Publications on Uninsured/Uncompensated Care

Senator Barack Obama, along with others, has proposed developing a public plan that would compete with private insurers within an organized health insurance marketplace. The argument is that a public plan would have lower administrative costs and more ability to control provider payment rates. This paper assesses these arguments concluding that there would be administrative cost savings and lower provider payment rates but not as much as is often asserted. Strong private insurers that offer good value for premiums charged would survive. But most important, the amount of real competition in both insurance and hospital markets would be enhanced.

The Obama health care plan would greatly increase health insurance coverage, substantially increase access to affordable and adequate coverage for those with the highest health care needs, significantly increase the affordability of care for the low-income, and reduce the growth in health spending through a broad array of strategies. Despite the overall positive assessment, a few concerns remain. The plan would leave about 6 percent uninsured, necessitating the maintenance of the current inefficient safety net system; the employer mandate may engender significant political opposition; and the cost estimate may be somewhat low depending upon how some plan details are resolved.

The McCain health care plan represents a philosophical advance over many proposals, principally in its commitment to redistributing the current tax exemption for employer-based health insurance. However, the plan raises more concerns than it addresses. McCain’s proposal would dramatically change how many obtain insurance, make coverage less accessible for those with health problems, have a high budget cost, but have little effect on the number uninsured. These problems could be addressed by providing a guaranteed source of adequate, affordable coverage; phasing-out the tax exemption slowly; larger subsidies to the low-income; spreading health risk broadly; and a significant commitment to cost-containment.

Small employers face substantial disadvantages relative to large employers when providing health insurance to their workers. These problems can largely be summarized as higher administrative costs of insurance, limited ability to spread health care risk, and a workforce with lower wages. All of these problems must be addressed if insurance coverage is to increase significantly among workers in small firms. Allowing small employers and individuals to purchase coverage through organized purchasing pools, substantial subsidies targeted to the modest income, and strategies to more broadly spread the risk associated with small-group and individual purchasing will be key components of successful reforms.

In testimony before the Senate Finance Committee, Robert Berenson, M.D. explores possible reasons that integrated care organizations that include multispecialty group practices have not become a major feature of the U.S. health system despite prominent success stories. These organizations are often penalized financially for undertaking activities that reduce costs because the benefits of efficiency are not internalized to the organization. Berenson makes the case that current payment incentives embedded in Medicare and private payer approaches promote behavior that may not benefit patients, such as rewarding preventable hospitalizations and producing a mismatch between the services patients need and those that fee schedules encourage.