Who Pays For Uninsured

November 4, 2005
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GRAND RAPIDS — Next Monday, representatives of business, health care, government, education and nonprofits will meet for a summit to discuss the effect that providing medical care to the uninsured has produced in West Michigan, and to consider what solutions the community might adopt.

According to the Henry J. Kaiser Family Foundation’s commission on the uninsured, there are about 45 million Americans at any given moment who do not have any form of health insurance. A study by consulting firm Deloitte & Touche shows that 63 percent of hospital CEOs consider finding health coverage for those individuals to be the “greatest need in health care.”

The Michigan Department of Community Health and several local organizations are hosting the town hall-style meeting at 5 p.m. Monday, Nov. 14, at Grand Valley State University’s Eberhard Center in downtown Grand Rapids. The forum is the final date in the MDCH’s current “listening tour.” The town hall meetings are part of a larger project called the Michigan State Planning Project for the Uninsured. Through household and employer surveys, interaction with policymakers, formal research and public forums, the project aims to “broaden and strengthen the current knowledge base regarding uninsured citizens.”

Judging by the public debate about the issue, that knowledge base contains some misinformation.

So what exactly is the problem (or “crisis” as it is often portrayed) with 15 percent of Americans not having health insurance? Do the uninsured use a disproportionate amount of health-care services? If 85 percent of Americans have insurance, can the double-digit increases in health insurance premiums over recent years be blamed on the wanton excess of

those that don’t?

Leaders in the health-care and insurance industries suggest that the failure of the uninsured to pay for the care they receive leads to “cost-shift” — wherein the insured subsidize the uninsured. For business owners and employees, this widely publicized “fact” is both troubling and unfair. But according to the Kaiser Foundation, it’s also not true.

“The large majority of uncompensated care is subsidized through a mix of federal and state government dollars, not cost-shifts to private payers,” reads a Kaiser fact sheet. “Anecdotes abound, but there is no hard evidence of cost-shifting to private payers; tightly negotiated managed care contracts have likely ratcheted down the potential for direct cost-shifts to private payers.”

But those federal and state programs are funded through taxes collected from the same individuals and businesses, cost-shift or no. Whether through increased premiums or redirection of tax dollars, the funds to cover the shortages created by unpaid medical expenses have to come from somewhere.

Perhaps the question is not of repairing the current funding model, but of reshaping it. The Clinton administration attempted a major overhaul of the country’s health-care system, with no appreciable results. The Deloitte & Touche survey found that even those hospital CEOs who would favor drastic changes in the way their hospitals operate admit that such changes are unlikely due to cost concerns and meager profit margins.

“They expect evolutionary, not revolutionary, change to continue to characterize the industry going forward. They are not expecting radical change, nor are they in a position to pioneer it,” the study found. “The underlying message is clear — at least for now, CEOs see their primary job as dealing with the age-old issues that face the industry. In an era of thin profit margins and increasing concerns about future revenue streams, the supposedly revolutionary potential of life sciences, including new pharmaceuticals and medical devices, is relatively low on the CEO radar screen.”

So if the people providing health care are too burdened by these present pressures to enact major changes in the system, correcting the perceived flaws must be left to the private and public sectors.

Both the Deloitte survey and numerous studies from Kaiser suggest that the most likely source of coverage for the uninsured is cooperation between government and business. Kaiser found that most uninsured Americans desire coverage, but feel that they cannot afford it. Individual and family coverage purchased directly from an insurer is routinely more expensive than coverage available through a group provider. The vast majority of uninsured Americans work, but 81 percent of them do not have access to health coverage through their employers. Creating tax incentives for companies that offer health benefits, for example, might reduce that number.

For further information on the town hall meeting, or the larger efforts of the Michigan State Planning Project for the Uninsured, visit the department of community health’s Web site at www.michigan.gov/mdch or call (517) 241-2966.  

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