Hidden Health Tax: Americans Pay a Premium

Source: Kathleen Stoll and Kim Bailey, Families USA, May 2009

When the uninsured do obtain care, they struggle to pay as much as they can afford. Often, however, the uninsured cannot afford to pay the entire bill, and a portion of it goes uncompensated. To make up for these uncompensated care costs, doctors and hospitals charge insurers more for the services provided to patients who do have health coverage. In turn, the costs that are shifted to insurers are passed on in the form of higher premiums to consumers and businesses that purchase health coverage.

This cost shift to health insurance premiums is a “hidden health tax.” To quantify this “tax,” Families USA contracted with Milliman, Inc., an independent actuarial consulting firm, to analyze federal Medical Expenditure Panel Survey (MEPS) data and data from other federal and private sources. Based on these data, Milliman estimated the total national cost of uncompensated care provided to the uninsured, and it quantified that amount spread across the privately covered, non-Medicare, non-Medicaid population.
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Key findings
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