How the Cost of the Uninsured is Imposed on Businesses
March 6, 2003
Businesses have long considered people lacking health insurance a problem for the government to solve. Lately, however, some executives have realized that the 41 million Americans who lack health insurance cost them money -- since doctors and hospitals raise rates on covered patients to recoup losses imposed by those not covered.
- Employers and managed care companies paid $1.5 billion to $3 billion through higher rates to cover part of the $24 billion hospitals spent caring for patients who could not pay their bills in 2001, according to researchers at the Urban Institute.
- In addition, federal taxes on employers help pay for programs that cover the greatest share of hospital costs for the uninsured.
- Analysts at the U.S. Chamber of Commerce estimate that while government programs pay 65 to 80 cents for every dollar of hospital care, providers charge employers $1.15 or $1.25 per dollar of employees' care to make up the difference.
- Another expensive headache for employers are state laws mandating treatments for certain kinds of illnesses, as well as the amount of time patients are entitled to hospital care.
As one executive put it: "If we are going to cover everybody, we can't cover everything."
Source: Milt Freudenheim, "Businesses Begin to Consider Costs for the Uninsured," New York Times, March 6, 2003.
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