A new government report says uninsured patients are generating $49 billion in unpaid hospital bills every year.
Put aside the fact that most of us don't have much confidence in the way hospitals calculate what we owe and take that number at face value. It comes out to a little more than $1,000 per uninsured person per year.
Does that mean that the average uninsured patient is getting $1,000 of free medical care paid for by you and me? A lot of supporters of ObamaCare would like you to think so. That's why we need a mandate, they argue, forcing people to buy health insurance whether they want it or not.
Ah…..but not so fast.
People who are insured by their employer's plan are getting a fat tax break. Wages are subject to a 15.3 percent federal payroll (FICA) tax, plus federal, state and local income taxes. Employer-provided health benefits avoid all these taxes, however. That's a subsidy equal to about 25 percent of the cost of health insurance for most employees.
But suppose you are one of those workers who gets all your compensation in the form of taxable wages and has no health insurance. Then you are paying higher taxes than someone earning just as much as you are but getting part of his compensation in the form of tax-free health insurance.
My back-of-the-envelope calculation suggests that the typical uninsured worker is paying more than $1,000 in extra taxes precisely because he is uninsured. That's right. The uninsured aren't really getting free rides after all. They're mainly paying their own way! And if they are above-average income, they are paying their own way by a good margin.
Now, I know what you're thinking. The uninsured may be paying more taxes to the government, but you're paying for their health care. Their unpaid bills make your hospital bill higher than it would have been.
That may seem logical, but it turns out to be mostly wrong. The cost of the unpaid hospital bills is mainly borne by government (and therefore, taxpayers), not by shifting costs to other patients. In fact, George Mason University health economist Jack Hadley estimates that about 75 percent of the cost of free care for the uninsured is paid by government.
John C. Goodman is President of the Goodman Institute and a Senior Fellow at The Independent Institute. He is the author of the widely acclaimed book, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts.”