On average, uninsured families can pay only about 12% of their hospital bills in full. Families with incomes above 400% of the poverty level, or about $88,000 a year for a family of four, pay about 37% of their hospital bills in full, according to the Department of Health and Human Services study.
Oy, where to begin?
The best data indicate that the problem of the uninsured not being able to pay their medical bills is real but relatively small. “Uncompensated care” for the uninsured accounts for just 2.8 percent of health care spending. To put that in perspective, 30 percent of Medicare spending is pure waste, according to the Dartmouth Atlas. Moreover, studies show that the uninsured who do pay their bills pay so much more than private insurance does that they more than make up for the uninsured who don’t pay their bills. That is, total uncompensated care may be negative.
This HHS report adds nothing to our understanding of this problem. Everyone already knows that nearly everybody would have a hard time paying an expensive hospital bill if they didn’t have health insurance.
In fact, this report detracts from our understanding of the problem. It essentially says that if all uninsured people were to experience a hospitalization, only some of them would be able to pay the entire bill for some hospitalizations—not necessarily their own hospitalization—with their liquid assets. That’s as non-illuminating as saying that very few “D” students could afford to pay four years of college tuition (say, $100,000) with the money in their bank account:
- Just like few “D” students are headed to college, very few of the uninsured are going to be hospitalized. Not only are most of the uninsured young and healthy, but most of them buy insurance as they get older.
- The “D” students who do go to college probably won’t be attending the most expensive colleges. Likewise, the uninsured who are hospitalized are likely to have relatively less-expensive episodes of care.
- Of the “D” students who attend college, some would be able to pay for some of their tuition from their bank accounts. But rather than tell us how much of these hypothetical medical bills the uninsured could pay, HHS reports the number that would be unable to pay these hypothetical medical bills “in full,” and that total billings for those hypothetical hospitalizations—not the unpaid amount—account for 95 percent of medical care provided to the uninsured.
- Some of those “D” students could obtain student loans and pay off their tuition over time. Likewise, some of the uninsured will be able to borrow money or sell their houses or cars to pay their medical bills. But HHS doesn’t account for the ability of the uninsured to borrow, nor does it count their ability to tap non-financial assets like cars and houses.
In short, HHS bent over backward to make this problem appear bigger than it is. Moreover, they couched their misleading findings in ways that lent themselves to even greater exaggeration. For example, the above quote from USA Today,
uninsured families can pay only about 12% of their hospital bills in full.
paints a far darker picture than what HHS actually found:
On average, uninsured families can only afford to pay in full for about 12% of the admissions to hospital (hospitalizations) they might experience. [Emphasis added.]
It’s almost as if HHS was hoping reporters would misreport their findings in a way that made the problem sound worse.