Paying a Premium: The Added Cost of Care for the Uninsured
This study quantifies, for the first time, the dollar impact on private health insurance premiums when doctors and hospitals provide health care to uninsured people. In 2005, premium costs for family health insurance coverage provided by private employers will include an extra $922 in premiums due to the cost of care for the uninsured; premiums for individual coverage will cost an extra $341.
More than one-third (35 percent) of the total cost of health care services provided to people without health insurance is paid out-of-pocket by the uninsured themselves. Through this study, we found that the remaining $43 billion is primarily paid by two sources: Roughly one-third is reimbursed by a number of government programs, and two-thirds is paid through higher premiums for people with health insurance.
Comment: The problem of cost shifting from the uninsured to others has long been recognized. This study adds to the understanding by quantifying the amount shifted to those paying insurance premiums. Because of the prevalence of employer-sponsored coverage, this study adds to pressures to reduce the obligation of employers to provide coverage for their employees.
To provide relief, the trend is to shift an inequitable and increasingly unaffordable portion of the costs to the employees themselves. Also, those purchasing individual plans are victims of cost shifting as well.
So what can we do about cost shifting? Many, including the leadership of Families USA, suggest that we merely need to cover almost everyone by expanding our present pluralistic system of funding care. But a parenthetical comment from this report should make us question that
“(These estimates do not include uncompensated care provided to insured people, who may be unable to pay because they face high deductibles, high copayments, uncovered services, and other out-of-pocket costs that people with insurance are sometimes unable to pay.)”
Individual plans are no longer adequate to ensure financial security in the face of significant medical costs. Because of the financial burden on employers, employer-sponsored plans also are shifting more costs to the employees. Medicare currently covers only about 45% of the costs of the beneficiaries. Medicaid is another source of cost shifting since it is chronically underfunded. Solutions that rely on the current system are fatally flawed for at least two major reasons. They fail to ensure affordable access to health care, and they are highly inequitable in determining just who would pay for our health care system.
A single payer system would not end cost shifting, but it would make cost shifting much more equitable by shifting some of the funding of the universal risk pool from those who cannot afford their share, to those who can easily afford far more than their share. Even more to the point, the common pool would shift costs from the fewer numbers of individuals who are sick and need more care, to the great multitude who are blessed with good health. Isn’t that what insurance is all about?