The Commonwealth Fund Annual Report

Failing to provide health coverage for all is economically short-sighted. The burdens of that failure fall most heavily on the 44 million Americans who are uninsured. Lack of health insurance shortens productive years of work, allows preventable or detectable conditions to develop into serious and expensive illnesses, and undermines the standard of living of those caught with financially ruinous medical expenses. The Institute of Medicine estimates that 18,000 people die each year as a direct result of lack of health insurance, making it the sixth leading cause of death among people ages 25-64, after cancer, heart disease, injuries, suicide, and cerebrovascular disease, but before HIV/AIDS or diabetes.⁽⁵⁾

Lack of health insurance also generates hidden costs in lost productivity, earnings, and capacity. The Institute of Medicine estimates that lack of health insurance costs society $65 billion to $130 billion each year.⁽⁶⁾ Those costs take a toll on employers, the health care system, government, and the American public.

For employers, the full cost of having uninsured workers is not well understood. It is clear, however, that indirect costs are incurred when employees miss work, leave their jobs, or retire early for health reasons. In the coming decades, employers will depend increasingly on a diverse and older workforce. Failure to invest early in access to preventive care will add to likely workforce shortages when the baby boom generation retires. A study⁽⁷⁾ supported by the Fund found that uninsured older adults ages 60-64 were much less likely than their insured counterparts to receive essential preventive services. The disparities decline dramatically once they are over age 65, when Medicare eligibility begins.

Another Fund-supported study⁽⁸⁾ identified considerable gaps between insured and uninsured adults in the use of medical technology for treating three common conditions: heart attack, cataracts, and depression. Focusing on the 55-64 age group, the authors found that use of the latest treatment technology for each condition was lowest among people without health insurance, producing an estimated $1.1 billion in costs associated with higher morbidity and mortality. As medical technology continues to improve, the potential losses, both human and economic, will grow if barriers to insurance are not addressed.

The costs to the health care system of treating uninsured patients have not been systematically documented. A recent analysis concluded that the uninsured received approximately $34.5 billion in uncompensated care in 2001,⁽⁹⁾ but there are hidden costs, as well. Many people who lack insurance do not have a regular doctor and use the health system inefficiently, seeking care in emergency rooms, for example, rather than less expensive primary care settings. The instability of the coverage system — with patients moving in and out of coverage — also generates administrative costs that are not well documented.⁽¹⁰⁾

Taxpayers pay some of the hidden costs of the uninsured. Federal, state, and local governments support public clinics and make payments to hospitals that provide care to patients without health insurance. Plus, government loses tax revenues when disabled adults or family caregivers are not able to hold jobs and pay taxes on earnings.

Finally, inadequate health care for the uninsured generates hidden costs borne by the general public. Contagious diseases that go untreated because a sick person lacks insurance threaten the health of the entire population. A teaching hospital or medical center that is financially strained by caring for the uninsured may be less able to provide high-level burn or cancer care or to respond to public health threats such as SARS or terrorism.⁽¹¹⁾ An emergency room with a high volume of uninsured patients may need to divert patients needing urgent care to other institutions.