This time its about uncompensated care. Here is a link to the paper in question, by economists Jon Gruber and David Rodriguez. Here is the abstract:
The magnitude of provider uncompensated care has become an important public policy issue. Yet existing measures of uncompensated care are flawed because they compare uninsured payments to list prices, not to the prices actually paid by the insured. We address this issue using a novel source of data from a vendor that processes financial data for almost 4000 physicians. We measure uncompensated care as the net amount that physicians lose by lower payments from the uninsured than from the insured. Our best estimate is that physicians provide negative uncompensated care to the uninsured, earning more on uninsured patients than on insured patients with comparable treatments. Even our most conservative estimates suggest that uncompensated care amounts to only 0.8% of revenues, or at most $3.2 billion nationally. These results highlight the important distinction between charges and payments, and point to the need for a re-definition of uncompensated care in the health sector going forward.
3 comments:
interesting - I've wondered about that before. what about stuff like group buying power vs the individual? I don't know the proper economic terms for this, but essentially, are insured prices lower because groups have more negotiating power? not that this fact makes it all fair (as I would know since I'm facing being essentially uninsured for the rest of the school year).
happy deepavali!
Thanks Valli. Happy D to you too!
Your question...I think you are basically asking why group insurance is cheaper than individual insurance. Here are two standard reasons:
1) Risk Pooling: by buying insurance as part of a group, any random loss you might generate for the insurance company is balanced out by revenue coming in from others (who don't get sick). The more people you have, the easier to pool risk, and the cheaper the premiums.
2) Getting Around Adverse Selection: As an individual, by going out and trying to buy insurance, you are revealing something about yourself: either you are risk averse, or you are sickly. In the latter case, you are a bad risk to an insurer. In the US, the groups are typically employees of a company. Since workers have come together for reasons other than health care or the need to buy insurance, an insurer is basically more confident that a employer based groups are not made up of sickly people who will break the bank.
Some interesting policy points that follow from this:
1) Large employers will find it cheaper to buy insurance for their peeps than small ones since risk pooling is more effective as n gets big.
2) Health insurance mandates such as that in Massachusetts, or in the plan proposed by Mrs. Clinton, may save money since making healthy people join the insurance pool allows for less adverse selection and greater ability to pool across increasingly good risks.
hope this helps.
actually, I was referring to the other side of things. are insurance companies able to negotiate a lesser price for services because they represent a large number of people - ie, its like they are buying a greater number of services vs an individual, who is only buying one service? is it kind of like buying in bulk vs 1 item at a grocery store?
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