…John Holahan and Bowen Garrett’s estimate of the reduction in uncollectible medical care bills that will follow from the expansion of health care insurance? As everybody knows, hospitals can’t (legally) turn away sick people. So when the uninsured are treated, somebody has to eat the lion’s share of the cost that can’t be extracted from the patients after the fact. And by the best available estimate, these uncompensated costs amounted to $56 billion in 2008.
Medicare and Medicaid offset part of these costs with $18 billion from special funds, while a host of public agencies shouldered $15 billion and physicians wrote off $8 billion in fees. Private parties (insurers and affluent patients) kicked in $6 billion – why else do you think hospitals try to charge $6 for a dose of Tylenol? Last, but hardly least, state and local governments coughed up $11 billion.
So, as the health care law is phased in and the number of uninsured gradually falls by two-thirds, who will reap the windfall? Well, it isn’t much of a “windfall;” Holahan and Garrett expect uncompensated charges to decline from $62 billion in 2009 to maybe $47 billion in 2019.
But here’s the striking part: without the new law, they estimate that the cost of uncompensated care would have risen to $123 billion in a decade. And, by the process of elimination, they estimate that most of the difference would have been borne by states and localities. Medicaid and Medicare, after all, are both under extreme pressure to contain costs. Meanwhile, the miscellany of other public agencies that now pay one-quarter of the bill will be suffering from almost-certain cuts in federal discretionary outlays coming down the pike.
So maybe those Republican state attorneys-general who are suing to stop health care reform might want to rethink their positions? Just kidding…