Control health costs without raising taxes

By Tom Fitz

Health care costs are now approximately 17 percent of our gross domestic product and rising. The reasons include the aging of baby boomers; the increased needs for health care services as people get older; the increasing amount of “free care” provided to the uninsured or underinsured; the higher premiums paid to insurance companies; the cost of defensive medicine provided by physicians and the cost of providing health care that Medicare and Medicaid do not cover.

As the former head of a major health care system in Georgia, let me share several steps that can be taken to lower costs without, I believe, unduly burdening future generations of taxpayers:

● Make health care coverage completely portable across state lines, and allow businesses to join together across state lines to increase the risk pool among small businesses and lower insurance premium costs.

● Reform medical malpractice laws. The cost of malpractice insurance for a neurosurgeon is more than $100,000 per year in Georgia. Malpractice insurance costs are a huge barrier to lowering health care costs as are additional “defensive” medical tests ordered by physicians to avoid litigation.

● Eliminate denial of insurance coverage because of pre-existing conditions.

● Establish transparency of pricing and financial reporting in the insurance and pharmaceutical industries, with healthy limits on executive bonuses. There should be a “rule of reason” associated with such bonuses.

● Increase Medicare and Medicaid payments to physicians and hospitals to fully cover the cost of care.

● Provide direct payment to insurance companies ($10,000 per patient might be reasonable) for the approximately 2 percent of our citizens who can not afford insurance, and require those with the means to pay for their own insurance to do so. Provide a sliding scale for payment of insurance premiums for those who are underinsured.

● Provide financial incentives for new doctors to pursue specialties providing primary care in order to increase preventive care.

Most people do not realize that hospitals must treat anyone with an emergency, irrespective of whether they can pay or not, under the Emergency Medical Treatment and Labor Act. If a woman is pregnant, has no insurance and is ready to deliver, she is rushed to the delivery room and care is provided, even if the baby requires intensive care. The hospital cannot ask about payment until the emergency is addressed.

We should provide insurance for those who absolutely can’t get it. Of the approximately 45 million people who have no health care insurance, according to a recent Wall Street Journal article, “approximately one-fifth are illegal aliens, nearly three-fifths make $50,000 or more a year and can afford insurance, and just under a third are probably eligible for Medicaid or other government programs already.” That leaves about 2 percent with no coverage.

Providing the 2 percent of our fellow citizens who have no access to care with a $10,000 payment directly to an insurance company for coverage would be far less money than what’s been proposed and would not cripple our economy. Similarly, for the underinsured, payments on a sliding scale based on income could be provided for far less money.

Today, some health insurance premiums are increasing as much as 30 percent to 40 percent per year. Neither physicians nor hospitals are getting the money. In fact, a large and growing percentage of hospitals in Georgia are losing money, according to the Georgia Hospital Association.

Many physicians have actually seen their incomes go down over the last decade. Medicare determines what it will and will not pay for.

Hospitals have had much the same experience, getting little if any increase in payments, depending on their contracts with insurers.

The amount of bad debt in hospitals throughout the nation is rising sharply. Who pays for the care of those who cannot pay? It is people with insurance. Such cost shifting increases the cost of care for those with insurance.

With the continual decline in payments to physicians, many physicians are finding they cannot afford to provide care to those patients. Accordingly, a number of physicians are no longer willing to treat Medicare and Medicaid patients. That means those over 65 and the poor are facing a decline in access to health care.

With even further cuts in payments planned, many of our best and brightest young people will no longer find a career in medicine. Georgia already ranks among the worst in the nation in the ratio of physicians per 1,000 residents. Many young physicians begin their careers hundreds of thousands of dollars in debt. Cuts in Medicare and Medicaid payments, combined with the high cost of malpractice insurance, mean many will not be able to get out of debt in their lifetimes. Fewer doctors lead to less access to care, especially primary and preventive care.

Some hospitals are considering opting out of Medicaid because it does not cover the cost of care. Many hospitals are seeing Medicaid payments at around 76 percent of the cost — not the charges, but the cost — of providing the care. Once again, those with insurance pick up the shortfall. Essentially, what we have in place today is a social transfer tax to cover the cost of what Medicare and Medicaid do not pay.

So, who’s doing well in this system? Over the last decade, according to a report from a major news network, insurance companies have seen their profits increase in some cases by 450 percent. A few years ago, the CEO of Wellpoint/Blue Cross received a bonus of approximately $250 million; and a year later the CEO of United Health Care received a bonus of approximately $450 million. I am all for executive bonuses, but there needs to be a rule of reason.

Tom Fitz retired as president and CEO of St. Mary’s Health Care System in Athens in 2008.