Photo by jamesfischer

There are 47 million Americans without health insurance. Often, these Americans take on tremendous debt and face bankruptcy when their health takes a turn for the worse. However, they do not bear the financial burden on their own. Much of the weight has already shifted onto the shoulders of Americans who have health insurance.

Due to their limited ability to pay for expensive health services, the uninsured of America are rarely able to utilize regular doctors and preventative care. They can often only seek help when their illness reaches advanced stages — the point when providers have no choice but to treat them. The hospital emergency room, for example, is obligated to treat every patient regardless of their ability to pay the bill.

Once stabilized in the hospital, these patients are discharged under the assumption that they can provide further care for themselves. However, financial barriers prevent the uninsured from utilizing continued care through a regular doctor after their hospital discharge, and their condition deteriorates back down to its pre-treatment level. This creates an expensive and repetitive cycle of discharges and readmissions.

As a result of their obligation to care for every patient in the ER, the financial burden of caring for the uninsured initially falls upon the hospital. The constant cycle of readmitting uninsured patients who are unable to provide for their own continued care further exacerbates the financial loss.

Just as shoplifters inflate the cost of consumer goods, like a hidden tax, the losses hospitals incur from unpaid bills inflate the costs for those who can pay: insurance companies and tax payers. To remain viable, hospitals need ways to make up for those lost dollars. Through shifting costs, they can transfer the financial burden and avoid bankruptcy.

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boliston

For-profit hospitals can only charge more for their services to shift costs. Generally, these bills are paid by insurance companies. So, the costs incurred by insurers increase, and the cycle of pushing costs down the line to maintain financial viability continues. Insurance companies raise their premiums, and the costs fall on insured Americans.

In addition to charging more, non-profit institutions have an additional cost shifting mechanism: tax breaks. Non-profit hospitals receive huge tax exemptions under the assumption that they provide free care to those who have no means of repaying their debt. Each year, a non-profit hospital is required to provide a certain dollar amount of free care to maintain its tax-exempt status. In the end, taxpayers (83% of whom are insured) foot the bill for the uninsured.

Why not change the system and cut the fat? The 250 million insured individuals in American are already footing the bill on an inefficient and expensive mechanism for delivering health care to the 47 million uninsured Americans. One possibility for reform is to mandate individuals to purchase health insurance while subsidizing those who can not afford the premiums. An increase in overall health and a net cost savings will result from providing actual health insurance to America’s 47 million uninsured.

Our current mechanism of providing care to the uninsured is extremely expensive, grossly inefficient, and shifts costs onto the public through ever increasing insurance premiums and lost tax revenue. By creating an avenue through which the uninsured can acquire affordable health insurance, there would be an overall cost savings in the health care system. Whatever the mechanism, providing coverage to the uninsured needs to be the first step taken towards curbing the runaway costs plaguing the American health care system.

Additional Reading:
TIME — Do Your Premiums Help Cover the Uninsured?