Few families without health insurance have the financial assets to pay potential hospital bills, reveals a new report released today by the U.S. Department of Health and Human Services (HHS). On average, the report says, uninsured families can only afford to pay in full for approximately 12% of hospital stays they may experience--bills that account for just 5% percent of the total amount invoiced. With 58% of hospital stays resulting in bills of more than $10,000, most uninsured people do not have the financial resources to cover potential hospital bills at all. Even the top 10% of uninsured families with the most assets are estimated to be able to pay the full bill for only half of potential hospital stays.
Moreover, according to the report, hospital stays for which the uninsured cannot pay in full account for 95% of the total amount billed by hospitals to uninsured patients. Other studies have estimated that the bills for all types of health care that the uninsured cannot pay—namely, the uncompensated cost of care—adds up to $73 billion a year. A significant portion of this total is shifted into higher healthcare costs incurred by insured Americans and their employers.
“One of the most enduring myths in American health care is that people without health insurance can get care with little or no problem,” said HHS Secretary Kathleen Sebelius. “Nothing could be farther from the truth. The result is families going without care – or facing health care bills they can’t hope to pay. When the uninsured cannot afford the care they receive, that cost must be absorbed by other payors. This is why expanding access to affordable health insurance under the Affordable Care Act is so important.”
Of the approximately 50 million Americans who do not have health insurance, the majority, the report states, have virtually no savings. In fact, the median financial assets for all uninsured families add up to a total of just $20. Even among higher income families, assets are low. Half of families with income at 400% of the Federal Poverty Level (FPL), or $89,400 a year for a family of four in 2011, have financial assets below $4,100.
“Health insurance is critical in helping protect families from unexpected hospital costs,” notes Sherry Glied, HHS assistant secretary for planning and evaluation. “This report shows that even higher-income uninsured families are struggling to meet the high costs of health care. No family should bear the burden of being one illness or accident away from bankruptcy.”
According to HHS, the high cost of hospitalization means that lacking health insurance poses a greater risk of financial catastrophe than lacking car insurance or homeowner’s insurance. Although people are 50% more likely to have a car accident than to be hospitalized in a given year, the average bill for a hospital visit is more than 2.5 times higher than the average loss for a car accident. And, while the bill for a single hospitalization is about the same as the average loss from a house fire, a person is ten times more likely to land in a hospital bed than to experience a house fire.