msnbc.com news services
updated 6/8/2005 1:36:51 PM ET 2005-06-08T17:36:51

Health insurance premiums will cost families and employers an extra $922 on average this year to cover the costs of caring for the uninsured, according to a report released Wednesday.

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With the added cost, the yearly premiums for a family with coverage through an employer will average $10,979 in 2005, said the report from consumer group Families USA.

By 2010, the additional costs for the uninsured will be $1,502, and total premiums will hit $17,273. In 11 states, the costs of the uninsured will exceed $2,000 per family.

Problem affects everyone
Families USA says its study shows the problem is not restricted to the tens of millions of uninsured Americans.

Rather, the problem affects everyone, because the insured subsidize the cost of care given the uninsured. Most economists agree that some amount of subsidizing occurs, but the question has been how much.

For individuals, the extra charge this year is estimated to be $341 on average, rising to $532 in 2010. Total premium charges for individuals will be $4,065 in 2005, and $6,115 in 2010.

“The stakes are high both for businesses and for workers who do have health insurance because they bear the brunt of costs for the uninsured,” said Ron Pollack, executive director of Families USA.

Nearly 48 million Americans will lack health insurance for 2005, the report said.

Paul Ginsburg, an economist, said hospitals are having more success negotiating reimbursement rates with private insurers, and they take into account their costs for uncompensated care, he said.

“Ten years ago, I might have been skeptical about a study like this, but in 2005, I’m not,” said Ginsburg, president of the Center for Studying Health System Change, an organization that provides nonpartisan analysis.

'A vicious circle'
Uninsured patients pay about one-third of the costs of their care provided by doctors and hospitals, the report said.

The remaining costs — more then $43 billion in 2005 — are considered “uncompensated care.” The government picks up part of the tab and most of the rest is added to insurance premiums for people with health coverage, the report said.

“Ironically, this increases the cost of health insurance and results in fewer people who can afford insurance — a vicious circle,” the report said.

Families USA supports expanding health insurance coverage to all Americans, or universal coverage.

Uwe Reinhardt, a professor at Princeton University, said universal health coverage would raise costs even more for those currently insured.

Reinhardt said the uninsured would be likely to go to a doctor more frequently if they had coverage. He’s skeptical that taxpayers would be willing to pay the added cost.

From the purely economic perspective, “leaving the uninsured is a bargain” for the insured, he said.

A trade group for insurers declined to comment on the specifics in the report. However, it agreed on the need to reduce the number of uninsured.

“This report shows there are many reasons for us to address the reasons for lack of insurance — one is to improve the health of the population and the other is to get a handle on the cost problem,” said Susan Pisano, spokeswoman for America’s Health Insurance Plans.

The costs for people with insurance vary by state based on a number of variables, including the percentage of uninsured in a state and the amount local, state and federal governments contribute.

The report was based on data from the Census Bureau, the Agency for Healthcare Research and Quality, the National Center for Health Statistics and other sources.

The Associated Press and Reuters contributed to this report

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