Did You Know Floridians Pay $1.4 Billion Due to Uncompensated Care?
By: Tracey Lowe
Did you know? Floridians pay a “hidden tax” of $1.4 billion due to uncompensated care. When this cost trickles down from hospitals and insurance companies to insured Floridians, it equates to between $1,700 to $2,200 for every insured admission.
As Florida’s business community is well aware, healthcare costs continue to have a significant impact on the bottom line. As costs continue to increase, Florida businesses struggle to prosper and the overall competitiveness of the business community diminishes. This week’s Scorecard Did You Know highlights the real cost of rising healthcare expenses to Florida businesses, more commonly known as the healthcare cost shift.
“Hospitals need to manage care delivery differently, moving toward focusing more exclusively on outcomes and efficiency of treatment,” said Rich Morrison with Florida Hospital. “This is an issue and challenge for those of us in the care industry as well as the business community as a whole. Taking into account uncompensated care to the uninsured, unpaid deductibles and copayments, and unreimbursed costs from Medicare/Medicaid, Florida Hospital alone spent more than $400 million last year on treatment and care that was never paid for. When this number is added up across the industry, the results are a massive cost shift and represent a hidden tax that ends up being paid for by consumers, the insured, and the businesses that pay the majority of insurance coverage. In a state with such a sizable number of retirees, this is a pressing challenge for Florida over the next 20-plus years.”
Florida’s demand for healthcare services is typically much higher than other states due to a significantly higher population of retirees. Between now and 2030, the Florida Chamber Foundation estimates Florida’s population is expected to increase by six million residents. Of these, the Florida Office of Economic and Demographic Research estimates as many as 55.4 percent will be aged 60 and older.
Calculating this cost shift is complex, but a range can be estimated. The first step is comparing total costs of service to the total charges, which then is allocated among the 2.4 million yearly hospital admissions in the state. The analysis leads to a range of cost-shift of about $2,000 for each uninsured to insured admission and this estimate does not include the additional cost shifts present in the Medicare and Medicaid programs.
The cost shift occurs when the costs for medical care for the uninsured are “passed” onto insured patients. When a doctor or hospital provides care to an uninsured party, the costs of those services have to come from somewhere. Insurance companies are ultimately forced to incorporate them into higher premiums, which are paid (the majority of the time) by companies providing benefits for their employees. To make Florida more attractive for business startups and relocations, healthcare costs must be slowed and show real decline, especially with respect to the cost shift.
Read the Florida Chamber’s Smarter Healthcare Coverage in Florida plan here.