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Brian T. Schwartz

Brian T. Schwartz

Posted: October 22, 2010 12:03 AM

Want to be taxed $5 to save just $1? Expect this kind of health care "reform" from those claiming to protect you from what's called the "uninsured cost-shift."

Minimizing cost-shifting is the most common argument against Colorado Amendment 63, and for mandatory insurance. It's not only flawed, but hypocritical. The argument is that mandatory insurance is needed because the uninsured don't pay their medical bills, which results in higher premiums for the insured. As I have explained in a previous post, this argument collapses on itself. By outlawing affordable insurance and forcing everyone to buy bloated expensive health plans, mandatory insurance imposes a much larger cost-shift.

There's more to this story. Supporters of mandatory insurance only claim to oppose cost-shifting. In practice, they support policies that, like mandatory insurance, add to the very cost-shifting they claim to object to.

Consider arguments by Edie Sonn, Public Affairs Director for the Colorado Medical Society. While opposing Amendment 63 on Colorado Public Television, she said that when uninsured people "need care, they often end up in emergency rooms [and] can't pay for that care. All of us who do have insurance end up paying that. That's called the cost-shift." It's a superficially appealing argument.

The problem with her argument is not only that mandatory insurance imposes a larger cost-shift. It's also that the CMS supports policies that increase cost-shifting.

For example, earlier this year the CMS supported HB 10-1021, which requires all individual health plans to cover maternity care and contraception. You may not ever want or benefit from such coverage, but the CMS wants to make you pay extra for it.

How much? Coverage for contraceptives and maternity each account for 1-3% of insurance premiums, reports the Council for Affordable Health Insurance. These mandates amount to between $60 and $180 annually for a $3000 policy.

For all its bemoaning of cost-shifting, last year the CMS supported Colorado HB 1293, a tax for Medicaid expansion, even though Medicaid involves large cost-shifts. Medicaid, like Medicare, underpays hospitals. To recoup these expenses, hospitals increase what they charge insurers.

For a family of four, which already pays taxes for Medicare and Medicaid, the cost-shift from them adds $1788 to its annual insurance premiums. So says a 2008 study by the Milliman actuarial firm, which concludes that "if there were no cost shift commercial hospital and physician costs would be 15% lower." Compare this amount to the cost-shift from the uninsured, which is at most "1.7% of private insurance premiums," concludes a Kaiser Family Foundation report.

Edie Sonn scapegoats the uninsured for using emergency departments and not paying. But again, Medicaid is more to blame. In 2008 Reuters reported that the uninsured pay more of their medical bills than Medicaid does for its participants. Further, the National Center for Health Statistics found that people "with Medicaid coverage were more likely to have had multiple visits to [emergency departments] ... than those with private insurance and the uninsured." As for the misuse of emergency departments, the uninsured are no more guilty than others. The study found that those with no insurance, private insurance, or Medicaid used emergency departments for non-urgent care at "similar rates."

Back to the $5 tax to save $1. Sonn says it's "important" the Colorado politicians can force everyone to buy politically-approved insurance. The "important" example she mentions is the state's "Blue Ribbon" Commission on Healthcare Reform. According to the Commission-sponsored study, the annual cost-shift from the uninsured was just $85 per insured Coloradan. But the Commission's policy recommendation, echoed by a Senate Bill, was mandatory insurance bundled with Medicaid expansion and tax subsidies. This would have cost $400 per insured Coloradan.

Despite the cost-shifting the Colorado Medical Society supports, Edie Sonn accused Amendment 63 of being the "cost-shift protection act" and expects that "Coloradans will see through" it. Instead, voters should see through the hypocrisy of consistently supporting cost-shifting while telling voters you're opposing it.

 
 
 

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