June 24, 2010 10:00AM # ObamaCare Regs’ Effect on Uncompensated Care Overblown By [Michael F. Cannon](https://www.cato.org/people/michael-f-cannon) --- SHARE An Obama administration “[fact sheet](http://healthreform.gov/newsroom/new_patients_bill_of_rights.html),” released alongside the [interim final rules](http://www.rock92.com/pages/4698996.php?) for several of ObamaCare’s [cost-increasing mandates](../2010/06/23/obamacares-unlimited-coverage-mandates-will-increase-some-premiums-by-7-percent-or-more/), claims those mandates will reduce the “hidden tax” imposed by uncompensated care: > By making sure insurance covers people who are most at risk, there will be less uncompensated care and the amount of cost shifting among those who have coverage today will be reduced by up to $1 billion in 2013. According to [research](http://content.healthaffairs.org/cgi/reprint/27/5/w399.pdf) by the Urban Institute, that “hidden tax” isn’t very large: > Private insurance premiums are at most 1.7 percent higher because of the shifting of the costs of the uninsured to private insurers in the form of higher charges. As the Congressional Budget Office repeatedly [lectures](http://www.cbo.gov/ftpdocs/103xx/doc10311/06-16-HealthReformAndFederalBudget.pdf) Congress, “Uncompensated care is less significant than many people assume.” Likewise, these mandates’ effect on uncompensated care will be less significant than the Obama administration would like you to think. Using [data](http://www.cms.hhs.gov/NationalHealthExpendData/downloads/bhg07.pdf) from the Centers for Medicare & Medicaid Services and a reasonable assumption of 6‑percent annual growth, total private health insurance premiums in 2013 will be in the neighborhood of $1.1 trillion. So the administration is boasting that these mandates will reduce the 1.7‑percent “hidden tax” imposed by uncompensated care to 1.61 percent. Indeed, the whole of ObamaCare may not do much to reduce the “hidden tax” of uncompensated care. After Massachusetts enacted a [nearly identical](https://www.cato.org/weekly/index.php?vid_id=156) law, the Urban Institute [reports](http://www.rwjf.org/files/research/48929.pdf), “high levels of emergency department (ED) use have persisted in Massachusetts. Specifically, ED use was high in Massachusetts prior to health reform and has stayed high under health reform.” A lot of uncompensated care comes in through the ED. Finally, notice how a 1.7‑percentage-point premium surcharge is a bad thing if President Obama is ostensibly [rescuing you](http://www.youtube.com/watch?v=kVFdAJRVm94) from it, but a good thing if he’s [imposing it on you](../2010/06/23/obamacares-unlimited-coverage-mandates-will-increase-some-premiums-by-7-percent-or-more/). ##### Related Tags [Health Care](https://www.cato.org/health-care) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).