Auto insurance and the uninsured
In 2003 Colorado changed its auto insurance law from one in "which all drivers were required to have coverage for treatment of any injuries resulting from auto accidents to a system in which just the driver at fault pays." The result has been a decline in the percentage of auto injury victims with insurance, leading to reduced revenues for hospitals and an increase in uncompensated care.
Health care providers in Colorado are up in arms about the impact the change away from the no-fault coverage has had on their financial wellbeing, claiming an $80 million hit from the new law. Interestingly, according to Insurance Journal, insurance spokespeople seem to acknowledge the transference of expense from the insurance companies and their policyholders to the hospitals. Carole Walker, executive director of the Rocky Mountain Insurance Information Association, stated:
"We don't believe people should be required to have medical coverage as part of their auto insurance just because some people don't have health insurance…Hospital profits are at the highest level in years, and many hospitals are building big new facilities.''
According to the study that was the basis for the article;
"the percentage of accident patients covered by auto insurance fell from 55.6 percent in 2001 to 32 percent last year; the percentage not paying for their care rose from 1.4 percent to 6.7 percent during the same period…the percentage of patients who couldn't pay for ambulance services had more than doubled to 43.4 percent from 2001 to 2004."
While it is clear that the change has hurt health care providers, there is also evidence that the move away from no-fault resulted in premium cuts in the neighborhood of 25%.
This is more evidence of the reluctance on the part of insurance companies to subsidize care for the otherwise-uninsured. Auto insurers are not in business to help pay for health care for uninsured motorists, and their policyholders can't be blamed for their joy at a 25% cut in their insurance rates. This "hidden tax" is but one example of the impact of uninsureds' health care costs on providers and payers. As more of these "hidden taxes" are revealed and eliminated, more and more costs will have to be shifted to those patients who do have health insurance. Previous studies estimate that those of us with insurance from employers pay an extra $1200 per year to cover those who do not.
It would be great if the politicians would stop arguing about covering the uninsured (they already are covered by these hidden taxes) and start arguing about a more logical and transparent coverage mechanism.