The Costs of Caring for the Uninsured Under Well-Structured Safety Net Systems

Despite comprehensive health insurance reform, over 20 million people will remain uninsured in the United States, amounting to roughly eight percent of the nonelderly population. Therefore, access to affordable care for the uninsured remains a critical issue for states and communities, both leading up to and following federal reform. Federal reform entails or anticipates several substantial changes in support for programs and providers of healthcare for the uninsured. Most visibly, federal support will double for community health centers (CHCs) at the same time that “disproportionate share hospital” (DSH) payments are cut and reallocated. In addition, the reform law requires clearer documentation of the charity care that tax-exempt hospitals provide. Reform also allows funding for several types of demonstration or waiver projects geared to low-income or uninsured populations. The changing landscape of the uninsured calls for renewed focus on model safety-net programs. If the best programs can be sustained and others improved, perhaps a form of nearly-universal coverage could be crafted by supplementing insurance expansions with decent safety-net access for those who unavoidably remain uninsured. Considering such possibilities, however, requires better understanding of the per-person costs of care under well-structured safety net systems. This is a study of model safety net programs for uninsured people in four communities, selected after a thorough national review based on consensus among experts that they are better structured than most. Each program covers a fairly full range of medical services, similar to what conventional insurance covers, and each program assigns members a place to receive primary care and provides an identification card that demonstrates eligibility to receive a range of services.The per person value of care was measured by its institutional costs. Purchased services were valued at paid costs and program costs were valued based on annual financial statements. In each location, a comparison insurance group was selected based on available data, from either a Medicaid program or a private insurance plan in the same city that used the same set of providers. The goal was to determine what would be the estimated cost to that insurer of covering the studied safety net population during the same year (2008). For each insurer, the actual mean cost for covering its nonelderly adults for a similar range of services was adjusted to reflect the demographic and health status mix of the uninsured program population in each location. The monthly cost-value of care per adult in 2008, net of patient copayments, was remarkably similar across three of the four safety net programs, at $141-147 per person. When adjusted for an area’s medical cost index (based on Medicare payments reported in the Dartmouth Atlas), per-person costs differed two-fold among programs with an overall monthly average of $161. The estimated monthly costs to have covered the same uninsured patients either by local private or public insurers for a similar range of services ranged from $217-$347, but the mean for Medicaid ($281) was almost identical to the private insurance mean ($282). These figures are 82% more on average than the safety net programs’ actual costs, with the difference ranging from 37% to 124% among locations. Despite its limitations, this study of four model safety net programs provides useful insight into the costs of providing structured access to care for people who are currently uninsured or who will remain uninsured after national health insurance reforms. None of these programs perfectly fits all situations, but each has important lessons to offer about the cost of services required to meet the basic health needs of this population.