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Tuesday, June 20, 2017

If Millions Lose Health Insurance, We’ll All Pay for It in Our Premiums

If the Senate passes a bill repealing the Affordable Care Act and cutting federal funding for Medicaid, the pain will not be limited only to people who rely on the ACA and Medicaid for health coverage. When millions lose health insurance, the burden of paying for the health care these now uninsured people need will end up hitting the rest of us – in the wallet.

More than 20 million could lose health coverage if Congress repeals the Affordable Care Act

The nonpartisan Congressional Budget Office (CBO) has projected that the bill passed by the House of Representatives to repeal the Affordable Care Act would cause 23 million more people to lose health coverage by 2026 – a number that is 82 percent higher than the uninsured rate under current law. 

Employers and insured Americans should worry about what will happen to their costs if the Senate passes its own repeal bill: If millions more people become uninsured, a portion of the cost of their care will be shifted to the health insurance premiums of everyone else in what might be called a “hidden health care tax.” 

Health care providers are not compensated for more than 1/3 of health care they deliver, one study found

Families USA studied that issue with Milliman, Inc., an independent actuarial firm, a year before passage of the Affordable Care Act. At that time, 1 out of 3 non-elderly Americans went without insurance during all or part of a two-year period. The uninsured commonly delayed care as long as they could, but when their conditions worsened, they sought care, paid what they could, and went into debt for the rest of the bill. 

After contributions from government programs and charities, more than 1/3 (37 percent) of the health care delivered to people without health insurance went unpaid in 2008.  Health care providers built the cost of this uncompensated care into the prices they charged for health care services, and ultimately, insurers added these costs to premium prices.

People with insurance pay more in premiums to account for this uncompensated care delivered to people without health insurance

In 2008, this hidden health “tax” that was tacked onto family premiums to pay for the cost of the uninsured was $1,018. The amount added onto individual premiums to pay for the cost of the uninsured was $368. 

In today’s health care dollars*, that means families would be paying at least $1,345 more in premiums. And individuals would pay $486 more in their premiums. And the amount will increase if a larger proportion of Americans lose coverage or if Congress makes additional cuts in safety net health care programs.

Since 2010, the nation has made enormous strides in reducing the uninsured rate. The percentage of non-elderly Americans who were uninsured for part of one year dropped from 22.5 percent in 2010 to 14.5 percent in 2016; the percentage of non-elderly Americans who were uninsured for more than a year declined from 13.3 percent to 6.1 percent . 

Let’s not reverse that progress or we’ll all pay the premium.

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* Inflated by CPI-M, which is likely an underestimate of the actual price increase in services actually used by the uninsured.

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