This week’s Courier Herald column:
Healthcare has been the dominant political issue for the past five years, with the battlefield and marching orders coming almost exclusively from Washington DC. Democrats managed to use absolute majorities in Congress and the White House to implement the Affordable Care Act, a/k/a “Obamacare”. Republicans managed to use the overreach to take the U.S. House in 2010 and the Senate in 2014. Democrats, however, were successful in re-electing President Obama in 2012.
Thus, in the battle over healthcare we now have the customary DC gridlock. While Republicans may manage to get a bill through Congress to repeal the ACA, it is highly unlikely that the President will repeal his signature legislation during the final two years of his term. The only real hope to break the gridlock is a pending Supreme Court ruling that will decide if citizens that did not set up their own healthcare exchange are eligible for premium subsidies.
This ruling, expected this Summer, will most likely come after Georgia’s General Assembly has gaveled to a close in early April. As such, while many realize much of Georgia’s healthcare delivery system is fundamentally broken, the state has only minor control over what can be accomplished locally. And yet, we have a crisis in rural areas with critical access hospitals.
Four rural hospitals have closed in the last 15 months. 15 hospitals are on the brink, with six considered operating “day to day”. Misty Williams of the Atlanta Journal Constitution recently took an in depth look at the problem, noting that rural hospitals lose money on 80% of the patients they see. They would need to make 300% of costs on their private pay patients just to break even.
Most acknowledge that some of these hospitals have no viable economic model. And yet, Georgia cannot turn our back on the 1.8 million citizens who rely on these hospitals and their physicians. Those who have access to state of the art facilities in metro Atlanta and Georgia’s larger cities should not look at this as just a rural Georgia issue. Rural hospitals are the canary in Georgia’s healthcare mine.
Governor Deal is expected to introduce several pilot programs to determine if other economic models than the traditional critical access hospital can work in some of Georgia’s most rural areas. These are the result of a year long committee of these providers, legislators, and other rural local officials who understand the need.
And yet, there will remain fundamental cost of service problems for all of Georgia’s hospitals, with rural ones showing the most strain. The AJC’s Virginia Anderson recently highlighted an example where Medicaid pays just over $40 for an office visit of “moderate complexity”. Medicare would pay roughly $72, while commercial insurance pays an average of $87. Even here, rural providers are at a distinct disadvantage.
Many of Georgia’s rural healthcare CEO’s spent a day at the capitol a couple of weeks ago. They noted that they do not have the negotiating power with their insurance carriers, as do suburban Atlanta hospitals with a significantly higher base of patients with private insurance. Many noted that they have as many as 2/3 of their insured patients concentrated with just one company. The negotiations are tilted in the insurance company’s favor.
In addition, many report that their insurance companies are rescheduling follow up visits for lab work and MRI’s at private clinics instead of the hospital that initially treated the patients. While a 9-5, Monday through Friday center can offer a lower individual patient cost, hospitals are still required to have these same facilities available every hour of every day. The “lower cost” just means the hospital loses revenue against a fixed overhead. This is not a net savings, but a transfer of potential profit.
We have a system where hospitals operate under a “Certificate of Need” which requires them to provide minimum services. The hospitals are also required to treat many patients regardless of their ability to pay. Given the high amount of regulation passed down from DC and additional rules imposed by the state, it’s hard to find any resemblance of the “free market” in modern health care. As such, those proposing “free market solutions” that involve scrapping CON should be given a healthy degree of skepticism.
There is nothing “free market” about mandating some providers absorb losses while creating carve outs for others to skim profitable patients. There is nothing “free market” about an insurance company with near monopoly market power intercepting one entity’s customers and shifting them to another provider.
Those who wish to legislate the ability to skim paying customers from the existing system without a plan in place to compensate providers at least for their cost of services are playing a game of Jenga with our healthcare network.
It is not the state’s role to create a “free market” for only some. The state’s goal must be equal treatment under the law. That, in a highly regulated industry like healthcare, must be the outcome.
Charlie Harper is the Editor of PeachPundit.com, and is the Executive Director of PolicyBEST, a group which works on policy solutions for Education, Science & Medicine, and Transportation.