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health / Stones & Bones / volume 10 number 4, April 2008 DOSE OF REALITY We repeatedly hear the lament about how much it is costing insured Americans to pay for the health care provided to the uninsured. The claim is that this cost-shifting creates a major burden on commercially insured persons by substantially increasing their insurance premiums. It is true that this cost-shifting occurs, but it is a far less serious problem than another, unheralded, form of cost-shifting: that from the Medicare and Medicaid sectors to the sector insured by privately-owned commercial enterprises. Although there is general knowledge that Medicare and Medicaid programs generally fail to pay the full costs of providing health care to their beneficiaries, little attention seems to be given to the cost-shifting that necessarily takes place because of this failure. More attention should be paid to this problem because it really is a serious one. Based on data available from the Fairbanks Memorial Hospital and a few other sources, I conclude that the combined cost-shifting from Medicare and Medicaid beneficiaries is more than three times the cost-shifting from the uninsured sector. The shifting of costs is almost entirely to the insured sector. During a recent year, 36 percent of the patients treated by the Fairbanks hospital were commercially insured, yet they paid for over 50 percent of the cost of the hospital’s operation. Forty-two percent of those treated by the hospital were Medicare and Medicaid beneficiaries, and they paid for only 26 percent of the hospital’s operating cost. Consequently, about 16 percent of the cost of operating the hospital was cost-shifted from the Medicare and Medicaid sectors over to the commercially insured sector. By comparison, less than five percent of the hospital’s operating costs were shifted from the uninsured to the commercially insured sector. Uninsured patients amount to only six percent of the hospital’s clientele, so the financial impact of serving them is not large, despite the fact that they pay for only a small portion of the care they receive. So while it is true that privately insured people pay for part of the costs of the uninsured, they pay a heck of a lot more for the care that Medicare and Medicaid patients receive. The blame for this inequity falls directly on the back of the Bush Administration and other conservative elements in government intent on undermining Medicare and Medicaid programs by underfunding them, in the guise of cutting health care costs. Part of the purpose has been to force more people into seeking commercial insurance, but that is the wrong approach to cutting health care costs because commercial insurance is by far more costly than public insurance. Private insurers take a healthy cut out of the health care dollar to pay for their high administrative costs and shareholder profit, leaving less money to pay for health care. And of course, one of the consequences of underfunding Medicare is the increasing number of physicians who refuse to accept new Medicare patients, and the relegation of Medicare patients to lower levels of care. It is a sad situation, likely to get worse in the months ahead because of additional cuts in Medicare expected in July 2008. I was told recently by a local doctor that no doctors in the Fairbanks area are now taking on new Medicare patients. This problem of underfunding Medicare and Medicaid deserves more attention than it is getting. It deserves at least as much attention as we are giving the problem of cost-shifting from the uninsured sector to the privately-insured sector. The 47 million uninsured Americans (114,000 Alaskans included) do of course constitute a serious problem. That problem, however, is not so much one of cost-shifting, but rather one of access to health care by uninsured people. People are uninsured for one of two reasons. One is that some of them are so young and healthy that they can choose not to carry insurance because in any given year they are unlikely to need any health care whatsoever. The other reason is that many uninsured Americans are in poor health and insurance companies refuse to insure them, drop them from coverage, or charge them such high premiums that they cannot afford to buy the insurance. People who are uninsured by choice feel that they can afford to gamble—and they usually win, but not always. This group tends not to receive preventive health care because of the costs involved. It is said that for this reason, 18,000 Americans die prematurely each year.* The uninsured by-no-choice-of-their-own usually do need health care, perhaps every year, and sometimes a lot of it. Herein is the real problem of the uninsured; for one reason or another, they are not getting the health care they need. This lack of access to health care is the issue that we should worry about, more so than the problem of cost-shifting to the insured sector that gets so much attention. We also need to stop the cost-shifting from Medicare and Medicaid, and the way to do that is to demand that our politicians increase funding for these public insurance programs. These are cost-effective programs, so by funding them adequately we can reduce overall health care costs. * Per the National Academies’ Institute of Medicine. Neil Davis is a retired geophysicist and author of several fiction and nonfiction books. Much of the material for Dose of Reality is derived from his recent book, Mired in the Health Care Morass. Neil can be contacted at neildavs@mosquitonet.com. | ||
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