The Economic Costs of the Uninsured

This article highlights the May 3, 2000, policy forum on Economic Costs of the Uninsured, sponsored by Employee Benefit Research Institute Education and Research Fund (EBRI-ERF). Attended by about a hundred invited experts, the policy forum examined the research that has been done connecting health insurance status to the performance of the economy, and the implications for consumers, business, and government. Most Americans have health insurance protection, but for more than a decade the proportion of nonelderly Americans without health insurance has been steadily creeping up. Today, some 44 million people in the United States - 18.4 percent of those under 65 - do not have insurance coverage to pay for their health care. But it is widely recognized that people without health insurance still receive health care. The uninsured are not staying out of the health care system; rather, they are receiving higher-cost medical care (through emergency room visits), and they are forcing others to pay for their health care. Economists say these costs are picked up in various ways: by businesses and their employees, in the form of higher premiums for their insurance; by workers, in the form of taxes; and by all Americans, in the form of an opportunity cost in lost value to the U.S. economy. Employers in both the private and public sectors are the dominant source of health insurance for nonelderly individuals in the United States, providing coverage for nearly two-thirds of this under age 65 population in 1998. But increasingly, the uninsured are being viewed as a challenge to and criticism of the employment-based health care system in this country - not just because the ranks of the uninsured are growing, but also because roughly 85 percent of the 44 million uninsured Americans are in a family with a working adult. As a result, many critics see the employment-based health insurance system as a failure, and are calling for it to be replaced with an individual-based system. However, even an individual-based system would not change the reality that health insurance in the United States is voluntary. Employers are not legally required to provide coverage to their workers, and individuals are not legally required to maintain coverage. In this kind of system, some segments of the working population will have coverage, while others will not. In addition, it is often overlooked that there are effectively two employment-based health insurance systems - one for small employers (where coverage rates are low) and one for large employers (where coverage rates are high). Mandated solutions are not as simple as they might seem, as indicated by experience in the states concerning noncompliance with income tax, driver's license registration, or automobile insurance. The PDF for the above title, published in the August 2000 issue of EBRI Notes, also contains the fulltext of another August 2000 EBRI Notes article abstracted on SSRN: Recent Evidence on Pension Coverage and Sponsorship, by Employer Size and Industry.