Hidden health tax to insured keeps growing, Study says families with coverage now pay $1,000 for those without

By Liv Osby, Greenville Online

May 29, 2009

The average South Carolina family pays more than $1,000 a year through its insurance premiums to cover health care for people with no insurance.

It’s a “hidden health tax” that results when costs of care for the uninsured are shifted to paying patients through higher charges to their insurers, according to data compiled by the Families USA consumers group.

As more people become uninsured, those health-care costs increase. And advocates¬†for reform say it’s another reason to overhaul the nation’s health-care system, which the Obama administration wants to do this year.

“That tax hits America’s businesses and insured families hard in the pocketbook,” said the group’s executive director Ron Pollack, “and they therefore have a clear financial stake in expanding health-care coverage as part of health reform.”

The actual firm Milliman Inc., which produced the report for Families USA, found that the average 2008 South Carolina fail premium was $12,110, including $1,017 to subsidize the uninsured. The average premium for individuals was $4,450, including $368 for the uninsured. That’s an increase from $922 and $341, respectively, since 2005.

Millman determined that the uninsured paid for 37 percent of the care they received, and that government programs and charities paid for another 26 percent. But the rest – about $42.7 billion in 2008 – was cost-shifted onto paying patients.

It’s a spiraling cycle that will only worsen without action, said Jim Head, senior vice president of the South Carolina Hospital Association.

“To keep their doors open, our member hospitals need to bring in more revenue than they spend, so they have to shift those costs on to paint patients,” he said. “It’s a problem that’s been with us for years. And the recession has certainly added to the rolls of the uninsured.”

Sue Berkowitz, director of the South Carolina Appleseed Legal Justice Center, said the extra costs could be just the thing that pushes people already struggling to pay for coverage over the edge and into the ranks of the uninsured.

“It’s expensive to maintain health insurance and, in this economy, people are trying to figure out how to hold on to jobs, let alone health insurance,” she said.

With 1.3 million people uninsured for at least six months last year, or 34 percent of the population, South Carolina ranks 13th in the nation for the number of residents without coverage, the group reports. Nationally, some 46 million Americans are uninsured.

Frank Knapp Jr., president of the South Carolina Small Business Chamber of Commerce, said that as privately insured people pay higher premiums to subsidize those without coverage, the uninsured get poorer quality care.

“All South Carolina females – the uninsured and insured, need genuine health-care reform,” he said, “and eliminating this hidden health tax is part of that reform.”

Head says that as the problem builds, it increases pressure on the system. Last year, he said, hospitals in the state provided $1.3 billion in uncompensated care.

“The numbers get worse every year,” he said. “We’ll see what happens in Washington.”

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