Tag Archives: Hospitals

Administration Plays “Medicaid Hardball” With Holdout States

Obamacare was supposed to dramatically increase Medicaid dependency in exchange for reducing some direct federal funding of hospitals. Now, some governors of states that rejected Obamacare’s Medicaid expansion are reacting negatively to the federal government’s cutting back hospital funding.

Governor Rick Scott of Florida is suing the federal government for proposing to cut Low-Income Pool (LIP) funding to hospitals, which he describes as retaliation for the state rejecting Medicaid expansion. Now, it looks like the Administration is issuing the same threat to Texas.

It is not clear why the Administration cares whether federal money sent to a state for health care is sent to Medicaid or directly to hospitals.

NCPA’s long-standing proposal for a universal, refundable tax credit addresses the issue as follows: If people do not claim the tax credit for health insurance, it gets sent to a safety-net facility where they reside. We haven’t gone deep into the details of how that gets executed. Although, my latest proposal is that all federal funding for welfare be bundled into unified Opportunity Grants

Obamacare’s Hospital Monopolies

Obamacare induces significant consolidation among providers, which the Federal Trade Commissioner has long recognized can be anti-competitive. State antitrust overseers are also pushing back against this effect:

During the 2008 financial crisis, “too big to fail” became a familiar phrase in the U.S. financial system. Now the U.S. health-care system is heading down the same path with a record number of hospital mergers and acquisitions—95 last year—some creating regional monopolies that, as in all monopolies, will likely result in higher prices from decreased competition.

Some see the dangers. In a rare move, Massachusetts Superior Court Judge Janet Sanders recently blocked Partners HealthCare—Harvard’s affiliated 10-hospital conglomerate and Massachusetts’ largest private employer—from acquiring three competitor hospitals.

(Marty Makary, “The Obamacare Effect: Hospital Monopolies,” Wall Street Journal, April 19, 2015)

Hospitals “Turbocharge” Medicare Claims

Today’s Consumer Price Index release shows a big jump in prices for hospital services. The Wall Street Journal has an exemplary piece of investigative journalism discussing one way hospitals gouge Medicare:

A Wall Street Journal analysis of Medicare claims data and financial filings from medical facilities shows that many hospitals increased prices faster than costs rose, affecting outlier payments. The Journal identified $2.6 billion in overpayments Medicare made to general hospitals between 2010 and 2013 because of overestimates of hospitals’ costs—about one-sixth of outlier payments in the analysis.

At Christ Hospital, more than 40% of outlier payments between July 2012, when the hospital was acquired by an investor group during bankruptcy proceedings, and the end of 2013 were due solely to an increase in prices, the Journal analysis shows.

The Medicare agency took steps in 2003 to deter hospitals from raising prices to increase outlier payments, sometimes referred to as “turbocharging.”

(Christopher Weaver, Anna Wilde Mathews, & Tom McGinty, “Medicare Pays as Hospital Prices Rise,” Wall Street Journal, April 15, 2015)

Well, that’s 12 years ago, and it obviously hasn’t worked. The only way to get hospitals to quite manipulating chargemaster prices is to get the government out of fixing hospital charges.

Boom! Hospital Revenue Up 5 Percent in Twelve Months

This morning’s Quarterly Services Survey (QSS) released by the Census Bureau reported that hospitals’ revenue rose 4.9 percent from the end of the second quarter in 2013 to the end of the second quarter in 2014. From the first quarter to the second quarter of 2014, it jumped 2.8 percent, overcoming a first quarter drop of minus 0.8 percent. Revenue for ambulatory services rose only 2.4 percent in the same twelve months. It jumped 3.0 percent from the first quarter of 2014, but had dropped 2 percent in the first quarter from the end of 2013.

The QSS surveys a sample of service businesses, and is assuming increasing importance in economic research. It is important because it reveals complementary — and in this case contradictory — data about health spending. As I’ve discussed frequently at this blog, healthcare employment is growing steadily, but not in hospitals. Growth is in the outpatient setting. I had hoped that this indicated that health services were moving out of the high fixed-cost hospital setting and into lower fixed-cost outpatient settings, especially convenient retail clinics.

Continue reading Boom! Hospital Revenue Up 5 Percent in Twelve Months

Government Spending on Uncompensated Care is Less Than One Half of One Percent of Government Health Spending

One of the reasons given for universal health insurance coverage is that uninsured people receive medical care but do not pay their bills. It’s true: A new analysis published by the Kaiser Family Foundation estimates that providers delivered $84.9 billion worth of medical care to uninsured people, for which they were not directly paid. However, federal, state, and local governments compensated providers $35.9 billion, leaving $49.0 billion truly uncompensated.

health-care-costsIs that a lot? Well, all levels of government spent $1.3 trillion on health care that year. So, government funding of uncompensated care is 0.4 percent of all government health care spending. If government stepped up and compensated the remaining $49.0 billion, the total payout would amount to about one percent of all government health spending.

Is this really something we should be turning ourselves inside out over? Especially given the evidence that Medicaid does not give timely access to care, and the emerging signals that ObamaCare reduces timely access to care, it is far from clear that adding ObamaCare’s insurance bureaucracy on top of this situation is going to be worth the trouble, even for the beneficiaries.

Continue reading Government Spending on Uncompensated Care is Less Than One Half of One Percent of Government Health Spending