What in the world is this?  This is fraud, that’s what it is.  This is a number that hospitals come up with at the end of the year.  It’s a number that supposedly represents the amount of charitable care delivered for which they were not paid.  The hospitals report this number to the feds.  Then….ready?….they get car dealer like rebates from….ready?….YOU!  Yes, that’s right.

“But wait,” you say!  “Hospitals are all losing money because they have to see everyone that comes to their emergency room!  The uninsured are breaking the backs of our health care system!  The hospitals have to charge more for you and me to cover these losses sustained by caring for the uninsured!”

Ahhh.  If only that were true.  I suppose that’s why there’s a crane in front of every emergency room to build on and expand!  The hospitals are actually incentivized to overcharge the uninsured and poor to maximize their take at the end of the year!  What?!  That’s right.  The less you obviously have, the more you will likely be charged. Take a look at the state of Arkansas questionnaire on how to calculate eligibility for the “disproportionate share” program (what I’m calling rebates). To confuse matters further, the “rebates” don’t arrive until the subsequent year (what is called “prospective payment”).

Now, in all fairness, there is some argument amongst the hospitals about all of this.  You see, some of the hospitals, although participating in this scam, are angry at some of the others that are taking advantage of the “program.”  Some of the hospitals calculate this number differently than the others.  While the number is supposed to be the amount of uncompensated charitable care, some are actually using the difference between what they billed and collected…..for everyone receiving care.  What?  If the hospital charges $100 for an aspirin and insurance only pays them $5 for the aspirin…well, you see, they lost $95.  This number then is added to the big tally and the feds (your money and mine) compensate them for this terrible loss.  This loss also helps the hospitals maintain the fiction of their not-for-profit status.

The discipline of the free market is absent in so much of medicine.  The free market is the medicine that so much of American medicine needs (sorry that came out kind of corny).  The idea that more government, not less, will make things better in any way in the delivery of health care is simply idiotic.  This example illustrates that, I think.

G. Keith Smith, M.D.