Study: Insured pay 'hidden tax' for uninsured health care

BySeung Min Kim, USA TODAY
May 27, 2009, 11:36 PM

WASHINGTON -- The average U.S. family and their employers paid an extra $1,017 in health care premiums last year to compensate for the uninsured, according to a study to be released Thursday by an advocacy group for health care consumers.

Families USA, which supports expanded health care coverage, found that about 37% of health care costs for people without insurance — or a total of $42.7 billion — went unpaid last year. That cost eventually was shifted to the insured through higher premiums, according to the group.

"I don't think anybody has any idea about how much they are paying because of the need to cover the health care costs of the uninsured," said Ron Pollack, the group's executive director. "This is a hidden tax on all insurance premiums, whether it is paid by business for their work or by families when they purchase their own coverage."

As President Obama and Congress take up health care legislation this year, the so-called hidden tax is increasingly becoming a talking point as proof that the U.S. health care system needs to be fixed:

• Senate Finance Committee Chairman Max Baucus, D-Mont., in a May 11 statement announcing policy options for expanding health care coverage, said: "The cost of that care is paid by every American with insurance in the form of a hidden tax of more than $1,000 a year in increased premiums."

•Health and Human Services Secretary Kathleen Sebelius, a Democrat, said at a House hearing earlier this month: "The large number of uninsured Americans impose a hidden tax on other citizens as premiums go up, and leaves too many Americans wondering where they will turn if they get sick."

•California Gov. Arnold Schwarzenegger, a Republican, said in a health care speech earlier this month: "We've got to stop that hidden tax. Everyone must be insured."

How this hidden tax will be eliminated will be a point of contention as the debate over health care intensifies.

Baucus, in a statement to USA TODAY, said that ensuring all Americans access to health care is key to improving care while cutting costs. "Health care reform will lower premiums and out-of-pocket costs for American families, free up cash for American businesses and make them more competitive around the world, and cut the country's debt and help keep the Medicare program sustainable for the next generation," he said.

Conservatives, including Robert Moffit of the Heritage Foundation, are wary of any proposals that expand existing government programs or create new ones. He blamed government programs — in particular, inadequate Medicare and Medicaid reimbursements to doctors, hospitals and clinics.

Moffit, director of the foundation's Center for Health Policy Studies, said tax credits or government subsidies should be available for people without coverage to buy their own insurance plan, helping to create a true free market for health care.

"The billions and billions of cost-shifting doesn't add one red cent to the value of patient care," said Moffit, a health official during the Reagan administration. "You pay for market distortions, and when you have stupid government policy, that's what you get."

ABC News Live

ABC News Live

24/7 coverage of breaking news and live events