Uninsured Americans Costing Government Billions in Uncompensated Care

Americans who lack health insurance during any part of 2008 will spend $30 billion out of pocket for healthcare services and will receive $56 billion in uncompensated care while uninsured, a new report funded by the Henry J. Kaiser Family Foundation finds. Published in the latest issue of Health Affairs, the report, Covering the Uninsured in 2008: Current Costs, Sources of Payment, and Incremental Costs (17 pages, PDF), found that government programs pay for approximately 75 percent, or roughly $43 billion, of the uncompensated care bill. That spending includes some $18 billion in special payments to hospitals by Medicare and Medicaid; $15 billion in tax appropriations and indigent care programs by state and local governments; and almost $10 billion in spending by the Veterans Health Administration, the Indian Health Service, community health centers, and similar direct-care programs. The report also found that people who are uninsured for a full year receive less than half as much care as people who have full-year private healthcare coverage and pay a larger share out of pocket. Someone who is uninsured all year pays 35 percent out of pocket toward the average annual medical costs of $1,686 per person, while annual medical costs of the privately insured average $3,915, with 17 percent paid out of pocket. According to the report, if all the people who end up uninsured for all or part of 2008 were to acquire health coverage, their medical spending would increase by $122.6 billion – an amount equal to about 5 percent of current national health spending – putting them nearly on par with the privately insured. Covering the uninsured would undoubtedly cost the federal government more, although some of the costs could be offset by redirecting funds that governments already spend to subsidize the uninsured’s uncompensated care. Redistributing these dollars is unlikely, however, unless universal coverage is achieved. “From society’s perspective, covering the uninsured is still a good investment,” said Jack Hadley, a professor and senior health services researcher at George Mason University and lead author of the report. “Failure to act in the near term will only make it more expensive to cover the uninsured in the future, while adding to the amount of lost productivity from not insuring all Americans.” Study: Uninsured Currently Spend $30 Billion Out of Pocket for Health Care. Health Affairs Press Release 8/25/08.