The New Health Dialogue

What happens if reform fails? Billions and billions in uncompensated care.

What happens if reform passes? A whole lot less uncompensated care. About half, according to an Urban Institute report this week.

According to the study, there were 49.1 million uninsured Americans in 2009, and uncompensated care reached $62.1 billion -- or $1,264 per uninsured person.

Without comprehensive health reform, which would cover more than 30 million uninsured Americans, the number of uninsured will likely grow to more than 57.0  million (at best) or 65.7 million (at worst) over the next 10 years. In this scenario, the cost of uncompensated care is estimated to reach between $106.6 billion and $141.4 billion in 2019. However, with comprehensive health reform, the study shows that uncompensated care costs will fall to $54.0 billion in 2014 and $46.6 billion in 2019. That's still a lot of money -- but the trend goes in the right direction.

Urban's John Holahan and Bowen Garrett explain that uncompensated care is financed through a number of sources, including:

• Medicaid and Medicare payments to hospitals to care for the indigent ($18.1 billion in 2008);
• Appropriations from state and local governments ($10.6 billion in 2008); and
• Cost shifts onto private insurers ($6.3 billion in 2008).

They suggest that in the absence of reform, it will be increasingly difficult for state and local governments to finance the health care expenses of the uninsured. Under budgetary constraints, federal contributions are not likely to grow significantly, so local and state governments will shoulder the burden. The financial strain on hospitals and clinics will grow, and they may be forced to limit how much care they give uninsured people. And with another 30 million or more people covered, we can redirect uncompensated care to other parts of the system (where it can be spent more efficiently). Under a system of mandates and shared responsibility, all Americans will contribute (with subsidies for those who can't).

Read the full report here.