Uncompensated Care for the Uninsured in 2013: A Detailed Examination

The Cost of Uncompensated Care

In this section we present 2013 estimates of uncompensated care costs for the uninsured based on data from the Medical Expenditure Panel Survey (MEPS).  We begin with a brief description of the survey and the methods; a detailed discussion is provided in the statistical appendix.    

Data and Methods for MEPS Analysis

MEPS Survey

The MEPS is a household survey nationally representative of the U.S. civilian non-institutionalized population.¹  It has a rotating panel design, where each panel covers two complete calendar years. The Household Component (HC) collects detailed information on health insurance status and medical care use by month, as well as medical expenditures by source.  To improve measurement of individuals’ responses to questions about health care use and cost, the MEPS includes the Medical Provider Component (MPC), which links select respondents’ information on medical use with provider information on and expenditures for health care services by payer (e.g., private insurance, public sources).  We use both the HC and MPC data in our analysis.

To obtain more precise uncompensated care estimates, we pool three years of MEPS data, representing calendar years 2008, 2009, and 2010. ²  Given that most elderly have Medicare coverage, we limit our analysis sample to respondents aged 0 to 64. Our final study sample is 86,047 respondent-year observations.

Adjustments to the MEPS Data

Several adjustments were made to the MEPS data that are detailed in the statistical appendix. The first is a reconciliation adjustment for the acknowledged level of expenditure differences between the MEPS and the National Health Expenditure Accounts (NHEA) data, which are widely viewed as a full accounting of national health care expenditures.³ Based on previous work by Sing et al., observed expenditures in the MEPS were inflated by payer (private insurance, Medicare, Medicaid, other) to more accurately represent aggregate medical expenditures in the U.S. as presented in the NHEA.⁴

We use MEPS data for 2008 to 2010 for the analysis.  To project uncompensated care for the 2013 population, two additional adjustments were imposed on the MEPS: The first was a population growth adjustment made to target the 2013 population; the second was to adjust for the change in per capita medical expenditures, which accounts for price and quantity changes per person that occurred between 2008 and 2013. These adjustments are based on the projections of Personal Health Care Expenditures from the NHEA.⁵

Estimating Uncompensated Care Using the MEPS

One important distinction between the NHEA and the MEPS is that the MEPS data do not include “implicitly subsidized care,” defined here as care received by the uninsured but not paid for by a directly identifiable source that can be linked to the patient. Implicitly subsidized care may be covered through indirect payments made to providers (from either private or public sources) that decrease the cost of medical care provided to the uninsured. Examples of implicitly subsidized care include Medicaid DSH payments and private grant programs.

We estimate the amount of implicitly subsidized care using the MEPS data. This calculation, detailed in the statistical appendix, compares the level of payment providers would have expected, on average, from the uninsured if they had had insurance to what they actually received from the uninsured. The difference is our estimate of implicitly subsidized care.

We define total “uncompensated care” as the costs associated with implicitly subsidized care (described above) plus expenditures from indirect sources made on behalf of the uninsured. These indirect sources, which we refer to as “other private, public, and unclassified sources,” include a wide range of payers such as the Veterans Administration, the Indian Health Service, local and state health departments, as well as automobile and homeowner’s insurance.⁶ We did not include spending from the MEPS expenditure category “other public” that is sometimes linked to uninsured individuals.⁷ This “other public” category is actually Medicaid expenditures, for which in theory there should be none for our study sample of individuals during the period in which they report being uninsured. That we find some Medicaid expenditures in periods in which an individual reported being uninsured may reflect a presumptive Medicaid eligibility decision and/or reporting error made by respondents.

Results for MEPS Analysis

Health Care Spending and Uncompensated Care Costs per Uninsured Person

Using the MEPS data, Table 1 reports projected estimates of per capita medical spending among nonelderly respondents, by insurance status and source of payment in 2013.⁸  We show spending estimates by four insurance statuses: all uninsured (full-and part-year uninsured), full-year uninsured only, part-year uninsured only, and, for comparison, full-year insured. For the part-year uninsured, we further break out spending and show spending while individuals are insured and while they are uninsured. We broke out sources of payment by direct payment sources (out-of-pocket, private insurance, Medicare, Medicaid, and other public) and indirect sources, including other private, public, and unclassified sources, and an estimate of implicitly subsidized care.

Across all uninsured (both those uninsured for the full year and those uninsured for only part of the year), medical spending per capita totaled a projected $2,876 in 2013 (Column 1).  The single largest source of payment for the uninsured is implicitly subsidized care, which equals $653 per person.  Indirect payments made by other private, public and unclassified sources were the second highest ($604 per person). Taken together, uncompensated care spending for the full-year uninsured is estimated at $1,257 per person in 2013, which represents approximately 44 percent of total per capita medical spending ($2,876) for the uninsured overall.

For the full-year uninsured (column 2), by far the largest single source of payment for health is implicitly subsidized care, which equals $1,005 per person.  Indirect payments made by other private, public and unclassified sources were the second highest ($697 per person). Taken together, uncompensated care spending for the full-year uninsured are estimated at $1,702 per person in 2013, which represents approximately 70 percent of total per capita medical spending ($2,443) for the full-year uninsured. Remaining spending are payments made out-of-pocket by the uninsured ($500 per person) and spending by other public sources ($240 per person).

Table 1: Per capita medical spending by insurance status and source of payment among the nonelderly (projected 2013$)
	All uninsured	Full-year uninsured	Part-year uninsured					Full-year insured
	(1)	(2)	(3)	(4)		(5)		(6)
			All	While insured		While uninsured
Sample size	26,419	15,627	10,792					57,979
2013 population estimate	72,180,997	40,799,801	31,381,196					196,400,000
Total expenditures ($)	$2,876	$2,443	$3,439	$2,878	$561			$4,876
By source of payment ($)
Direct sources	$1.62	$740	$2,762	$2,601	$162			$4,644
Out-of-pocket	$490	$500	$476	$315	$162			$610
Private insurance	$559	$0	$1,286	$1,286	$0			$2,966
Medicare	$24	$0	$56	$56	$0			$343
Medicaid	$411	$0	$944	$944	$0			$725
Other public a	$136	$240	$0	$0	$0			$0
Indirect sources (uncompensated care)	$1,257	$1,702	$677	$278	$399			$232
Other private, public & unclassified sources b	$604	$697	$482	$278	$204			$232
Implicitly subsidized	$653	$1,005	$195	$0	$195			$0
Source: Urban Institute estimates using MEPS data representing calendar years 2008, 2009, and 2010, pooled together. Note: Estimates are restricted to respondents aged 0-64 with 12 months of health insurance data. a Corresponds to the MEPS expenditure category “other public,” which are Medicaid payments among respondents that reported zero months of Medicaid coverage b Includes payments from the following MEPS expenditure categories: other private, VA, Tricare, other federal, other state & local, workers compensation, and other unclassified sources.

As expected, medical spending for those covered by health insurance for the entire year are much higher than that that of uninsured. Per person spending among the full-year insured equals $4,876 per person (column 6), about 70 percent higher than that for all uninsured ($2,876; column1).Medical spending for the part-year uninsured was estimated at $3,439 per person (column 3). Not surprisingly, most health care costs for part-year uninsured (84 percent, or$2,878 per person, column 4) occurred during periods in which they had insurance. Private insurance and Medicaid contributed approximately 77 percent of per capita spending during the time respondents reported being insured ($1,286 and $944 per person, respectively). For the period during which these individuals were uninsured (column 5), medical spending was just $561 per person. Implicitly subsidized care was $195 per person, while expenditures from other private, public, and unclassified sources were $204 per person.

Aggregate Uncompensated Care Spending for the Uninsured Population

Table 2 reports projected aggregate medical expenditures for 2013 for the entire uninsured nonelderly population for the months that they were uninsured.⁹ Column 1 shows aggregate medical expenditures for individuals who were uninsured at any time during the year; columns 2 and 3 show this information for full-year uninsured only and part-year uninsured only, respectively.  Total uncompensated care for all uninsured in 2013 is estimated at $84.9 billion (column 1). Nearly two-thirds of that uncompensated care ($49.0 billion) is implicitly subsidized care with the balance ($35.9 billion) paid by other private, public, and unclassified sources.  Uncompensated care for the uninsured accounts for approximately 70 percent of their total medical expenditures while uninsured ($121.0 billion) in 2013. Remaining expenditures for the uninsured were $25.8 billion in out-of-pocket payments and $10.3 billion in Medicaid spending (i.e., “other public”), which likely represent retroactive payments.¹⁰  The vast majority of uncompensated care (85 percent; $72.0 billion) spent on the uninsured is for those who are without insurance the full year (column 2).

Table 2: Aggregate medical expenditures for the nonelderly uninsured, by source of payment (projected, billions 2013$)
	(1)	(2)	(3)
	All uninsured, at any point during the year	Full-year uninsured	Part-year uninsured
Total uncompensated care expenditures	$84.9	$72.0	$12.9
Implicitly subsidized a	$49.0	$42.7	$6.3
Other private, public & unclassified sources b	$35.9	$29.3	$6.6
Out-of-pocket expenditures	$25.8	$20.6	$5.1
Other public c	$10.3	$10.3	$0.0
Total medical expenditures	$121.0	$102.9	$18.1
Source:  Urban Institute estimates using MEPS data representing calendar years 2008, 2009, and 2010, pooled together.Note: Per capita expenditures in Table 1 were calculated over MEPS respondents with 12 months of health insurance data, whereas the aggregate expenditures in Table 2were calculated over all respondents. As a result, the aggregate estimates are larger than the per capita estimates multiplied by their respective population size. In addition, aggregate spending estimates are calculated only for periods of time that people lack coverage. Months during which the part-year uninsured had insurance coverage are not counted.a  See the statistical appendix for details on the construction of implicitly subsidized care.b  Includes the following MEPS expenditure categories: other private, VA, Tricare, other federal, other state & local, workers compensation, and other unclassified sources.c  Corresponds to the MEPS expenditure category “other public,” which are Medicaid payments among respondents that reported zero months of Medicaid coverage.