Sunday, November 22, 2009

The Big Cost Shift

Health care reform moved one step closer to reality last evening when the Senate attained the necessary 60 votes to begin debate. Passage is still anything but certain, but it is looking more promising than just a few short weeks ago when many wrote it off as all but dead. One remaining concern is that many in our country do not see the uninsured as "their" problem and lack sympathy because they believe the uninsured will always get care they need in an emergency room if they have a true crisis. The Obama administration and Congressional leaders have failed to clearly and directly rebut these misperceptions. For health reform to gain broader support, we need to do a much better job of getting people with insurance to understand that the plight of those without insurance is their problem too. Here is how we can do it.

Those who lack insurance do in fact show up in emergency rooms and they are taken care of. But this becomes what is known in the hospital world as uncompensated care. Hospitals are required to provide the care, but in order to survive, they must find a way -- like all businesses in similar circumstances - to cover the costs of that care. So they shift the cost of that care to private payers (the same way they do for underpayments from Medicaid and Medicare, our government programs that pay all hospitals at rates that are below their costs). They do so by negotiating higher rates from private payers. Those private payers then pass on these higher rates to employers in the form of higher premiums. And those employers then pass on those higher premiums to their employees. The result is that all employees are in fact already paying the cost of uncompensated care. It is indeed a societal problem. What's worse, when those who lack insurance seek care in the emergency room, they are doing so in the most expensive setting - so the costs are extremely high. If they had insurance, they would get preventive care (at much lower cost) and would be able to avoid those expensive ER visits and hospitalizations. That is a key reason we need health care reform.

Until the public clearly understands the big cost shift that goes on in our health care system, we will continue to struggle to gain broad support for national health reform.

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