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Akron Univ. School of Law

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Monday, August 25, 2008

Uninsured to Spend $30 Billion, Study Says

The Wall Street Journal reports on a study that is likely to spark campaign debate, which finds uninsured Americans will spend about $30 billion out of pocket on medical care this year, while the government will end up covering another $56 billion in costs.  Jane Zhang writes,

Health_care_2Americans who lack health insurance will spend about $30 billion out of pocket on medical care this year, but others -- mainly the government -- will end up covering another $56 billion in costs, according to a new study.

The tab to cover all the uninsured would be $208.6 billion -- $122.6 billion more than this year's projected total -- mainly because people with insurance tend to use more health-care services, the study found.

The report from researchers at George Mason University in Fairfax, Va., and the Urban Institute think tank in Washington, D.C., is to be published Monday in the journal Health Affairs online.

With the Census Bureau set on Tuesday to release two major reports on income, poverty and the uninsured, the study is likely to spark debate on health-care reform and rising health costs.

Health-care spending accounted for 16.3% of gross domestic product in 2007, or about $2.2 trillion, and that amount could nearly double in 10 years, according to federal figures. More of the cost is expected to shift to the government, even as it seeks to shrink large deficits.

Democratic presidential candidate Barack Obama says he would seek to give coverage to nearly all Americans by requiring parents to insure their children and large employers to offer a plan or pay into a fund. His plan relies on government subsidies, including for low-income families, and would cost an estimated $110 billion a year.

Republican presidential candidate John McCain has promised to offer more choices, but also would offer subsidies to help lower-income patients with pre-existing illnesses. His plan would provide tax credits to individuals who buy private heath insurance. His campaign has offered a preliminary estimate of $7 billion to $10 billion a year for the cost.

The new study estimates the government pays 75%, or $42.9 billion, of the amount uninsured patients can't pay -- through Medicaid, the federal-state health-insurance for the poor and Medicare, the federal program for the elderly and disabled, as well as state and local taxes.

Complicating the measure: Some doctors and hospitals donate time and forgo profit to cover poor people, and in some cases private donations cover the costs. Just how much money doctors and hospitals lose in caring for the uninsured is difficult to pin down, partly because group plans often negotiate lower payment rates than other consumers are billed. For this study, Mr. Hadley of George Mason University defined uncompensated care as the difference between how much the uninsured paid and what the providers would have received had those patients been privately insured.

While many have argued that uncompensated care will translate into higher premiums to patients with private insurance, Mr. Hadley said the impact is "very small," noting that despite an increase in the number of uninsured, hospital spending on uncompensated care has been relatively stable. That is partly because the public hospitals and clinics that most often care for the uninsured often don't have many privately insured patients to absorb the costs.

"It's more through taxes than private insurance bills," Mr. Hadley said.

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