• Obamacare is not just the answer to the uncompensated care problem

    A common argument is that we need the Affordable Care Act to address the uncompensated care problem. Maybe so, but it’s pretty clear from the numbers that that argument is incomplete, for the ACA costs far more than would be required to solve that problem alone. Effectively, the ACA suggests that we, as a society, think that individuals should participate in financing far more than their potential uncompensated care.* Here are the numbers:

    From Jay Bhattacharya and colleagues (PDF):

    Because the total cost of uncompensated care in the United States is currently around $56 billion, the total tax would be no greater than this. Indeed, current taxation is likely already covering about $43 billion of this amount, suggesting that the incremental tax would be modest. [...]

    Uncompensated care for the uninsured is estimated to have cost $56 billion in 2008. [] Up to $42.9 billion may already be indirectly covered by public funds such as DSH payments under Medicaid and Medicare. Presumably this is already included in current Medicaid costs. As a result, perhaps as little as $13.1 billion may need to be financed by our safety-net tax. [Links added.]

    From the CBO:

    In its May 2013 baseline projections, CBO projected that the insurance coverage provisions of the Affordable Care Act would have a net cost to the federal government of $1,363 billion over the 10-year period from 2014 to 2023. (The ACA includes many other provisions that, on net, will reduce federal budget deficits. Taking the coverage provisions and other provisions together, CBO and JCT estimated that the ACA will reduce deficits over the next decade.) As a result of the Administration’s announcement and recently issued final rules, the net cost is now estimated to be $1,375 billion.

    By my calculations $1,375B over ten years is $137.5B per year, which is larger than the additional $13.1B needed to finance uncompensated care or even the full $56B cost of uncompensated care. Consequently, though the Affordable Care Act is intended to address uncompensated care financing, it clearly does far more than that.

    If we merely wanted to tax Americans to finance Emergency Medical Treatment and Active Labor Act (EMTALA) care, it’d only cost us another $13.1B per year or about $57 per adult per year. Compare that with the ACA’s first-year penalty, the minimum of which is $95 for those not exempt due to hardship.

    * It only suggests that. Many people do not agree that individuals should have to finance as much as the ACA requires.

    @afrakt

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    • Is this a question? Is anyone arguing that that’s all there is to the ACA? Does anyone think that?

      • People often say we need people to become insured because the rest of us are obligated to fund their emergency care anyway. That’s not a complete argument. Paying the penalty more than covers the expected per person cost of emergency care. Thus, one has to make another argument as to why people should insure to a much higher degree. I’m not saying there are not such arguments. Aaron has written a lot about how EMTALA-related care barely scratches the surface of what one needs for adequate care of chronic conditions.

        • That’s all true, but this article doesn’t really talk about
          that. You limited yourself to proving that the ACA costs more than
          uncompensated care. But I don’t see why that needed to be said, who
          doesn’t already know that? Did you mean to imply something
          further?

    • Emergency room treatment is not preventative care or treatment of serious illness or chronic disease. Thanks to the Grover Norquist pledge, a tax to pay for ER care would most likely be unanimously opposed by the congressional opponents of Obamacare, and would do nothing to address the uninsured cancer or diabetes patient who needs to have long term care.

      That the ACA does far more than address the cost of indigent ER care is a great thing!

    • Again here, Austin.

      “Effectively, the ACA suggests that we, as a society, think that individuals should participate in financing far more than their potential uncompensated care.* Here are the numbers”

      The ACA says that we should be required to buy a certain minimum level of benefits so that people who are sick aren’t screwed over and have the same ability to live healthful lives without wrecking their finances. This isn’t that complicated.

    • Where is the rest of the money, the $137.5B minus $13.1B,
      going? I assume that the $126.4B remainder is cost of care that was
      previously compensated, but not by the federal government, plus
      care that otherwise wouldn’t have taken place because the patient
      couldn’t afford it. What’s the breakdown? How much of this is
      shifting care previously paid for by states to care now paid for by
      the feds? The care that was previously not going to be provided,
      but now will be provided– what is it? Preventative care, care of
      chronic diseases like asthma, hypertension, heart disease,
      what?

    • As you suggest, uncompensated care is a relatively small
      fiscal component to our healthcare woes. The larger issue I see is
      the argument that EMTALA is “universal coverage.” Romney tried that
      argument – but (ultimately) I think most people saw through it.
      There is, however, a lingering element to that notion – which we
      need to dispel. Why Romney’s Emergency Care Isn’t Health Care
      http://onforb.es/RcwS55 But it’s all so much larger anyway.
      Governor Kitzhaber of Oregon cites his now famous “air-conditioner”
      story – which is reflective of our skewed “thinking” – and policy.
      The story is simple: Medicare is perfectly content to pay $40-50K
      for an emergency cardiac event for an elderly patient. What’s
      needed to prevent that cardiac event in the first place can be as
      simple as a $200 window air-conditioner. Our fee-for-service system
      has corrupted our thinking of what constitutes health – and
      healthcare.

    • I’m a 70-year-old who self-pays for health care. I find
      good, cheap care and universal choice of docs and facilities
      worldwide, especially in Mexico, which is only 4 hours away. But
      I’d have no reluctance to go to a local emergency room for care and
      then stiff them entirely, since I’ve spent my entire life paying
      taxes to support everybody else’s health care through taxes. I’ve
      paid to benefit others for hospitals, medical research, Medicare
      advantage plans and Medicaid, none of which will be of any use to
      me in Mexico. It is a consolation that the prices for health care
      there are 1/3 those in the USSA. The smart thing, of course, is to
      seek health care in Mexico, Brazil, Costa Rica, Ecuador, Thailand,
      India, Hungary and the Czech Republic, but you know what?–the
      Amerikan gummint continues to levy taxes and Obamacare penalties on
      the Amerikans who travel there!

    • If the right wing nuts oppose a tax to pay for emergency care, shame on them. I do not actually know how to deal with them.

      As for chronic illness, which according to George Halvorson is the real driver of high insurance premiums:

      How much does it cost to have an MS sufferor visit their doctor six times or even 8-9 times a year?

      Probably about $1,000 a year. Big deal.

      But how much do their drugs cost? Maybe $48.000 a year

      It seems like we need the regulation of drug prices before even insurance regulation/

    • I’ve always wondered about the price tags of uncompensated care. I’ve assumed that the hospitals charge the fully loaded price (ie far more than anyone with any kind of insurance pays) then claim the “loss” (ie uncovered uncompensated care) as charity, as loss, as something that proves they are good guys, and not rip-off artists. Am I correct? If so, a lot of the numbers are skewed. I really feel that hospitals should be held to decent audit standards and pricing standards.

      I think the other element here is that many people feel that hospital prices are deeply unfair. Even educated, well-paid, middle-class people think that paying full freight for a hospital bill means being ripped off, so the ethic of paying what you owe is eroded when it comes to these bills. And not just for people like Jimbino, but regular citizens.

      I personally feel one price for all, posted clearly would help this a lot.

    • I think you are missing the point in my previous post. Libertarians and those who choose not to insure themselves are doing so on a PERSONAL level. There is no group dynamic involved at all. They reject group dynamics and want to be treated as an individual. Fine, I say. No insurance, no ability to pay= no care. In legal terms, it is called assumption of the risk. You have assumed all the risk of your rejection of insurance. You as an individual; not you as a group.

      Since these people are so sure that they will never get sick and/or injured, fine. Amen. Let them suffer the consequences. But don’t make the rest of us pay anything for their choice; otherwise we are financing their risk. And that is unfair.

      (Again: I believe in universal health care but I am sick of these individuals claiming they are brave for having no insurance when they KNOW the rest of us have their backs. It is childish, ignorant, narcissistic, and deserves to be treated as such.)

    • Aaron,

      Can you elaborate on where the remainder of the $137.5B – $13.1B is going?

      • Huh? I don’t understand the question.

        • Your analysis is that the ACA will cost $137B/yr; yet, currently, it would only cost an additional $13B/yr to cover the remaining uncompensated care costs.

          My question is: why does the ACA cost 10x what it would cost to simply pay for the current uncompensated care?

          • I don’t believe I ever said it “costs” $137 billion a year. Where did you get that number?

            • You quote “CBO projected that the insurance coverage provisions of the Affordable Care Act would have a net cost to the federal government of $1,363 billion over the 10-year period from 2014 to 2023″

              Which, you calculate, is $136B a year. Where does it all go? Some of it goes to cover care that would otherwise have been uncompensated. What about the rest of it? Does it go to care that somebody else would have paid for, or care that wouldn’t otherwise have been delivered?

            • Sorry. That’s Austin’s post, not mine. That’s why I got confused!

            • Oops, sorry, mixed up the two names.

      • Without knowing the actual figures, I presume the bulk of that money is going to (1) subsidize the cost of health insurance for those up to four times the poverty line and (2) pay for health care for those newly eligible for expanded Medicaid. I’d like an expert (e.g. Austin) to clarify.

    • The law’s net cost isn’t 1.3 trillion over 10 years. That’s just the net cost of the insurance provision of the law, excluding other parts of the law.

      When taxes and other revenue raisers are added to these calculations, then the ACA law is in the black acc. to CBO. That’s why repealing the law would be expensive compared to keeping it in place.

      (CBO manages to be incredibly unclear on these points, which is why even seasoned journalists have to call them for clarification regularly. )

      Here’s CBO’s data on this:

      http://www.cbo.gov/sites/default/files/cbofiles/attachments/44190_EffectsAffordableCareActHealthInsuranceCoverage_2.pdf