August 28, 2006

     Experts with the National Center for Policy Analysis (NCPA) estimate that taxpayers spend approximately $1,500 per year on free care for every person without health insurance -- $6,000 for a family of four.  The U.S. Census Bureau is expected to release its annual report estimating the number of medically uninsured on Tuesday.

 

     "Instead of turning to taxpayers to solve the uninsured problem, we should use the free care money taxpayers are already providing to subsidize the purchase of private insurance," said Devon Herrick, senior fellow with the NCPA.  "This is precisely what Mitt Romney is trying to do in Massachusetts."

 

     While estimates vary, free care spending on the full-time uninsured range from $1,049 to a high of $1,548.  At this rate, federal, state government and physicians and non-profit hospitals spend as much as $6,000 on charity care per uninsured family of four.  In most states, that is enough to purchase a private insurance policy.

 

     In addition, the NCPA noted the uninsured pay higher taxes because they do not receive the tax subsidies of employer-provided health insurance.  However, their higher taxes are sent to Washington, DC, while the free care is provided locally.

 

     "We should allocate the higher taxes the uninsured pay to any free care they require due to their inability to pay their medical bills," said Herrick.

 

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Background

 

Hadley and Holahan estimate spending on uncompensated care was $41 billion in 2004.  Of this $30 billion was on individuals uninsured for an entire year.[1] 

 

In 2004, the U.S. Census Bureau listed 46 million people as uninsured.[2]  However, most experts agree these are unlikely to be uninsured for the entire year.  A newer report by the National Center for Health Statistics finds in 2005 only 29 million had been uninsured for more than a year at the time of interview.[3] 

 

Some experts think the long-term, chronically-based analysis of the Survey of Income and Program Participation may put the number between 21 million and 31 million people.[4]  At this rate annual charity care spending on the full time uninsured ranges from $965 per year to a high of $1,424 per year in 2004. 

 

In the 25 months since Hadley and Holahan's study was published, the medical care component of the Consumer Price Index increased from 309 to 336.  Adjusting for inflation, charity care spending today would range from $1,049 to $1,548.

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[1] Jack Hadley and John Holahan, The Cost of Care for the Uninsured: What Do We Spend, Who Pays, and What Would Full Coverage Add to Medical Spending?," Kaiser Family Foundation, Issue Update 2004, May 10, 2004. Available. Internet. http://www.kff.org/uninsured/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=35965. Accessed August 11, 2006.

[2] Carmen DeNavas-Walt, Bernadette D. Proctor and Cheryl Hill Lee, "Income, Poverty, and Health Insurance Coverage in the United States: 2004," U.S. Census Bureau, Current Population Reports: Consumer Income, P60-229, August 2005.  Available. Internet.  http://www.census.gov/prod/2005pubs/p60-229.pdf Accessed August 11, 2006.

[3] Robin A. Cohen and Michael E. Martinez, "Health Insurance Coverage: Estimates from the National Health Interview Survey, 2005, Division of Health Interview Statistics, National Center for Health Statistics, June 2006. Available. Internet.  http://www.cdc.gov/nchs/data/nhis/earlyrelease/insur200606.pdf Accessed August 11, 2006.

[4] Douglas Holtz-Eakin (Director, Congressional Budget Office), "The Uninsured and Rising Health Insurance Premiums," Testimony before the Subcommittee on Health Committee on Ways and Means, U.S. House of Representatives, March 9, 2004.  Available. Internet.  http://www.cbo.gov/showdoc.cfm?index=5152&sequence=0.  Accessed August 11, 2006.