The Uninsured Versus The Insured: Who Subsidizes Whom?

This article by John Graham at PRI provides a different look at the data on insured and uninsured health care. The key points:

–California Governor Schwarzenegger, Massachusetts Governor Patrick, and other state politicians believe — wrongly — that “covering the uninsured” will eliminate a “hidden tax” that the privately insured pay to subsidize the uninsured. –The financial crisis of hospital emergency rooms has little to do with the uninsured; rather, there is a far greater “cost shift” from beneficiaries of government health care to the privately insured. –As a group, the uninsured voluntarily pay about $60 billion worth of extra federal income taxes — explicit taxes which dwarf the hidden tax of uninsurance. –Because they use only half the health services, per person, that insured Americans use, the uninsured pay a kind of “hidden subsidy” to the insured, who over-consume health services. — The hidden tax of overinsurance — which the insured unconsciously levy on each other, is far greater than the relatively insignificant hidden tax of uninsurance.

Adrian Moore

Adrian Moore, Ph.D., is vice president of policy at Reason Foundation, a non-profit think tank advancing free minds and free markets.