In support of his health care plan, President Obama often refers to the ‘hidden taxes’ insured families pay on behalf of the uninsured. On multiple occasions, he’s stated, “the average family pays a thousand dollars in extra premiums to pay for people going to the emergency room who don’t have health insurance.” Factcheck.org did a little investigating and determined that this claim comes from a 2005 report by Families USA. Obama uses this assertion to support his argument that if these people were insured, unnecessary ER visits would stop, thereby eliminating these hidden costs. It turns out that his numbers are wrong, and his claim that the uninsured overuse the ER is also inaccurate.
A 2008 study by the Urban Institute for the Kaiser Family Foundation looked at the 2005 study and concluded:
“[W]e are highly skeptical that the high and growing cost of private insurance is strongly related, if at all, to the amount of uncompensated care delivered by private providers or to the growing number of uninsured people.
Jack Hadley, the lead researcher on the KFF study, [told Factcheck.org] that to assume that the insured end up paying for all uncompensated care is “clearly an exaggeration.” According to KFF, the amount of uncompensated care that providers could shift to the privately insured is much less, only $8 billion, not the $42.7 billion Families USA said could be passed on to premium payers in 2008. The KFF number is less than 19 percent of Families USA’s, and by [Factcheck.org's] figuring that implies a per-family increase in health insurance premiums of less than $200 a year, not $1,000.“
As for the President’s argument that the uninsured overuse emergency rooms, a study by the University of Michigan found the exact opposite to be true. In a study published in the Journal of the American Medical Association their team concluded that:
“The uninsured do not make up a disproportionate share of ER patients, because they are the only group that faces the full cost of care…Although it challenges some of the most-repeated mantras about the uninsured and ER care, the study does confirm that solid evidence exists for many of the things that Americans have come to believe about the uninsured and emergency care.
For instance, the study shows, the number of people without insurance visiting American ERs is rising — but less quickly than the numbers of uninsured are rising. Meanwhile, patients with insurance are going to the ER more frequently.
There is also solid evidence that caring for patients — insured and uninsured — in an ER is more expensive than treating the same complaint in a doctor’s office. Uninsured people definitely have a hard time finding primary care doctors who will see them as outpatients, but even insured patients have difficulty finding primary care.
“What we found is that there is a perception that — because one of the roles of the emergency room is a safety net for the uninsured — it is the uninsured who must be causing all the problems in ER care,” says first author and emergency physician Manya Newton, M.D., MPH, M.S., a Robert Wood Johnson Clinical Scholar at the U-M Medical School.
“The crisis in emergency medicine and the problems of the growing uninsured population have been conflated,” she said. “While there’s excellent research out there on both issues, the myths about how the uninsured use the emergency department threaten to interfere with the policy-making process. The rise in ER use has much more to do with the aging of the population, the increase in chronic diseases, and the decrease in available primary care than with the uninsured. Policies based on false assumptions risk diverting energy and money from confronting the true drivers of emergency department crowding.”
At the least, Newton and her co-authors conclude from their review, ER policy solutions will need to address the lack of timely access to primary care by the uninsured and insured alike.”
So much for the uninsured monopolizing emergency rooms and increasing costs for everyone.
But, as it turns out, the President is right in pointing out that those who have private insurance do foot the bill for others who underpay. What the President got wrong is who this culprit is who underpays and leaves others having to pay the bills. Since it happens to be the government when it underpays for Medicare and Medicaid services, this is a hidden tax the President doesn’t want you to know about.
ObamaCare opponents argue that these already existing public programs add to the high cost of private insurance. More specifically, when the government imposes its own fee structure on providers, and thereby underpays them, they find ways to recoup those lost fees. And by now, you can probably guess who bears this expense — taxpaying, insured, private citizens like you and me.
A recent article by Grace-Marie Turner and Joseph Antos in the WSJ explains:
“According to Milliman, an independent actuarial firm, Medicare—and to an even greater extent, Medicaid—underpays doctors and hospitals, shifting costs to private insurers. Milliman estimates that the average family in a private PPO health plan pays an additional $1,788 a year to compensate for underpayments by Medicare and Medicaid, representing a “hidden tax” on commercial payers totaling $89 billion a year.”
Providers could not keep their doors open without the higher payments from private insurers. A recent letter to Congress from 13 leading health-care delivery organizations, including the Mayo Clinic, said “many providers suffer great financial losses associated with treating Medicare patients.” They said that if these rates were expanded to patients who currently have private insurance, the result “will be unsustainable for even the nation’s most efficient, high quality providers, eventually driving them out of the market. “That means we would say goodbye to some of the best health-care systems in the country.
Yet, as he laid out in his speech to Congress this week, President Obama’s goal is to insure everyone under a Medicare/Medicaid type system. So the critical question then becomes, who will pick up these costs if a Medicare-for-all system is implemented?
ObamaCare supporters have not answered that question. Instead, their response to critics who point out that private companies cannot compete with this government-run system is that the public option is just an option. This default response does not address the issue, and their dismissal of such an important question is one reason why they are losing the health care debate. Just last week, former Senate Majority Leader and HHS Nominee Tom Daschle mocked those who are concerned with the public option, laughing at what he sees as the illogical argument that the public option is bad because it would be so popular. Clearly, Mr. Daschle misses the point. Critics of the bill are concerned with the bill’s constraints on individuals and private businesses via mandates and on insurance companies via regulations — all of which will result in 1) increased premiums for private insurance and 2) as many as 88.1 million people being forced into the public option (see The Lewin Group’s study).
President Obama stated this week that his door is open to those with alternative proposals. The 13 health care organizations that wrote that letter to Congress actually support health care reform, just not the President’s version. If he truly cares about health care, he’d do well to start listening to them and to stop using false information, like his claim about the cost of the uninsured visiting emergency rooms, to support his program. Obama often refers to the greater good, the socially just thing to do. Well, in this case, it’s to make sure that health care providers never have to shut their doors, or else it won’t matter how many are or aren’t insured.
*Originally published September 13, 2009 on The American Issues Project Blog, here.
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