Let’s say that a “not show a profit” hospital happens to be paid 3 times by Medicaid what our surgery center is paid by a private insurer.  Yes, you read that right and it’s actually true.  Keep this in mind as you hear politicians talk of their concern about government spending and the bankruptcy of health plans like Medicaid! Let’s break this down.  

Let’s say that the surgical procedure we are considering results in a payment to our surgery center of $1000 from private insurance (an actual example).  Actually, the $1000 is what the insurance company calls the “allowable” charge.  If  a patient has a $2500 deductible, it should be clear that they are paying for this particular procedure completely out of their pocket if they’ve not met their deductible.  If they have met their deductible they are probably still going to have to pay some percentage of the $1000, probably 20-40% out of their pocket, still a significant portion of the charge, given that they have paid $800-900/month, minimum, for this “coverage.”  

Now let’s look at this from the hospital angle.  Same procedure.  Medicaid pays the hospital $1500.  Then the disproportionate share hospital padding is added, in this case, another $1000.  Then, the “provider tax” (see my blog about how this works here) amount kicks in, bringing the payment to a little over $3000.  But wait a minute.  The hospital doesn’t pay tax!  This “minor” concession basically doubles the value of the compensation!  

But wait.  Isn’t the hospital cost-shifting to everyone with private insurance due to the “losses” they sustain on these Medicaid payments?  It’s not hard to show losses if you subtract their Medicaid compensation from their outrageous hospital bills, though, is it? And the uncompensated care padding is predicated on the “not for profit” hospitals generating these fictitious “losses.”   Wasn’t one of the main reasons we were saddled with the Unaffordable Care Act was to guarantee payment to these “struggling” hospitals, so they wouldn’t shift costs to the rest of us to cover these Medicaid “losses?” 

Now keep in mind I am comparing private insurance payment at our facility to Medicaid payment at a “not for profit” hospital.  I have done this intentionally so that you can see that the worst paying insurance (Medicaid) pays the hospitals multiples of what private insurers pay our facility for the same procedure.  

Big hospitals going broke?  Give me a break.  Little hospitals are going broke thanks to the big hospitals, that’s for sure.  Hospital bills high because costs are shifted from Medicaid and other losses to those who are paying?  Give me a break.  Obamacare will lower our health costs due to its remedy of this situation?  Seriously?

G. Keith Smith, M.D.