The Corner

Another Health Care Myth Punctured

If you’ve spent any time out on the hustings debating health care issues, you’ve heard the familiar argument — employed by industry lobbyists, single-payer advocates, and everyone in-between — that a big driver of health-care inflation in the United States is emergency-room “cost shifting.”

The argument goes something like this. The uninsured show up in droves at the emergency room, having failed to access necessary preventive care. They then run up huge hospital bills and don’t pay them, so a big portion of hospital bills for everyone else is devoted to making up the difference. The conclusion is supposed to be that we would all be better off paying higher taxes to provide universal coverage, thus saving us money on the back end.

Just about every premise in this argument is false. On the whole, for example, preventive care confers medical benefits for many patients but it does not save money in the long run. It’s a net cost. If you subsidize the use of medical services, consumption of medical services will rise even after accounting for some back-end savings for some patients. Why do countries with universal coverage tend to spend less on health care than the U.S. does? It’s a complex question, but among many other explanations, these other systems still ration access by substituting longer waiting times for money prices.

Regarding unpaid hospital bills, they add up to a very small share of total health care expenditures (less than four percent in most studies I’ve seen) and it’s not a rising share. Can’t explain big annual hikes in insurance premiums that way.

As for the initial premise, a new study from the Journal of the American Medical Association debunks the notion that uninsured Americans explain much of what’s going on in emergency rooms. From the Heartland Institute’s coverage:

The past decade has seen more emergency room patients than ever before. Americans are living longer, leading to more chronically ill elderly, but there are fewer primary care physicians available to serve them and other patients. So patients turn to the emergency room when in the past they would have gone elsewhere, said [study contributor Carla] Keirns.

“It’s not the uninsured who burden America’s emergency rooms so much as it is people who are carrying government insurance policies,” said Devon Herrick, Ph.D., a senior fellow at the National Center for Policy Analysis. “The low reimbursement rates offered doctors by government programs means very few will accept taxpayer-funded insurance any more, leaving those on government plans to visit ERs for care instead of primary care physicians.

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