Information released this week by the American Hospital Association (AHA) shows how the worsening economy has taken a toll on U.S. hospitals. 

According to AHA, U.S. hospitals provided $36.4 billion in uncompensated care in 2008, a $2.4 billion increase over 2007.  Uncompensated care is the combination of bad debt (money hospitals expected to receive for care provided but did not) and charity care (money not expected to be received from patients who met the hospital’s guidelines for free care). 

In Iowa hospitals, uncompensated care totaled $709 million in 2008, up from $613 million in 2007. 

Meanwhile, underpayment by Medicare and Medicaid to U.S. hospitals reached $32.4 billion in 2008, up from $31.9 billion in 2007 and $3.8 billion in 2000, respectively.  Medicare reimbursed 91 cents and Medicaid reimbursed 89 cents for every dollar hospitals spent caring for these patients.  In Iowa during 2008, Medicaid losses totaled nearly $178 million, while Medicare losses amounted to $103 million. 

The poor economy and the rising cost of insurance have led to more people becoming uninsured.  Research has shown that for every one percentage point increase in unemployment, 2.5 million people lose their employer-sponsored insurance.  More uninsured people means more spending by hospitals to pay for care for people who cannot pay for it themselves. 

Some of the uninsured qualify for government assistance to pay their medical bills, often through the Medicaid program.  But Medicaid doesn’t pay hospitals for the full cost of care (neither does Medicare, but Medicaid pays even less) and hospitals must cover the difference.  With more people going on Medicaid, that difference is growing larger. 

How does this impact hospitals?  Well, for one thing, the growing demand for charity care and more instances of bad debt makes it harder for hospitals to pay better salaries (it’s well known that Iowa nurses salaries are among the lowest in the nation) that help keep medical professionals (particularly young ones) in the state.  It also makes it harder for hospitals to build reserves that pay for replacing aging equipment and improving services. 

But uncompensated care and underpayment by Medicaid and Medicare also impact individual Iowans, because these costs are shifted to payers who do cover their full cost of care – mainly people who are privately insured.  In Iowa, Wellmark has estimated that 10-15 percent of the dollars it pays to Iowa hospitals and physicians is to compensate for government programs’ shortfall. 

Uncompensated care and underpayment by Medicaid and Medicare are always a challenge for hospitals.  This is why IHA supports efforts to insure more Iowans and more Americans and why IHA has fought to keep the government from cutting Medicare and Medicaid payments.

William Galbraith
Physician
Mercy Medical Center-Cedar Rapids

William B. Galbraith, M.D., personifies the truest definition of a “Hospital Hero.”  For years, he has reached out to those in need.  His selfless commitment to his practice and the community is remarkable and genuine, a reflection of his true character.

His professional knowledge, skill and expertise as a medical practitioner are impeccable. Dr. Galbraith directed the University of Iowa Medical Outpatient Clinic for four years and practiced internal medicine for more than 30 years in Cedar Rapids. He was a consultant internist before subspecialty internal medicine became the rule. He was president of the Linn County Medical Society, the medical staff of Mercy Medical Center and a Director/Emeritus Director of the American Board of Internal Medicine. His efforts established the Crawford Diabetes Education Center at Mercy in 1986 and he served on its board.  Upon retirement from private practice, he returned to the university as a Professor of Clinical Internal Medicine before retiring again in 1998.

But Dr. Galbraith truly shines in his tireless advocacy for those with the most urgent need for health care: the working poor.  His leadership helped establish the Community Health Free Clinic in 2001. Funded entirely through charitable donations, this clinic has become a major medical facility in its own right, tending to the medical needs of the uninsured and under-served of east-central Iowa.

But the clinic would not be where it is today without Dr. Galbraith’s perseverance. Thanks to his acumen in organizing, fund-raising and problem-solving, the Community Health Free Clinic is still able to charge no fees for its services.

Clinic co-founder Darlene Schmidt characterizes Dr. Galbraith as a “one of a kind” gentleman, consensus builder, visionary, listener and patient advocate.  Colleagues praise him as a healer and mentor whose moral and ethical standards are above reproach.

A recent article in the New York Times illustrates the travails for one U.S. Senator as he finds himself between a health care reform rock and hard place.  The Senator is Florida’s Bill Nelson.  The rock is more than 1 million Florida senior citizens who enjoy spa-like services under Medicare Advantage.  The hard place is 50 million nonelderly uninsured individuals in the U.S., including more than 3.7 million in Florida. 

It’s a bit of a gut-check for Nelson, a Democrat, as he is forced to balance his loyalty to party and president against perhaps the most motivated voting bloc in the country.  And motivated they should be.  After all, Medicare spends an average of $8,794 a year on each Medicare enrollee (compared to $6,204 in Iowa) and an average monthly Medicare Advantage payment rate of $1,013 (compared to $752 in Iowa).  Clearly, Medicare Advantage has been a big hit in Florida, which is why it has a 28 percent market penetration, compared to barely 12 percent in Iowa. 

Just where Nelson is leaning is clear from the Times article, in which he declares, “It would be intolerable to ask senior citizens to give up substantial health benefits they are enjoying under Medicare…I am offering an amendment to shield seniors from those benefit cuts.” 

Iowans, of course, have subsidized Medicare health benefits in Florida and other high-flying states for years, as Congress and the Centers for Medicare & Medicaid Services have allowed geographic disparity within Medicare to go unchecked, despite reams of data that show (1) it’s unnecessary and (2) it doesn’t benefit patients and, in fact, appears to detract from their quality of life, if not their overall health.  Speaking of “intolerable” – it’s doubtful that the Sunshine State Senator is aware that Florida is in the top 10 for Medicare spending and the bottom 10 for quality of care provided to Medicare beneficiaries. 

The good Senator gauges the situation by the e-mails and letters he has received, including, apparently, those coerced by Humana, one of Florida’s big Medicare Advantage insurers.  (Humana has since been taken to the CMS woodshed for using its Medicare Advantage database to further its political advocacy.)  What he should be looking at is why his state, home to the most expensive Medicare region in the country (Miami, at more than $16,000 per enrollee per year) is such a Medicare outlier.  That kind of guzzling at the public trough is bound to get you some well-deserved attention. 

It boils down to a basic question of equity.  Floridians are simply being asked to shoulder a small portion of what Iowans have hauled around since the Medicare Prospective Payment System was put in place.  Whether or not they choose to see the bigger picture and support a reformed national health care system that prioritizes patients – not just services – will depend a great deal on the words and actions of leaders like Senator Nelson and those who can, if necessary, neutralize him.