Cause of high costs argued

Californians without medical insurance are a much smaller factor in increasing health care premiums in the state than low funding from government programs such as Medicare and Medi-Cal, according to a study released Wednesday.

The California Chamber of Commerce's think tank found that paying for care for uninsured patients in California hospitals causes an increase in private premiums of just 1.4 percent -- a far smaller percentage than earlier studies found.

"Private payers are paying more because of Medi-Cal and Medicare -- significantly more. They are not paying significantly more due to the uninsured," said the report's author, Daniel Kessler of Stanford University's Graduate School of Business and the Hoover Institution.

The study found that low reimbursements from the federal Medicare program and from Medi-Cal, the state-federal program for low-income people, account for the lion's share of the cost shift to insurers -- 10.8 percent.

In selling his universal health coverage proposal, Gov. Arnold Schwarzenegger has argued that the uninsured impose a "hidden tax" - an increase in private insurance rates caused in part by the cost of providing health care to people without coverage.

To back up his plan to require all Californians to obtain health coverage, the governor has cited a New America Foundation report estimating that caring for the uninsured increases private health insurance premiums by 6 to 11 percent. The study did not estimate the impact of low Medicare and Medi-Cal funding.

The state Chamber of Commerce has criticized the governor's and other health reform plans, objecting to mandates that employers provide health coverage or pay into a state-run insurance-purchasing pool.

Critics of the chamber's study questioned whether the finding that the uninsured don't affect health premiums much might reflect the business group's objections to the reform proposals.

"To say the cost shift from the uninsured is 1.4 percent is very out of the mainstream," said Peter Harbage, one of the authors of the New American study, of the chamber's report.

Ken Thorpe, professor of health policy at Emory University, called the lower figure "absolutely startling" and questioned whether the motivation is to underplay the impact of the uninsured on rising health premiums.

Loren Kaye, president of the chamber's think tank, the California Foundation for Commerce and Education, attributed differences between the studies to variations in methodology.

Kaye said his group's study shows that raising government reimbursements, which generally come from increasing taxes or taking money from other programs, is a better way to address the impact of the "hidden tax" on premiums. He said the decision to cover the uninsured should be based on moral reasoning, not economics.

E-mail Victoria Colliver at vcolliver@sfchronicle.com.