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Total Health Care Costs Fall When Poor Are Provided Insurance: Study

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First Posted: 02/10/2012 9:06 am Updated: 02/10/2012 9:06 am

The concept of support for universal health care is taboo among Republicans who scrutinize the Affordable Care Act -- dubbing it the "Job-Killing Health Care Law Act" -- and call for its repeal. But a new UC Irvine study challenges the GOP argument that the health care law is too costly, with data illustrating that health care costs on the whole fall when poorer, uninsured patients are provided with insurance.

"In a case study involving low-income people enrolled in a community-based health insurance program, we found that use of primary care increased but use of emergency services fell, and -- over time -- total health care costs declined," David Neumark, a co-author of the study, said in a release accompanying the findings.

The study -- which focused on uninsured people in Richmond, Virginia who fell 200 percent below the poverty line -- found that over three years, health care costs fell by almost 50 percent per participant, from $8,899 in the first year to $4,569 in the third after they received insurance. Participants who enrolled in health coverage made fewer trips to the emergency room, which are notorious for running up patient bills. Instead, insured participants went for more primary care visits.

"A lot of the debate about health care reform surrounds the issue of whether we're setting up something that's going to cost us more by increasing use of medical services or something that will cut costs through more appropriate and timely use of medical services," Neumark said in the release. "[O]ver time, costs can be reduced through increased use of primary care and reductions in emergency-department visits and hospital admissions, but it may take several years of coverage for substantive savings to occur."

Health care spending in the U.S. has been on the rise for years. Americans spent more than three times on health care in 2008 than they spent in the 18 years before, according to a Kaiser report.

Low-income, uninsured individuals tend to rack up exorbitant health-care bills because they often rely on emergency room visits instead of primary care. In the long run, these bills are paid by taxpayers. The Affordable Care Act "is set to extend Medicaid benefits to about 16 million uninsured, low-income adults and children by the end of 2014," according to the study.

In an extreme example of the societal cost of leaving some uninsured, New Yorker writer Malcolm Gladwell once chronicled the medical costs of a homeless man in Nevada who "used more health-care dollars, after all, than almost anyone in the state."

"It would probably have been cheaper to give him a full-time nurse and his own apartment," Gladwell wrote.

Mandatory health care already saw some success in Massachusetts last decade, when current GOP presidential candidate and then-Massachusetts governor Mitt Romney signed a health care law that inspired the Affordable Care Act. Today, Massachusetts has the highest percentage of insured residents of any state.

Though he initially supported the plan, Romney's rival, GOP candidate Newt Gingrich, continues to slam Romney for enacting the health care law.

"Your plan essentially is one more big-government, bureaucratic high-cost system." Gingrich said. Gingrich's views are reflective of a majority of Americans who say they are in favor of repealing the health care law.

A repeal of the act could potentially add "at least a trillion dollars to the deficit," according to HealthCare.gov.

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Filed by Emily Cohn  |