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An economic imperative: cost effective quality care without making profit

 

Data on the cost of the uninsured and who pays for them from the Medical Expenditure Panel Survey, the Center for Medicare and Medicaid Services, and other provider based sources are very confusing. Because of this, accepting the assertion that everyone ends up paying for the cost of the uninsured without questioning the data is just taking the assertion on faith.  

 

The President makes a point of the ER visit.  There is no dispute that this is an access point to the health care system by many unisured.  Even talk radio show host, Sean Hannity,  uses easy access to ERs as evidence that anyone could get care in the United States whether they have insurance or not.   Indeed, when any person without insurance goes to the emergency room they are not turned away without treatment and, if they are medically unstable, they are admitted to the hospital and not discharged or transferred until they are stable. EMTALA, the Emergency Medical Treatment and Active Labor Act, makes certain of this. However, they are not getting free care.  

 

If they require admission, case managers check to see if they are veterans or are disabled, pregnant, elderly, blind, or poverty stricken. If they are, they essentially have insurance and are entitled to veteran’s benefits Medicare or Medicaid. However, the majority of the uninsured, who go to the ER, do not meet these criteria. Under these circumstances, none of the standard guidelines for reimbursements, discounts or prospective payments that apply to insurances apply to them and they are designated as self-pay. When someone is self-pay and outside of these guidelines, there are no discounts and they are expected to pay the full price for their services. This is odd, because, in a way, when the uninsured pay the full price, they essentially recover the costs that were adjusted off the accounts of insured patients who received discounts.

 

According to the Urban Institute and the Kaiser Foundation, the total medical care received by uninsured people is unclear  because some are chronically uninsured while others are uninsured for just a portion of the year. In both cases, their care could be as high as $98.9 billion. Whatever those costs are, 35% are out-of-pocket, paid by the uninsured. Remember, they get no discount. Insurance companies, Medicare, and Medicaid all have essentially negotiated discounts that pay as little as 50 cents on the dollar of true charges. Therefore, the 35% of out-of pocket costs, 35 cents on the dollar, is almost what would have been reimbursed if these people had insurance anyway. There are philanthropic contributions to offset the cost of the uninsured which adds another 10%,  Federal, state and other private sources of funding add still another 20%. These, in particular, are the costs that can truly be said everyone pays.  The combination of out-of-pocket payemts and these other sources is 65% of the true charges for the care of the uninsured, which is at least the same percentage of the true charges paid by third party payers on behalf of people with insurance.  There is still another 35% of all charges for the uninsured that remain completely uncompensated. No American pays for this 35% and eventually, these charges are unrecoverable bad debts that are just written off and absorbed by the providers

 

Whether by happenstance, as in totally uncompensated write offs of charges for the uninsured, or by design, as in routine adjustments of charges for people who get the discount, the net effect is exactly the same, namely, approximately 35% of all health care charges for both the insured and the uninsured are never recovered.   What business, other than the businesses of doctors and hospitals, is expected to operate with 35% of all accounts receivable having to be written off?  This is unsustainable.