Hoover Insitution Confirms that Insured Californians Pay 'Hidden Tax' for the Uninsured
SACRAMENTO, CA (May 21, 2007) -- Insured Californians pay a "hidden tax" for the uninsured, a study released today by the Hoover Institution confirms. However, an analysis by the New America Foundation finds that the Hoover study underestimates the size of this tax. The New America analysis shows that the reasonable range of estimates of the "hidden tax" is between 6% and 11%, but the Hoover Institution's estimate falls well below this range.
In order to provide uncompensated health care for the uninsured, providers charge higher prices to insurers, who then charge higher prices to insured families - resulting in a hidden tax. "The good news is the Hoover Institution agrees there is a 'hidden tax' that links the well-being of the insured and the uninsured," said Len Nichols, Director of the Health Policy Program at the New America Foundation.
However, the Hoover Institute's analysis contains several flaws. By assuming current Medi-Cal payment rates adequately cover provider costs, and by underestimating the number of uninsured, the Hoover Institution seriously misjudges the "hidden tax." "In downplaying the hidden tax, the study denies the need for real health reform that covers the uninsured and spends our health dollars more wisely," said Peter Harbage, Senior Program Associate based in Sacramento.
Although health analysts may debate the correct methodology for estimating cost-shifting in the health care system, they widely agree that Californians ultimately pay a significant hidden tax to cover medical care received by the uninsured. As taxpayers, all Californians pay for government funding that may go toward care for the uninsured; health care providers pay if they are not able to shift costs to insurers; and, as the analyses released today show, insured families pay through higher premiums and out-of-pocket payments.
"The New America estimate of the hidden tax withstands analytic scrutiny. The larger point is that we all help pay for the uninsured in a variety of ways, none of which are efficient or transparent," said Nichols.
Today, the New America Foundation released an analysis of the Hoover Institution study, with updated estimates of the "hidden tax." This memorandum is available on the New America Foundation website at: http://www.newamerica.net/publications/policy/estimating_the_hidden_tax.
Related Programs: New America in California, Health Policy Program
Topics: Family & Children, Health Policy
