uncompensated care in 2011; Jefferson HealthCare has also been generous in providing care for those without Washington insurance over the years. However, you have to understand that “uncompensated” just means that the individual doesn’t pay – medical care providers must still make up the difference somehow.

That brings us to the second problem: who pays for uncompensated care?  You probably won’t be too surprised to find that the answer is pretty much you.  The federal government provides some compensation through programs that supplement Medicare and Medicaid programs, the states provide some support to individual state programs and of course some amount is written off by the physicians and institutions providing care. A big chunk is funded through cost shifting, that is, increasing costs in one area to offset the losses in another area.  The cost of uncompensated care provided by hospitals gets passed along to families and employers with private insurance. A 2009 study reported by Families USA indicated that uncompensated care costs accounted for an increase on family health coverage of $1,017 in 2008.  McKinsey & Company, a respected consulting firm, has also found that premiums of commercial health insurance policies, paid largely by employers, help subsidize health care for the uninsured (as well as subsidizing some care through government-sponsored programs).

It makes little difference where you stand on the politics of health care; every solution proposed has to somehow take into account the problem of dealing with the health care costs incurred by the uninsured.

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