Uninsured add $900 to health premiums-study (will be $1,500 in 5 years)

Reuters ^ | June 8, 2005 | Reuters

[QQQQQ]

WASHINGTON (Reuters) - Health insurance premiums will cost families and employers an extra $922 on average this year to cover the costs of caring for the uninsured, according to a report released on Wednesday. With the added cost, the yearly premiums for a family with coverage through an employer will average $10,979 in 2005, said the report from consumer group Families USA.

By 2010, the additional costs for the uninsured will be $1,502, and total premiums will hit $17,273. In 11 states, the costs of the uninsured will exceed $2,000 per family.

For individuals, the extra charge this year is estimated to be $341 on average, rising to $532 in 2010. Total premium charges for individuals will be $4,065 in 2005, and $6,115 in 2010.

"The stakes are high both for businesses and for workers who do have health insurance because they bear the brunt of costs for the uninsured," said Ron Pollack, executive director of Families USA.

Nearly 48 million Americans will lack health insurance for 2005, the report said.

Uninsured patients pay about one-third of the costs of their care provided by doctors and hospitals, the report said.

The remaining costs -- more $43 billion in 2005 -- are considered "uncompensated care." The government picks up part of the tab and most of the rest is added to insurance premiums for people with health coverage, the report said.

"Ironically, this increases the cost of health insurance and results in fewer people who can afford insurance - a vicious circle," the report said.

The costs for people with insurance vary by state based on a number of variables, including the percentage of uninsured in a state and the amount local, state and federal governments contribute.

The report was based on data from the Census Bureau, the Agency for Healthcare Research and Quality, the National Center for Health Statistics and other sources.

[laurav]

The study is saying that the reason aspirin costs $5 a pill in the hospital is that many people don't pay for care, so hospitals pass along higher costs to those who can pay, ie, the insured. Health insurance companies then pass those costs along to people as premiums. So when people don't pay for their care, those who are insured pay more.

Basic things that need to happen for costs to come down:
1. More transparency in costs. Doctors, hospitals, etc. should publish exactly how much they charge for everything.
2. More people should carry catastrophic insurance, not the kind that covers everything like well-patient visits and most prescriptions. The reason drug companies and doctors charge so much is that most people are not paying full freight-- so there's no price sensitivity. Insurance should cover low probability high cost events like hospital visits, not high-probability low-cost events like doctors visits.
3. Malpractice reform. It's not as big a part of the cost structure as many people think, but it's there, and adds to costs by more tests.
4. More doctors -- the AMA artificially holds the numbers low to keep salaries up. We need more medical schools and residency slots.
5. More nurses/physicians assistants/nurse practitioners doing more things doctors used to do. Also pharmacists. All these people can diagnose most ailments, so there's no need for people to see a doctor for a sinus infection.

[Yo-Yo]

How is it that a family can get private health insurance in Australia for at most $2,700 US per year, yet it is so expensive here? Something doesn't add up.

[redlocks322]

Wonder how to find out what ins comp profit margins are? Now THAT would be newsworthy I bet.

[thoughtomator]

Who do you think pays for it even if you're insured? Other people. If I have need of some outrageously expensive medical care to survive, and I can't (or won't) pay for it, then let me die. I'm a free man and it's my choice to make. In the meantime, I will require a lot less medical care since I can devote my income to maintaining my well-being, and I don't contribute to the outrageous wastefulness involved in HMOs and all the other scams that pass for medical care in this country.

Excuse me if I decline to join my healthcare fate with homosexuals, hypochondriacs, and Viagra users.

[skip_intro]

We owe a lot of this to the tort lawyers. Set some limits on them and a lot of hospital expenses could be slashed.

We also owe it to the state legislatures that keep mandating new benefits that insurers must cover. Since only suckers like me actually pay for their own health insurance, it's all "free".

[QQQQQ]

"wish they would offer a catastrophe plan."

I think there probably are some plans like that.

You really should look into that.

The general problem is also, that the whole idea of insurance is to spread the risk. If only sick people buy insurance, in order for the insurance company to just break even, they have to charge as much in premium, as the actual cost, because they pay out huges sums for each person insured.

[joshhiggins]

I think those who are covered with Medicaid are not being counted as uninsured.

I don't know how they arrived at their 45 million people without insurance figure, but I suspect they are including Medicaid figures. My sister is on Medicaid, and technically each month she has no insurance until her card arrives in the mail. I suspect they are using technicalities like this to inflate their numbers. If I recall a recent report held the number of truly uninsured at under 20 million.

Medicare and Medicaid are notorious for paying less than the true cost of service, and then retroactively changing the rules and refusing to pay for past services because they had not been processed using the new retroactive rules. These losses do get passed on as higher charges to paying and insured customers. I think this is what they are actually referring to but did not want to actually come out and say.

[Phantom Lord]

Note the numbers: they say 45 million people are uninsured.

This number is wildly over inflated. Also, one of the ways that they come up with wildly over inflated numbers and try to justify them as real is as follows.

Any person who goes without health insurance coverage for 1 day counts as "uninsured."

So, if you change jobs and your health insurance coverage between employer A and employer B has a gap of 1 day, you are considered uninsured.

[redlocks322]

Another partial fix would be for insurance co's to base fees by a person's usage. That's how car insurance works... you have a wreck, you pay more for your insurance. Might stop a lot of overuse of services that way.

[Labyrinthos]

In my opinion, there could be a number of underlying issues...from the cost of outrageous law suits to illegal aliens.

I suspect that the cost of the outrageous lawsuits is a lot less than the cost of preventing outrageous lawsuits, which is why hospitals and doctors perform quadruple bypass on the unisnured as someone earlier pointed out.

[Dr. Free Market]

This is from a report by "FamiliesUSA". As it is my job to review such "reports", I can tell you to take it with a LARGE grain of salt. They are notorious for coming up with fictitious numbers and reporting them as fact.

Report found here: http://www.familiesusa.org/site/DocServer/Paying_a_Premium.pdf?docID=9241

This is how they explain it:

How Does This Happen?
How does the cost of care for the uninsured end up being passed on in the form of higher private health insurance premiums? The cost of care not otherwise directly paid for by the uninsured or by government programs or philanthropy is built into the cost base of physician and hospital revenue.Providers attempt to recover these uncompensated care dollars through various strategies; one key strategy is to negotiate higher rates for health care services paid for by private insurance. The extent to which providers can do this varies from state to state; nonetheless,the rates always reflect a significant amount of uncompensated care. Given that most health care providers are not driven to bankruptcy and our health care system survives from year to year,we can say with certainty that those with health insurance finance the residual two-thirds of the cost of care for the uninsured provided by a state's hospitals and doctors.Ironically,this increases the cost of health insurance and results in fewer people who can afford insurance;a vicious circle.

I will have to go through the report more thoroughly, and report back.

[econ_grad]

I think the cost of healthcare is going up because of the uninsured. So insurance comapnies are facing a higher price. I am not entirely sure about this, but it would be my conjecture.

[redlocks322]

I'm in HR at my job. 2 years ago we were shopping for a new health plan. One of the choices was a plan based on age. The older employees would have a higher premium than the younger employees. My boss mulled it over a few days and decided against it because he was afraid of being sued for discrimination by having that health plan.

[Dr. Free Market]

Note the numbers: they say 45 million people are uninsured. This number is wildly over inflated.


You are correct. Regardless, the number as a percentage of the overall population has remained relatively constant for the last 20 years or so.

[Dust in the Wind]

"the yearly premiums for a family with coverage through an employer will average $10,979 in 2005, said the report from consumer group Families USA."

If a family making $9hr (18K a year and plenty of them out there) is expected to pay 10K for premiums I'd like to know where the encograds really are. Do the math if you wonder why so many are uninsured. What is your definition of indentured servitude?

I'd sure like to get $900 an hour or more and expect my customers to pay full rate even if I made a mistake in my service to them. Between the tax man, insurance companies and hospitals there is not much room for anything else.

[Phantom Lord]

One thing that is never mentioned in these articles and the health insurance debate in general is the number of people who can afford, but choose not to buy insurance. There are a good number of young healthy people who choose to spend the money on something else.