News and Commentary

Uninsured Spend $30 Billion Out of Pocket, Study Says

People who will be uninsured for any part of 2008 will spend about $30 billion in out-of-pocket costs and receive about $56 billion in uncompensated care. The payer who picks up most of the tab? The federal government, not private insurers, pays about 75 percent or $42.9 billion, according to researchers at George Mason University and the Urban Institute.

And while it is thought that private insurers adjust for uncompensated care by shifting costs, the researchers found that this isn’t the case.

The study, published in Health Affairs, notes that cost shifting as a result of uncompensated care has a “very small impact on private insurance premiums.”

Jack Hadley, PhD, a professor and senior health services researcher in the department of Health Administration and Policy at George Mason and lead author, estimates that $14.1 billion could be financed by shifting costs.

The researchers say that total private health insurance expenditures for 2008 will be $829.9 billion, but the amount potentially associated with cost shifting represents at most 1.7 percent of private health insurance costs.

“Covering the uninsured will likely lead to a significant increase in demand for both drugs and coverage by managed care programs,” says Hadley. “Since the currently uninsured tend to have lower incomes, they should be more likely to seek coverage through lower cost insurance products, i.e., managed care. Another possibility is that the expanded insurance coverage would be through public programs, especially Medicaid. Based on past experience, expanded Medicaid coverage is also likely to increase the demand for managed care plans.”


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