Hospitals Respond to Obamacare’s Perverse Incentives: ED Use Up, Charity Care Cut

Physician and Nurse Pushing GurneyHospitals, inveterate lobbyists for Obamacare, have responded rationally to its incentives: They have increased use of their emergency departments, and cut charity care.

NPR had a feature on hospitals’ using online services to allow frequent flyers to book appointments at the ED:

Three times in one week, 34-year-old Michael Granillo returned to the emergency room of the Northridge Hospital Medical Center in Southern California, seeking relief from intense back pain. Each time, Granillo waited a little while and then left the ER without ever being seen by a doctor.

“I was in so much pain, I wanted to be taken care of ‘now,'” says Granillo. “I didn’t want to sit and wait.”

But on a recent Wednesday morning, he woke up feeling even worse. This time, Granillo’s wife, Sonya, tried something different. Using a new service offered by the hospital, she was able to make an ER appointment online, using her mobile phone.

Isn’t that exactly the sort of thing that Obamacare was supposed to stop? All those newly insured patients are supposed to get timely primary care, nipping their health problems in the bud at low-cost points of care. Back in July, I wrote about this worrying development, and concluded that we might all end up getting our health care in the ED. Well, it looks like that is the hospitals’ goal:

Recently, Dignity stepped up its marketing — with billboards, print advertisements and online and radio spots. One online ad features a woman sitting in a hospital waiting room, and then cuts to her on a living room couch with a dog, as the words on the screen read, “Wait for the ER from home.”

Who is not welcome? The uninsured, that’s who. We’ve previously discussed how hospitals’ increased Obamacare funding reduced their write-offs for charity care. Well, now their victims are coming out of the shadows:

Stephen Maxwell had struggled for years with a bad back, but what he felt in December was something new.

In January, Truman Medical Center, the hospital he has relied on for care, rolled back its financial assistance program. Truman used to provide free or discounted care for uninsured people making up to 400 percent of the federal poverty level — $46,680 for an individual. Now, only those making less than 200 percent qualify for the help. The change was intended to motivate people to sign up for health insurance plans through the Affordable Care Act (Kansas City Star).

Another Obamacare success story! Hospitals are where we spend most of our health dollars. And their incentives under Obamacare are worse than they ever were. The next health reform must ensure that hospitals are freed from the spell of perverse incentives.





Comments (6)

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  1. Perry says:

    Obamacare did not address physician manpower and in fact discourages docs from taking Medicaid (not a new problem) due to low reimbursement. My understanding is that the Obamacare plan reimbursements are not that great either. Added to the increase in newly insured seeing docs and not enough docs to go around, gives more incentive to go to ER for immediate care. Not to disparage severe back pain ( have had it myself) but this is something that can and should be treated in an office setting, not the ER.

  2. bob hertz says:

    To make a small point, many doctor’s waiting rooms are cramped and have stiff office chairs. When I had severe back pain about 20 years ago, I simply could not climb stairs or sit in a waiting room. I could not get in or out of a small car without extreme pain. ER’s have stretchers and ramps (as shown in the very picture in this article.)

    ER use only drains health care dollars when and if insurers pay all the loaded charges that hospitals pour into ER bills.

    No law of nature or economics says that insurers could not limit ER payments to $250 per visit, or $100 per hour of actual care, etc. Medicaid does this already.

    The solution is site-neutral payments. Instead virtually all health plans coddle hospitals and give them ‘financial healing.’

  3. Uwe Reinhardt says:

    If you look at real marginal costs, not charges, ED’s are not necessarily more expensive than regular office visits. If there is a shortage of primary care doctors in private practice, then using the EDs may be a very efficjent solution.

  4. Bob Hertz says:

    Thank you, Prof. Reinhart. I have said for years that once the ER is built and staffed, the cost of treating an extra patient is not high. After all, we do not stop the presses and hold emergency city council meetings when more people use the library, or when there are a few more fire department calls each month.

    However,if every ER user pays $200, is it possible that the hospital would go broke.
    Megan McCardle – who is not a professional economist, but writes well on the subject — brought this up in a piece entitled “Not everyone can be the marginal consumer.”

    Comments welcome!

  5. Big Truck Joe says:

    IRS Section 501(r) Stipulates financial penalties for charitable tax exempt hospitals to treat uninsured Americans. Obamacare wants to force everyone to be insured by the govt or privately and essentially stop allowing free healthcare from non profit hospitals to treat the uninsured. But as long as healthcare is perceived as “free” by the masses and hospitals advertise the low wait times in their ER, patients will continue going to ER for non-acute situations.