NCPA - National Center for Policy Analysis


December 13, 2007

The magnitude of provider uncompensated care has become an important public policy issue. Yet existing measures of uncompensated care are flawed because they compare uninsured payments to list prices, not to the prices actually paid by the insured, according to the National Bureau of Economic Research Working Paper (NBER).


  • Many argue that the uninsured are already implicitly insured through the provision of uncompensated care.
  • Others use the existence of uncompensated care as a justification for, and potential financing source of, universal insurance coverage.
  • But such debates begin with a flawed definition of uncompensated care that does not recognize the realities of the U.S. health care market, and in particular the enormous discounts delivered to insured patients relative to the list prices charged the uninsured.

Considering an alternative approach which recognizes those discounts by comparing the prices paid to the uninsured to those paid by the insured provides a very different picture of the level of uncompensated care provided by physicians:

  • While sample physicians appear to be providing charity care for the uninsured that amounts to between 2.7  percent and 3.2 percent of their practice revenues, in fact the uninsured are paying more, on net, for their care than are the insured.
  • Even the most conservative estimates suggest that uncompensated care amounts to only 0.8 percent of revenues, or at most $3.2 billion nationally.

This is a striking finding which throws into doubt many arguments over uncompensated care.  Of course, physician uncompensated care is only a minority of the total amount of uncompensated care provided in the United States.  The important question, says NBER, is whether applying the type of approach considered here to hospitals would lead to dramatic reductions in their reported uncompensated care.

Source: Jonathan Gruber and David Rodriguez, "How Much Uncompensated Care Do Doctors Provide?" Working Paper No. 13585, National Bureau of Economic Research, November 2007.

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