Government Picks Up Health Tab of Uninsured Workers

In 1996, 22 percent of low-wage workers were uninsured compared with 6 percent of higher wage workers. But by 2003, nearly 33 percent of low-wage workers were uninsured with no change in the share of uninsured higher-wage workers, according to the report.

Because health-care expenditures have not risen as fast as costs, low-wage workers are frozen out of many of the latest medical innovations and new drugs, Glied said. "We are seeing an increasingly two-class, health-care delivery system," she said.

Glied thinks there need to be more subsidies provided for low-wage workers to allow equal access to health care. "Or we have to reconcile ourselves to the idea that being rich is not only good for your living, but also how long you live and how well you live," she said. "That's a kind of frightening thought."

One expert noted that uninsured workers subsidize the health-care system through the taxes they pay.

"Public spending on uninsured workers is not huge, and much of it is offset by the workers' own tax payments," said Dr. Steffie Woolhandler, an associate professor of medicine at Harvard Medical School and co-founder of Physicians For A National Health Program.

All workers must pay the Medicare payroll tax, which is 3 percent of earnings and nominally split equally between employer and worker. However, according to standard labor economics, all the money is coming from the workers' compensation, Woolhandler explained. "So, a worker earning $33,000 per year would pay $1,000 in Medicare payroll taxes alone," she said.

Most workers also pay property taxes, either directly for their homes, or indirectly through higher rents, Woolhandler noted. "Virtually all workers must pay sales taxes, and many pay income taxes. Hence, uninsured workers/dependents should not be seen as freeloaders -- although perhaps some of their employers should be," she said.

Woolhandler believes the only way to solve the health insurance crisis and offer care to everyone is a universal health-care system run by the federal government.

Another expert thinks the answer to the crisis is to get the medical community to control the costs of care.

"In is absolutely unacceptable to employees and employers be squeezed the way they are on health care," said Mohit Ghose, a spokesman for America's Health Plans, which represents private health insurance companies.

"The only way to fix that is to address the underlying cost drivers," Ghose said. "We must focus on reducing waste in the system, enhance best practice in the practice of medicine and encourage people to be value-conscious, cost-conscious as they seek out their health care."

Ghose thinks that everybody should be covered by some type of health insurance. For those who can afford it, private insurance, and for those who can't afford health coverage, public assistance. In addition, health-care resources may need to be rationed.

"We need to get everyone covered, we need to have solutions that work for different types of people," Ghose said. "But the public safety net needs to be shored up -- there are going to have to be extended federal outlays. We're also going to have to optimize the use of limited health-care resources and target them appropriately so that we don't break the bank."

More information

For more information on health insurance, visit the U.S. Department of Labor.

SOURCES: Sherry Glied, Ph.D., professor, health policy and economics, Columbia University, New York City; Steffie Woolhandler, M.D., associate professor, medicine, Harvard Medical School, Boston, and co-founder, Physicians For A National Health Program;Mohit Ghose, spokesman, America's Health Plans, Washington, D.C.; May 2, 2008,Who Pays for Health Care When Workers Are Uninsured,The Widening Health Care Gap Between High- and Low-Wage Workers, Commonwealth Fund