Covering the uninsured in 2008: Current costs, sources of payment, and incremental costs

Health Affairs

Volumn 27, Issue 5, 2008, Pages

  Hadley, Jack ^a,b   Holahan, John ^b   Coughlin, Teresa ^c   Miller, Dawn ^c  

^a GEORGE MASON UNIVERSITY   (United States)

^b URBAN INSTITUTE   (United States)

^c Urban Institute's Health Policy Center ^*

Author keywords

[No Author keywords available]

Indexed keywords

GOVERNMENT; HEALTH CARE COST; HEALTH CARE POLICY; HEALTH INSURANCE; HEALTH PROGRAM; HEALTH SERVICE; MEDICAID; MEDICAL CARE; REVIEW;

COST ALLOCATION; ECONOMICS, HOSPITAL; FINANCING, GOVERNMENT; HEALTH CARE COSTS; HUMANS; INSURANCE COVERAGE; MEDICALLY UNINSURED; UNCOMPENSATED CARE; UNITED STATES;

EID: 54349117940     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.27.5.w399     Document Type: Review

References (42)

1. J. Hadley and J. Holahan, "How Much Medical Care Do the Uninsured Use, and Who Pays for It?" Health Affairs 22 (2003): w66-w81 (published online 12 February 2003; 10.1377/hlthaff.w3.66);
2. J. Hadley and J. Holahan, "Covering the Uninsured: How Much Would It Cost?" Health Affairs 22 (2003): w250-w265 (published online 4 June 2003; 10.1377/hlthaff.w3.250);
3. and J. Hadley and J. Holahan, "The Cost of Care for the Uninsured: What Do We Spend, Who Pays, and What Would Full Coverage Add to Medical Spending?" (Washington: Henry J. Kaiser Family Foundation, 10May 2004).
4. For methodological details and additional tables, see J. Hadley et al., Covering the Uninsured in 2008, August 2008, http://www.kff.org/ uninsured/7809.cfm (accessed 25 August 2008).
5. Although the CPS is themost commonly used source for the number of uninsured people, this analysis relies primarily on MEPS because of its detailed data on use and spending in addition to insurance coverage. However, the MEPS estimate of the number of uninsured people is consistently larger than the CPS estimate. State Health Access Data Assistance Center and Robert Wood Johnson Foundation, "Comparing Federal Government Surveys that Count Uninsured People in America," August 2007, http://covertheuninsured.org/pdf/ comparison0807.pdf (accessed 30 May 2008). Using the CPS number of uninsured people would lower our estimates of current spending and incremental costs by about 10 percent.
6. M. Sing et al., "Reconciling Medical Expenditure Estimates from the MEPS and NHEA, 2002," Health Care Financing Review 28, no. 1 (2006): 25-40.
7. The conditional model is estimated by a gamma function with a log-link. See W. Manning and J. Mullahy, "Estimating Log Models: To Transform or Not to Transform?" Journal of Health Economics 20, no. 4 (2001): 461-494.
8. See Hadley et al., Covering the Uninsured in 2008, for methodological details and the complete models.
9. American Hospital Association, "Uncompensated Hospital Care Cost Fact Sheet" (Chicago: AHA, October 2007).
10. Hadley and Holahan, "How Much Medical Care Do the Uninsured Use?";
11. and P. Cunningham and J. May, "A Growing Hole in the Safety Net: Physician Charity Care Declines Again," Tracking Report no. 13 (Washington: Center for Studying Health System Change, March 2006).
12. The recent study is J. Gruber and D. Rodriguez, "How Much Uncompensated Care Do Doctors Provide?" Journal of Health Economics 26, no. 6 (2007): 1151-1169. It estimates that physicians' uncompensated care may be much lower than we estimated, roughly $3.2 billion in 2005, because it counts higher payments from the uninsured as offsets to lower payments.
13. Regarding state matching funds, see Centers for Medicare and Medicaid Services, "Medicaid Program; Fiscal Year Disproportionate Share Hospital Allotments and Disproportionate Share Hospital Institutions for Mental Disease Limits," Federal Register 72, no. 248 (2007): 73831-73841, http://edocket.access.gpo.gov/2007/pdf/E7-24486.pdf (accessed 22 May 2008).
14. Regarding new funding adjustments, see T. Coughlin, S. Zuckerman, and J. McFeeters, "Restoring Fiscal Integrity to Medicaid Financing?" Health Affairs 26, no. 5 (2007): 1469-1480.
15. T.A. Coughlin, B.K. Bruen, and J. King, "States' Use of Medicaid UPL and DSH Financing Mechanisms," Health Affairs 23, no. 2 (2004): 245-257;
16. and Coughlin et al., "Restoring Fiscal Integrity to Medicaid."
17. AHA, "Underpayment by Medicare and Medicaid Fact Sheet" (Chicago: AHA, October 2007).
18. Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment Policy (Washington: MedPAC, March 2007), 77, 72.
19. Ibid., 78-79. Data are from selected states in 2002 and 2003.
20. CMS, Office of the Actuary, National Health Statistics Group, "Table 11: Expenditures for Health Services and Supplies under Public Programs, by Type of Expenditure and Program: Calendar Year 2005," http://www.cms.hhs. gov/NationalHealthExpendData/downloads/tables.pdf (accessed 2 June 2008).
21. Hadley and Holahan, "How Much Medical Care Do the Uninsured Use?" estimated that private philanthropy contributed about 5 percent of the cost of hospitals' uncompensated care. If private philanthropy continues to support hospitals' uncompensated care to this extent, it would contribute $1.8 billion, which would leave $4.5 billion as supported by hospitals' profits. Since these funds are fungible, it could be argued that all $6.3 billion is financed from hospital profits.
22. Families USA, "Paying a Premium" (Washington: Families USA, July 2005).
23. For details, see Hadley et al., Covering the Uninsured in 2008, chap. 5.
24. The correlation with the uncompensated care percentage is 0.04.
25. MedPAC, Report to the Congress, 63;
26. A. Dobson, J. DaVanzo, and N. Sen, "The Cost-Shift Payment 'Hydraulic': Foundation, History, and Implications," Health Affairs 25, no. 1 (2006): 22-33;
27. and J. Zwanziger and A. Bamezai, "Evidence of Cost Shifting in California Hospitals," Health Affairs 25, no. 1 (2006): 197-203.
28. M.A. Morrisey, "Cost Shifting: New Myths, Old Confusion, and Enduring Reality," Health Affairs 22 (2003): w489-w491 (published online 8 October 2003; 10.1377/hlthaff.w3.489);
29. P.B. Ginsburg, "Can Hospitals and Physicians Shift the Effects of Cuts in Medicare Reimbursement to Private Payers?" Health Affairs 22 (2003): w472-w479 (published online 8 October 2003; 10.1377/hlthaff.w3.472);
30. and P. Feldstein, "Cost Shifting," chap. 16 in Health Policy Issues: An Economic Perspective (Chicago: Health Administration Press, 2003).
31. Institute of Medicine, Hidden Costs, Value Lost: Uninsurance in America (Washington: National Academies Press, June 3003), 103.
32. Centers for Medicare and Medicaid Services, Office of the Actuary, "National Health Expenditure Data, Projected," 25 February 2008, http://www.cms.hhs.gov/NationalHealthExpendData/ 03_NationalHealthAccountsProjected.asp (accessed 24 June 2008).
33. C. DeNavas-Walt, B.D. Proctor, and J. Smith, Income, Poverty, and Health Insurance Coverage in the United States: 2006, Pub. no. P60-233 (Washington: U.S. Government Printing Office, 2007), 58.
34. The projected estimate of $3,751 was computed by taking a weighted average of per capita spending under private and public expansions in 2001 (from Hadley and Holahan, "How Much Medical Care Do the Uninsured Use?") and inflating to 2008 by the change in total national health spending per capita (from the National Health Expenditures Accounts).
35. B. Kreider and S. Hill, "Partially Identifying Treatment Effects with an Application to Covering the Uninsured," Journal of Human Resources (forthcoming).
36. Our estimate is lower than the Families USA estimate because we included several government sources omitted by their analysis and we assumed that some providers absorb the cost of uncompensated care in the formof lower profits - that is, that they are unable to pass on uncompensated costs to private payers. Families USA, "Paying a Premium." For details, see Hadley et al., Covering the Uninsured in 2008, chap. 5.
37. T.M. Selden and B.M. Gray, "Tax Subsidy for Employment-RelatedHealth Insurance: Estimates for 2006," Health Affairs 25, no. 6 (2006): 1568-1579.
38. Calculated from average annual percentage changes reported in CMS, Office of the Actuary, "National Health Statistics Group, Table 2: National Health Expenditures Aggregate Amounts and Average Annual Percent Change, by Type of Expenditure: Selected Calendar Years 1960-2006," http://www.cms.hhs. gov/NationalHealthExpendData/downloads/tables.pdf (accessed 9 July 2008).
39. Commonwealth Fund Commission on a High Performing Health System, Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending (New York: Commonwealth Fund, December 2007).
40. W. Miller, E.R. Vigdor, and W.G. Manning, "Covering the Uninsured: What Is It Worth?" Health Affairs 23 (2004): w157-w167 (published online 31 March 2004; 10.1377/hlthaff.w4.157).
41. J. Hadley, "Sicker and Poorer: The Consequences of Being Uninsured," Medical Care Research and Review 60, no. 2 Supp. (2003): 3S-75S.
42. J. Hadley and T. Waidmann, "Health Insurance and Health at Age Sixty-five: Implications for Medical Care Spending on New Medicare Beneficiaries," Health Services Research 41, no. 2 (2006): 429-451.