Why your uninsured neighbor costs you money

A Wisconsin Public Radio show was  recently polling listeners’ opinions of the health reform bill in Congress when a man called in to say how furious he was that the legislation would require every American to get health insurance.

The caller, who identified himself as a married man with two children, said he was  upset with the idea that the U.S. government might require him to have health insurance. He said he was even considering dropping the insurance he already had and paying a federal penalty just to prove his point that the government shouldn’t force him to have insurance.

He didn’t say it, but the caller and his family must be healthy or he wouldn’t have been so cavalier about giving up the family health plan. If he’s like most people, he probably doesn’t know how expensive a hospital visit really can be, even for little stuff like ear tubes for his kids. That common outpatient procedure for youngsters with chronic ear infections can cost $2,200 to $3,600 — not counting doctor’s fees — at Children’s Hospital of Wisconsin.

If the caller is an amateur athlete and blows out his knee playing softball on the weekend, he’s looking at more serious money. Knee replacement surgery at a Milwaukee hospital can cost about $45,000, and that’s before the orthopedic surgeon and physical therapist weigh in with their fees.

Aside from how irresponsible it would be for this self-described family man to follow through with his threat to cut off his nose to spite his face, he’s not alone in his view that the U.S. government has no right to make people buy insurance, even if doing so is in their best interests. An example: The state of Virginia last week passed a law that says Congress can’t make Virginians have health insurance.

But here’s why everyone should care whether or not everyone else has insurance: the cost of your insurance is higher because there are people who don’t have it.

While it’s true that anyone who enters a Wisconsin hospital with a medical emergency will be treated regardless of insurance status, it’s also true the hospital expects to be paid. And when patients can’t afford to pay their medical bills, doctors and hospitals pass along those uncompensated fees through higher prices on individuals and businesses with private health insurance. Some health policy experts call this cost-shifting a “hidden tax on the insured.”

President Obama has estimated this hidden tax adds about $900 a year to the cost of a family health plan and $341 to a single person’s policy. Families USA, a nonprofit group that advocates health reform for consumers, says the hidden tax may be even higher – about $1,017 more for a family plan and $368 more for a single person’s policy.

That’s why Obama, Families USA and other advocates are calling for the individual insurance mandate. For those who can’t afford to buy a health plan and don’t meet income eligibility limits to enroll in government programs like Medicaid or Wisconsin’s BadgerCare, the federal reform bill includes tax credits and other incentives to help people purchase a health plan. The legislation also calls for insurance exchanges where individuals and small businesses can shop health plan prices in a more competitive insurance environment than exists today in many communities, including Milwaukee.

In Wisconsin, where about 10 percent of the population lacks insurance, the demand for hospitals to provide free or discounted care is at an all-time high. Most hospitals in the state are private, not-for-profit organizations with a community mission to provide care regardless of ability to pay, but hospitals’ resources to do that can go only so far.

“Hospitals can’t fulfill their mission if they can’t afford to keep their doors open,” says Brian Potter, vice president of finance for the Wisconsin Hospital Association. “There’s not an unlimited supply of resources.”

And that gets back to the idea of requiring everyone to carry health insurance. A lot of problems must be fixed before an individual mandate is a feasible solution: people can’t be denied coverage for preexisting conditions; government will have to continue picking up the insurance tab for the destitute and working poor and insurance companies will have to truly compete on price with the health plans they sell to businesses, the self-employed and individuals.

Unless Congress can pull together and pass a health reform bill that does all that for every American, the radio show call-in guy has nothing to worry about.