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Overcharging the Uninsured in Hospitals: Shifting a Greater Share of Uncompensated Medical Care Costs to the Federal Government
QLR
  • James McGrath, Texas A&M University School of Law
Document Type
Article
Publication Year
2007
Abstract

In addressing problems with our health care payment system, one of the most contentious debates has been whether the United States should adopt a plan of universal health care. The debate intensifies over whether this country should adopt a single payer health care system, which one commentator describes as a system "in which a federal agency would centrally administer a single, comprehensive benefits package financed through general tax dollars..." Under a single payer plan, everyone in the country would receive at least some level of access to health care for which the federal government would pay.

The federal government already pays for or subsidizes health care through many commonly known as well as many indirect and hidden programs. This article explores one particular hidden federal subsidy for treatment of the uninsured: a tax subsidy that results from unpaid, uncollected, and inflated health care bills. Acknowledging this hidden burden on the federal government, the article further erodes two of the common criticisms against adopting a single payer system in this
country. First, many opponents of a single payer system assume that in our current multi-payer health care system, competition is necessary to achieve efficiencies, and that market-based economic effects efficiently minimize costs and provide adequate health care.5 Second, opponents of a single payer system predict that a single payer plan would require excessive new federal expenditures and higher taxes to finance such a comprehensive system.

Providing at least minimal coverage for the health care of everyone could help utilize our precious health care dollars more efficiently. One of the criticisms of a single payer health care system is that it would require taxpayers, through the federal government, to pay for the health care of all Americans. The problem with this critique, however, is that the federal government is already paying for much of the treatment of the uninsured, in a way that is inefficient, inequitable, and ineffective. Whatever the problems with a single payer plan, any benefit from market competitiveness that exists in our current health care payment system is cancelled by its gross systemic inefficiencies.

Part II of this article provides a brief history of the health care funding system and examines our current pricing scheme. Part III analyzes the current hospital pricing scheme in light of its effects on the uninsured. Part IV examines the adoption of a single payer system while recognizing less sweeping approaches that some commentators have advanced to address the immediate concern of paying for the uninsured.

The mechanics of shifting our current system to that of a single payer system, or implementation of any other plan to overhaul our health care payment system, is a topic beyond the scope of this article. Such a massive structural change would be onerous, but preferable to forced change in the event of the current system's eventual collapse. Quoting Bill Clinton once again, "[t]he general point I want to make is that I think profound change has happened in societies when essentially people understand that the cost of staying with the present course of action is greater than the cost of change; that the risks of staying with the present course of action are greater than the uncertain risks of change." Although additional federal funding or some stopgap state response could address disparate treatment of the uninsured, this would merely ameliorate a symptom in the short term, while preventing treatment for the underlying systemic failure.

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Citation Information
James McGrath. "Overcharging the Uninsured in Hospitals: Shifting a Greater Share of Uncompensated Medical Care Costs to the Federal Government" QLR Vol. 26 (2007) p. 173
Available at: http://works.bepress.com/james_mcgrath/5/