The Exagerrated Cost of the Uninsured

One of the main reasons for requiring people to buy health insurance, or be penalized for not, is that the uninsured then use the emergency rooms, which cost everyone else.

In a July press conference Obama said, "...the average American family is paying thousands of dollars in hidden costs in their insurance premiums to pay for what's called uncompensated care, people who show up at the emergency room because they don't have a primary-care physician." (1) Entire transcript is here.

I know I'm not even paying $1000 a year for insurance so I don't know how I'm paying "thousands" to pay for uncompensated care. Plus, I would think that people who go into an emergency room get the care but then also get the bill. Maybe he means those that can't pay the bill, like illegal aliens?

In his interview on ABC News this weekend he said, "You and I are both paying $900, on average -- our families -- in higher premiums because of uncompensated care." (2) The full transcript is here.

Who, in just a couple of months we have gone from "thousands" to $900. We're making progress already, and no government intervention was necessary. But I digress...

But according to a 2008 report from the Henry J. Kaiser Family Foundation, both of those claims are off -- way off. The foundation's analysis indicates that the true annual cost per family is more like $200, with uncompensated care accounting for "less than one percent of private health insurance costs." (3) You can find the PDF here.

And for this, an extra $200 per family per year, we want to create a huge government bureaucracy and spend trillions?

So if it isn't the uninsured that is really driving up the costs, what is? Litigation, defensive medicine, "jackpot justice" and other factors we have already covered on this blog. But the legislation proposed isn't about fixing the problems, it's about expanding government.

Obama's assertion that people who don't have health insurance are "irresponsible" and need to buy it is bogus (4). The reason people need to buy health insurance is to pay for those who will be covered but will be costing the government lots of money. People like those who are dying, who require special care. People with diseases like cancer, who can't get private insurance. In other words, the most expensive patients are the ones who are most likely the sign up. It's called the adverse selection problem (5).

Please don't be distracted by false numbers thrown about by Obama and the Democrats. This isn't about covering people who can't afford insurance. It's about expanding the role of government in our lives.

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1. Sweet, Lynn (2009, July 22). "Obama July 22, 2009 press conference. Transcript". Chicago Sun-Times.
Retrieved September 23, 2009, from Chicago Sun-Times

2. "Transcript: President Barack Obama" (2009, September 20). ABC News.
Retrieved September 23, 2009, from ABC News

3. Henry J. Kaiser Family Foundation (2008, August). "Covering the Uninsured in 2008: A Detailed Examination of Current Costs and Sources of Payment, and Incremental Costs of Expanding Coverage". The Kaiser Foundation.
Retrieved September 23, 2009, from Kaiser Foundation

4. Obama, Barack (2009, September 9). "REMARKS BY THE PRESIDENT TO A JOINT SESSION OF CONGRESS ON HEALTH CARE". The White House.
Retrieved September 23, 2009, from The White House

5. Sullum, Jacob (2009, September 23). "Does the cost of uncompensated care justify forcing people to buy health insurance?". Reason Online.
Retrieved September 23, 2009, from Reason Online