February 25, 2009

Providers might blame soaring healthcare costs in part on caring for uninsured patients, but a new study published by the journal Health Affairs suggests this argument may not hold much water.

While the number of uninsured Americans has grown, the share of healthcare dollars dedicated to caring for them has remained stable. Only about a quarter of the cost for their care goes uncompensated, and that amount has remained a stable 6% of hospital costs for many years, according to the study, which was sponsored by the Commonwealth Fund.

Meanwhile, as a percentage of GDP, the cost for healthcare in the United States has more than doubled since the 1970s. Healthcare cost has risen from 7.2% of the GDP in 1970 to 16.2% in 2007, according to the Centers for Medicare and Medicaid Services (CMS). Health spending totaled $2.5 trillion in 2008, but is expected to nearly double by 2016 to $4.1 trillion.

The Common Fund study used data from the 2004 Medical Expenditure Panel Survey. It determined that, while the total cost for uncompensated care escalated from $9.4 in 1999 to $12 billion in 2004, the uncompensated care share of total healthcare spending remained unchanged at 3%.

In 2008, the public cost to care for nearly 77 million workers who were uninsured all or part of the year totaled a record $57 billion. This was up from $32.5 billion in 2004. Government programs, however, reimbursed hospitals $42.9 billion for services provided these patients, while hospitals and physicians absorbed $12 billion in uncompensated care.

The Commonwealth study authors did note that there is no evidence hospitals raise prices for private payers to offset their cost of unreimbursed care. In fact, the authors contend cost shifting to offset the cost for uncompensated care has little impact on insurance premiums, estimated to be, at most, 1.7%.

These findings by the Commonwealth Fund provide pathologists and lab managers with additional insight into the problem of uninsured care and who pays for it. Across the laboratory industry, there has not been the same public discussion about the cost of uninsured care as has occurred within the hospital industry. If the lab industry has experienced a constant percentage of unreimbursed care write-offs during recent decades-similar to the hospital uninsured care rations indicated by the Commonwealth Fund study-then it is not likely that write-offs from uncompensated care have grown to a size that makes it a lab industry concern.

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