Hidden Costs, Value Lost Uninsurance in America (2003) / Chapter Skim
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3. Spending on Health Care for Uninsured Americans: How Much, and Who Pays?
3. Spending on Health Care for Uninsured Americans: How Much, and Who Pays?
Pages 38-61
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From page 38... ...
.i The health care services received by uninsured individuals that they do not pay for themselves are picked up or "absorbed" by a number of parties, including: · practitioners and institutions, both public and private, that serve the uninsured at no charge or reduced charges; · the federal government, localities, and states that support the operation of hospitals and clinics, both through direct appropriations and implicit subsidies like the Medicare and Medicaid disproportionate share hospital payments; and · philanthropic donations. The claim is often made that hospitals and physicians shift the costs of uncompeniThe differences in service utilization costs between uninsured and insured individuals reported in this chapter have not been adjusted for differences between the two groups in age composition and family income, which also affect health services use and spending.
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From page 39... ...
The third section presents estimates developed by Jack Hadley and John Holahan of the Urban Institute of the amount of uncompensated health care services used by people uninsured for part or all of a year. The fourth and last section examines the incidence of the burden of uncompensated care costs across public and private payers, and more specifically how it is shared among the federal, state, and local governments.
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From page 40... ...
Except for emergency room services, which are used comparably by about 11 percent of privately insured and uninsured persons, the proportion of the uninsured population using any other kind of health service is one-half to two-thirds of the proportion of the privately insured population using each type of service. Persons uninsured for the full year incur total average annual expenses for health care services that are less than two-fifths of those of someone with either full-year private or full-year public coverage.
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From page 41... ...
SPENDING ON HEALTH CARE FOR UNINSURED AMERICANS 4 When people who lack insurance do obtain care, it is paid for by a number of parties, including the uninsured themselves. The remainder of this chapter examines who provides and also pays for this care, and the economic implications of uncompensated care burdens on health care providers, payers, governments, and taxpayers.
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From page 42... ...
g3.1b 1,33sb Total Populations 500.9 2,163 aCivilian, noninstitutionalized population under age 65, excluding people with any Medicare coverage, nursing home, and long-term hospital care. bNo adjustment for MEPS undercount of uncompensated care.
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From page 43... ...
Uninsured individuals pay for a larger share of services received on an ambulatory basis than they do for inpatient care. Figure 3.1 displays the proportion of costs that uninsured individuals pay out of pocket for various kinds of services and the share of total health expenditures represented by each kind of service.
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From page 44... ...
Public coverage through Medicaid offers health insurance without paying a premium for those with very low income.6 State Children's Health Insurance Programs (SCHIPs) and state-only insurance programs may require income-related premiums for families with incomes above the Medicaid or SCHIP full-subsidy level (SCHIP limits 6Health Insurance Is a Family Matter presents state-by-state income eligibility standards for Medicaid and the State Children's Health Insurance Program in Appendix D
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From page 45... ...
Data from 1997 Medical Expenditure Panel Survey. cost sharing to less than 5 percent of income)
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From page 46... ...
Whether or not enrollees' out-of-pocket costs for health care, including insurance premium payments, are higher or lower than they would be without insurance depends on the time period considered, their health status, and the extent of any premium subsidy. UNCOMPENSATED CARE TO UNINSURED PERSONS Finding: The best available estimate of the value of uncompensated health care services provided to persons who lack health insurance for some or all of a year is roughly $35 billion annually, about 2.8 percent of total national spending for personal health care services.
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From page 47... ...
Free or uncompensated care accounted for 61 percent of the value of services used by those uninsured for the full year and 17 percent of the value of services provided to those uninsured for part of the year.8 This amount represents 2.8 percent of the projected total personal health care expenditures nationally for 2001 (Hadley and Holahan, 2003a)
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From page 49... ...
In their second set of estimates, Hadley and Holahan calculated the value of uncompensated care to the uninsured from private provider surveys (e.g., by the American Hospital Association and the American Medical Association) and public provider budgets and appropriations (for clinics and other government direct care programs, such as Department of Veterans Affairs services)
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From page 50... ...
This amount is certainly an overestimate of the uncompensated care costs of the uninsured because some proportion of bad debt is attributable to insured patients who do not pay some part of the hospital bill for which they are responsible the deductible, coinsurance, or noncovered services. Increasing this 1999 estimate to projected Medicare payment increases by 2001 yields an estimate of$23.6 billion in uncompensated care in the latter year.
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From page 51... ...
survey reports that physicians provided about equal amounts of reduced-price and free care (Emmons, 1995~. Unlike the case with hospitals and publicly supported clinics, physicians and others in individual and small-group practices usually do not receive explicit subsidies for uncompensated care nor do they have the organizational superstructure and capacity of larger providers to absorb and balance the financial burdens of uncompensated care.
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From page 52... ...
As a final adjustment to eliminate the double counting of charity care provided by salaried physicians practicing in teaching hospitals, public clinics and hospitals, and community health centers, the authors used the CTS survey estimate that 25 percent of the time physicians reported as spent providing charity care was as salaried employees to reduce the $6.8 billion to $5.1 billion. Sum of Provider Budget Estimates of Uncompensated Care Combining the estimates of uncompensated care reported by hospitals through the AHA survey ($23.6 billion)
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From page 53... ...
Overall, public support from the federal, state, and local governments accounts for between 75 and 85 percent of the total value of uncompensated care estimated to be provided to uninsured people each year. Spending for personal health care services and supplies amounted to $1.236 trillion nationally in 2001 (Levis et al., 2003~.
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From page 54... ...
. As just discussed, federal, state, and local subsidies of various kinds appear to equal the estimate of hospital uncompensated care costs.
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From page 55... ...
Increases in Prices of Health Care Services and Insurance Premiums' 2 Finding: There is mixed evidence that uncompensated care is subsidized by private payers. The impact of any such shifting of costs to privately insured patients and insurers is unlikely to be so large as to affect the prices of health care services and insurance premiums.
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From page 56... ...
Although uninsured patients are not the only people who account for uncompensated care, the estimates presented assume that they are responsible for much of it. It is certainly an overestimate to attribute all hospital bad debt and charity care to uninsured patients, as Hadley and Holahan acknowledge, because patients who have some insurance but cannot or do not pay deductible and coinsurance amounts account for some of this uncompensated care.
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From page 57... ...
The concern with cost shifting from the uninsured to the insured population as a phenomenon may be changing to a focus on the transference of the burden of uncompensated care from private hospitals to public institutions due to decreased profitability of hospitals overall (Morrisey, 1996~. Instead of shifting costs, private hospitals are cutting costs and reducing uncompensated care (Campbell and Ahern, 1993; Gruber, 1994; Zwanziger et al., 1994; Hadley et al., 1996; Morrisey, 1996; Dranove and White, 1998~.
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From page 58... ...
. As the Committee noted in A Shared Destiny, given the differences in scope of public finance arrangements and the range of strategies employed to finance uncompensated care and safety-net arrangements from community to community, there is no generalized, simple relationship between a community's uninsured rate and its tax burden.
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From page 59... ...
. SUMMARY The Committee has sketched the range of costs involved in providing health care services for uninsured people, both those borne out of pocket by the uninsured themselves and uncompensated care costs borne by a variety of public programs, providers of services, philanthropy, and possibly by other payers as well.
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From page 60... ...
. Health care services used by uninsured people often are uncompensated in
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From page 61... ...
. Uncompensated care costs may beget additional external costs in the forms of higher local taxes to subsidize or reimburse uncompensated care, diversion of public funds from other public programs, and reduced availability of certain kinds of services within communities.
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