Uninsured Cost U.S. $125 Billion in Medical Costs

May 10, 2004 (PLANSPONSOR.com) - Uninsured Americans will incur $41 billion in uncompensated health-care treatment in 2004.

Overall, medical costs for all the uninsured may reach $125 billion in 2004, of which one-third of this care ($41 billion) is uncompensated. Other sources of funding come from over one-quarter of the uninsured’s health care costs being paid out-of-pocket by individuals, while the remaining 42% of care for the uninsured is paid by private and public insurance for those individuals who have health coverage for part of the year, a study released by the Kaiser Commission on Medicaid and the Uninsured (KCMU) revealed.

Most of the cost of this uncompensated care – care that is not paid by insurance or out-of-pocket by the individual – is falling on the shoulders of government entities, including federal, state and local government branches. Together, these three administrative entities pay $35 billion, roughly 85%, of the care given to uninsured Americans .

Of the $35 billion, two thirds of the government spending on uncompensated care is attributable to the federal government. Most of this goes toward payments to hospitals to offset losses incurred when a plethora of uninsured patients are unable to pay their hospital bills.

The problem is that uninsured Americans are still not receiving enough health care. Even after accounting for the $41 billion in uncompensated care, 2004 per capita spending for people uninsured for the full year is projected to remain about half (55%) of what medical spending is for a full-year insured person, $1,629 juxtaposed to the $2,975 figure for the fully-insured.

The study found if all the uninsured were granted full-year health coverage, medical spending is estimated to increase by $48 billion in 2004 dollars. This sum, added to current medical spending on the uninsured, would bring the total medical spending on the currently uninsured population to $173 billion. However, all the kerfuffle over the extra cost in providing coverage to the uninsured is substantially mitigated when the uncompensated health-care treatment being provided is factored in, said authors of the study Jack Hadley and John Holahan

“Leaving 44 million Americans uninsured exacts a substantial price on society as well as individuals, while covering the uninsured would improve their health care without generating large increases in overall health spending,” said Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured.

A copy of the report is available at www.kff.org/covertheuninsured2004 .