Cost of Failure: Economic Losses of the Uninsured

Publication Date: March 2008

Publisher: New America Foundation

Author(s): Elizabeth Carpenter; Sarah Axeen

Research Area: Health

Keywords: Uninsured; Economy

Type: Brief

Abstract:

In 2000, the Institute of Medicine (IOM) estimated that "the annualized economic cost of the diminished health and shorter lifespan of Americans who lack health insurance is between $65 and $130 billion for each year of health insurance forgone."

After updating the IOM's numbers to reflect growth in the economy and increases in the number of uninsured, we estimate that the poor health and shorter lifespan of the uninsured cost the U.S. economy between $102 billion and $204 billion in 2006. This estimate does not include spillover costs. For example, when medical bills go unpaid, providers attempt to recoup lost revenues by raising the rates for their services. In response, insurers raise premiums. This vicious cycle of "cost shifting" inextricably links the uninsured to rising health care costs and premium rates for the insured.

The economic cost imposed on the nation by the uninsured is as much as and perhaps greater than the public cost of covering them.