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Most Without Insurance Do Not Pay Hospital Bills: Federal Report

May 10, 2011

Written by: Insurance Journal

Few families without health insurance have the financial assets to pay potential hospital bills. On average, uninsured families can only afford to pay in full for approximately 12 percent of hospital stays they may experience – and even higher-income uninsured families are unable to pay for most potential hospital stays, according to a report by the U.S. Department of Health and Human Services (HHS).

Hospital stays for which the uninsured cannot pay in full account for 95 percent of the total amount hospitals bill the uninsured. Other studies have estimated that the bills for all types of health care that the uninsured cannot pay – the uncompensated cost of care – is up to $73 billion a year, a significant portion of which is shifted into higher costs for Americans with insurance and their employers, according to HHS.

The report found that most of the country’s 50 million uninsured people have virtually no savings. In fact, the median financial assets for all uninsured families are just $20. Even among higher-income families, assets are low. Half of families with income at 400 percent of the federal poverty level, or $89,400 a year for a family of four in 2011, have financial assets below $4,100.

Every year, nearly two million uninsured Americans are hospitalized. With 58 percent of these hospital stays resulting in bills of more than $10,000, most uninsured people are unable to afford potential hospital bills. The report found that even the top 10 percent of uninsured families with the most assets are estimated to be able to pay the full bill for only half of potential hospital stays. Uninsured families can, on average, afford to pay the full bills for only about 12 percent of the hospital stays they might experience, bills that account for just 5 percent of the total amount hospitals bill them.

“Health insurance is critical in helping protect families from unexpected hospital costs,” said Sherry Glied, HHS assistant secretary for planning and evaluation. “This report shows that even higher-income uninsured families are struggling to meet the high costs of health care. No family should bear the burden of being one illness or accident away from bankruptcy.”

According to the report, the high cost of hospitalization means that lacking health insurance poses a greater risk of financial catastrophe than lacking car insurance or homeowner’s insurance. Although people are 50 percent more likely to have a car accident than to be hospitalized in a given year, the average bill for a hospital visit is more than two and a half times higher than the average loss for a car accident. While the bill for a single hospitalization is about the same as the average loss from a house fire, a person is 10 times more likely to be hospitalized than to experience a house fire.