Elusive price tag for universal health coverage

One of the biggest questions hanging over the national debate on health care reform is, how much will it cost to provide health coverage to the nearly 50 milllion Americans who have no insurance?

Until details of the plan are finalized, the only honest answer is: No one knows.

In a speech to Congress Wednesday, President Obama pledged to keep the total tab for his comprehensive health care reform package at $900 billion — promising cuts elsewhere if costs run higher. But it's impossible to predict how patients, insurers and providers will respond to the most complex overhaul of the health care system since Medicare was launched more than 40 years ago.

The biggest single cost will likely be extending coverage to those who don't currently have it. It remains to be seen how that cost will be shifted among patients, insurers, employers, and taxpayers.

One thing is certain: the ranks of the uninsured are large — and growing. The Census Department Thursday reported that the number of people lacking health insurance rose to 46.3 million in 2008 - up from 45.7 million in 2007. The current number is likely even higher because the latest data applies to 2008, before the recession generated the heaviest job losses.

Some 60 percent of American get their health coverage from their employer. Since the recession began, nearly 7 million people have lost their jobs, and many have lost their health insurance with it.

But depending on how the final version is structured, adding even a large group of people to the health insurance pool could represent a relatively small increase in the more than $2 trillion spent on U.S. health care each year. It also could end up saving money for the majority of American who already have insurance.

That is because the vast majority of the oldest and sickest people already are covered by Medicare.

“We know that the underinsured tend to be healthier,” said Timothy McBride, associate dean for public health at Washington University in St. Louis. “So if they were to get insured they would not be as expensive as the rest of us.”

That’s what researchers at the Kaiser Family Foundation concluded in a study published a year ago that looked at the estimated cost of providing universal health care coverage. Adults without year-round coverage get $1,825 worth of health care servicers each year — about 40 percent of the $4,639 in care received by adults with coverage.

Part of the reason the uninsured consume less care is because they have no coverage. But they also tend to be younger and healthier than those with insurance, according to Census data. More than a third of the uninsured are under 24 years old, and 58 percent are under 35. About 57 percent of the uninsured are adults without children; individuals are usually cheaper to care for than families.

The Kaiser researchers estimated that if everyone without insurance were covered in 2008, those uninsured people would have used another $123 billion worth of health services, which represents about 5 percent of the $2.42 trillion in total health care spending, as estimated by the Department of Health & Human Services. By way of comparison, the researchers noted that the tax subsidy for people covered by employer-sponsored insurance — who don’t pay taxes on value of their premiums — was over $200 billion in 2006.

The Kaiser estimates assume that everyone who doesn’t have coverage will get it. It remains to be seen how far the final health reform package will go in reaching that goal of universal care. The final costs could be higher or lower depending on which provisions are included.

One such provision would bar insurers from “cherry picking” healthy people and denying coverage to those with costly, “pre-existing” conditions — many of whom can’t get coverage at any price.

The basic argument for universal coverage is that every younger, healthier person who signs up helps offset the higher costs of older, sicker subscribers. By expanding the pool, the hope is that overall costs will be better controlled. But if only some of those younger people sign up, the cost will continue to skew higher.

Expanding health care coverage to everyone also could produce cost savings for those who already are paying for insurance. Hospitals and other providers routinely charge more for insured patients to cover the uncollected costs of treating people who have no coverage.

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