Anyone who deals with the health-care system in the United States knows it is no joking matter — but a little levity can help. To wit, a tale from the Internet:
An American, a Scot and a Canadian were in a terrible car accident. Transported to the emergency ward, all three of them died before the doctor could see them. Just as the toe tag was being slipped onto the American, he opened his eyes and sat up. Astonished, the doctor asked him what happened.
“Well,” said the American, “I remember the crash, and then there was a beautiful white light. Suddenly the Canadian and the Scot and I were standing at the gates of heaven. Saint Peter looked us over and said that we were too young to die. He decided that for a donation of $50 each, we could return to earth. Of course I pulled out my wallet and gave him the $50, and the next thing I knew I was back here.”
“That’s amazing!” said the doctor. “But what happened to the other two?”
“Last I saw them,” replied the American, “the Scot was haggling over the price and the Canadian was waiting for the National Health Service to pay for his.”
Chuckles aside, there are clear parallels between that fictional trio and the current health-care system in this country. The American, like his privately insured compatriots, is accustomed to shelling out for deductibles and copayments. The Scot (a.k.a. the uninsured) relies on his bargaining prowess to negotiate reductions in the full-fare fees that he is charged, and the Canadian knows that the government will pick up the tab, much as the U.S. government does for Medicare and Medicaid.
Is this any way to run a health-care system?
Increasingly, the answer is a resounding no, as costs spin out of control, access becomes more difficult for those who lack the means to pay, and inequities pile up like so much surgical gauze.
Let’s face it: National politicians and pundits give health care a lot of lip service. But once the balloting is over, the ungainly topic loses its appeal and is swept aside to fester for another four years.
A new presidential campaign is upon us, and health care once again hovers near the top of the issues list. Several candidates have already unveiled their proposals to fix the system. The real question we should be debating isn’t “will it work?” but “can we afford for it not to?”
Like most bloated bureaucracies, our health-care system runs on numbers — BIG NUMBERS — that make those generated by the Department of Defense pale by comparison. For starters, $2 trillion was spent on health care in the United States in 2005 alone, more than four times the DOD budget for the same period.
The fact is that our country spends more on health care than other industrialized nations that provide universal health insurance to their citizens, yet 16 percent of us are not covered. Statistics from the National Coalition on Health Care for that population segment alone are staggering:
• 47 million Americans are uninsured
• $100 billion was spent on health services for the uninsured
• $37 billion in charges was picked up by private and public payers
• $34 billion in uncompensated care was provided by hospitals
• $26 billion was paid out of pocket by the uninsured.
Throw into the mix Medicare and Medicaid recipients (87 million combined, generating $602 billion in benefits) and employees covered by company-provided health insurance (whose average out-of-pocket costs for deductibles, copays and coinsurance have soared 115 percent since 2000), and the enormity of the problem is apparent.
Nonprofit hospitals, whose services account for the largest slice of the health-care pie, are hard-pressed to maintain a positive operating margin while meeting their mandate to provide care to all, regardless of ability to pay. Doctors struggle to reconcile their massive investment of time and money in their careers with skyrocketing liability premiums and the stark economic reality of dropping patients or services that are no longer profitable. And consumers are left holding increasingly thinner wallets as they grapple with premiums, medical costs and taxes that are on a continual uptick.
To explain the situation, Brian Grissler, president and CEO of Stamford Hospital, quotes Princeton economics professor Uwe Reinhardt: “There are three aspects to health care: cost, quality and access. Society can have two out of the three, but not all three. Which two do you want?”
In Connecticut, health-care officials and the medical establishment are hoping it never comes to that.
On the plus side, close to 94 percent of state residents are insured, through either self-purchase, an employer, Medicare, Medicaid or state assistance, according to figures from the Office of Health Care Access (OHCA). Private insurance experienced a slight rise between 2004 and 2006, when the state added 30,000 jobs and the share of residents with employment-based coverage increased from 64 to 66.5 percent. In the same period, those with public coverage declined from 26.2 to 23.3 percent.
OHCA statistics also paint a revealing portrait of just who makes up the majority of Connecticut’s uninsured: working adults between the ages of nineteen and thirty-nine employed in permanent full-time jobs. They lack coverage because two-thirds of their employers don’t offer it. When it is available, the premiums and deductibles are often budget busters.
“We’re seeing a trend out there with larger and larger deductibles — $5,000 is not uncommon,” says Beth Martin, Norwalk Hospital’s director of patient accounts. “And there are a large number of self-employed individuals in this area carrying their own insurance, who make a conscious decision to pay lower premiums and roll the dice that they’ll be healthy. Unfortunately, that often translates to higher deductibles.”
Ironically, the so-called working poor frequently earn too much to qualify for state-funded coverage like Medicaid, HUSKY (which covers children up to the age of nineteen) and SAGA (for the indigent).
So where do these individuals end up when they or a dependent is sick? Free clinics, like the one run by AmeriCares in South Norwalk, are one option. Old Greenwich internist Dr. Burt Rubin, who volunteers in South Norwalk, says the clinic tries to “fill the holes in the dike.”
“We do the best we can for these people, but without some type of state program to help them out, they’re not going to get optimum medical care,” he admits. “They can’t afford it. They don’t have high incomes or medical insurance, so they can’t get preventive care. When they develop more serious problems, they wind up in emergency rooms, where the hospitals take care of them for free.”
Indeed, hospitals have become the safety net for the uninsured, to the tune of $518 million in uncompensated care last year alone. Connecticut Hospital Association’s Director of Communications Jennifer Barrows says its members are frustrated.
“Talk about expanding the safety net to cover those who are uninsured scares them terribly because the system, as it stands, is not working as it should,” she explains. “The slogan we’ve been using is, ‘Mend the current safety net before you expand it.’”
Ask a hospital administrator what’s wrong with the system, and it doesn’t take long before the words Medicare, Medicaid and reimbursement rates start cropping up in the same sentence. With the annual shortfall for Medicaid alone running about $250 million in Connecticut, their complaint that government-run programs just don’t pay enough seems valid.
In 2005, for example, Norwalk Hospital received reimbursement of eighty-seven and seventy-one cents on the dollar from the two programs, respectively. That shortfall helped run up the hospital’s uncompensated care costs to $8.4 million for the year.
“There are certain patients that we accept that we know we’re not going to get paid for,” explains Chief Financial Officer Tom Breen. “It’s a cost that we’ve got to bear as part of our charitable mission, and we do that by passing those costs on to patients who pay.”
Known as cost shifting, the practice tends to blur the lines between charges, payments and costs. OHCA’s 2006 “Annual Report on the Financial Status of Connecticut’s Short Term Acute Care Hospitals” includes the following explanation of the practice: “A hospital may charge $9,000 for a specific medical procedure. The discount agreement negotiated between one payer and the hospital for that procedure may be $8,000, while another payer may have a negotiated rate of $7,600 for the same procedure. In turn, the actual cost to the hospital of providing that procedure may be only $6,500.”
In 2005 Norwalk Hospital’s private payment to cost ratio was 1.3, or 130 percent of what it costs to provide the services. At Stamford Hospital the cost ratio was 1.35.
“We’re basically taxing the people who pay their health-insurance premiums,” admits Grissler, who is quick to point out the irony of the situation. “Every budget year, when I buy insurance for 2,800 employees, I’m in the unique position of not only executing our own strategy, but bearing the results as well.”
It’s all a matter of economics, agrees Norwalk Hospital’s Breen. “We have a budget, and every year it’s a challenge because we never get paid all that we want to be paid,” he says. “In terms of establishing charges and what you can negotiate with payers, it’s a function of making sure that we can cover all our expenses.”
Overcharging doesn’t end with the insurance companies and premium payers. A study released in May by Gerard Anderson, an economist at the Johns Hopkins Bloomberg School of Public Health, reveals that hospitals nationwide routinely charge the uninsured and self-pay patients two-and-a-half times what insured patients pay and more than three times the costs allowed by Medicare.
Euphemistically called “pricing flexibility” by some, it’s been a financial fact of life for hospitals for decades. However, Anderson is critical of the practice.
“In the 1950s the uninsured and poor were charged the lowest prices for medical service. Today they pay the highest,” he says. “The markup on hospital care for these individuals, especially for those who can afford it least, is unjustifiable.”
Physicians, too, are feeling the economic squeeze. Dr. Rob Goldberg is one of five doctors at Avery Center for Obstetrics & Gynecology, with offices in Westport, Fairfield and Norwalk. Over the past dozen years, he’s witnessed many changes in his field; most, he says, are for the worse.
“I was really naive when I first went into medicine,” the New Canaan resident admits. “Unfortunately, economics became a reality very quickly.”
One of the biggest realities is skyrocketing malpractice insurance rates, which have hit OB/GYNs particularly hard. Dr. Goldberg reports that his practice’s premiums are five times higher than when he first joined, adding that he personally has never been sued.
Uncertainty over future increases causes him to question how much longer Avery can remain a full-service practice. “There are OB/GYNs in Stamford who could not get malpractice insurance, so they went without insurance and they couldn’t deliver their patients,” he notes. “You hold your breath every year when your policy comes through to see what your new rate is and if they’ll insure you. It’s a terrible way to have to practice.”
Statewide, the medical liability insurance crisis has been directly linked to the loss of thirty-five OB/GYNs and sixty-four doctors performing deliveries between 2002 and 2004. An analysis performed by Stamford OB/GYN Leonard Ferrucci reports that physicians facing annual insurance premiums as high as $150,000 are retiring early, leaving Connecticut or giving up high-risk procedures, generally defined as obstetrics.
“Based on current trends, this decline will continue unabated,” he concludes. “This trend can only be reversed with meaningful tort reform and immediate premium relief.”
Dr. Ferrucci adds that, due to the high cost of medical liability insurance and the associated repercussions, the number of medical students choosing obstetrics and gynecology as a career is steadily declining and residency positions are going unfilled. And he notes that the existing crisis mode in Connecticut has landed it on the American Medical Association’s list of twenty-one crisis states.
As a result of the new economic reality — including physician fees that are fixed by HMOs, Medicare and Medicaid — some doctors at the Avery Center have stopped accepting Medicare patients on the recommendation of their financial advisor and accountant.
“For what we get compensated for a Medicare GYN checkup, it’s costing us money to see that patient,” Dr. Goldberg explains. Still, he insists that that if a patient can’t afford his services, “I’ll do what I have to do to make sure she’s taken care of.
“We made a commitment to give back to the older population, but it got to the point where we could not stay afloat and continue for all of us to accept Medicare,” he says. Other altruistic gestures, like donating time to local free clinics and Planned Parenthood, have also been discontinued by the practice.
Dr. Goldberg admits that he has considered leaving Fairfield County, lured by states that have caps on malpractice insurance, where rates “are kind of under control.” But his familial ties to the area and dedication to his patients keep him here — for now.
“I’m not a trust fund baby, and I don’t practice OB/GYN as a hobby,” says this son of a construction worker. “It may get to the point that it’s an economic decision that I can’t afford to stay here.”
The State of Connecticut is taking some initial steps to address the health-care debacle, reports OHCA Commissioner Cristine Vogel. Over the summer, Governor Jodi Rell convened a task force of industry leaders to address the numerous issues and suggest hospital reforms.
Vogel pinpoints the main problem as the reimbursement structure of our health-care system, “a system where we constantly try to patch holes and make it better for that year.” Correcting it for the long term requires that states work together to change the entire system, not just pockets within it.
“Over the last few years, we’ve watched states try to do it independently,” she says, pointing to reform-minded Maine and Massachusetts as examples. “But all it takes is for someone to jump the border. If they have insurance in Massachusetts but then move to Connecticut, they become uninsured. That’s not a long-term way to provide coverage and access for everybody.”
Dr. Rubin, who is also the current president of the Fairfield County Medical Association, advocates cutting waste from the system, beginning with the crippling defensive medicine costs. He cites a recent PricewaterhouseCoopers report that says these fees account for ten cents of every insurance-premium dollar.
He singles out advertising and corporate profits as two more potential areas of waste containment and calls on consumers to separate their health-care wants from health-care needs.
“They get a lot of things that they honestly don’t need, either because their doctors are nervous about the legal implications or the patients are so insulated from the costs that they’ll take anything, even if it has marginal benefit,” Rubin explains. “If patients had to pay for some of this stuff out of their own pocket, they’d be much more economical.”
But the general consensus is that the biggest change needs to come from Washington, despite its poor track record. Brian Grissler maintains that politicians view health care from a “high altitude bombing perspective,” a metaphor he picked up from a colonel in the air force’s Strategic Air Command.
“When he was doing bombing runs, he was looking at a scope at 40,000 feet and all he’d see was a little puff of smoke. He had no clue of the damage he was wreaking on the ground,” elaborates Grissler. “Politicians do a lot of that, and I think it’s only going to get worse. The costs of the boomers aging and the immigration factor — legal or illegal — are going to cause the numbers to grow.”
So as the politicos hit the campaign trail in earnest this fall, they might try casting health-care reform in a patriotic light. After all, as Dr. Rubin points out, “We talk about our constitutional rights in this country all the time: life, liberty and the pursuit of happiness. The question is: Is access to health care one of those rights? It may not be in the Constitution, but how can you have those other things if you don’t have access to health care?”