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FORUM Toward Redistributing Health Care Costs Renee Hsia Photo by Jeff Cleary Mr. Richards is uninsured. He comes in for chest pain and is admitted for a "rule-out myocardial infarction." Whether we know he is uninsured or not, it does not change our management. He is admitted, waits for three sets of negative cardiac enzymes, and maybe a stress test. He is sent home; we have taken care of him; and everyone is happy. So who paid for his care? The providers may have only a vague understanding that some form of cross-subsidization takes place. The "Robin Hood" effect does not bother us and, perhaps for some, seems appropriate. But it is this short-sightedness that blinds us to the larger, systems problem. A Burden on Providers The uninsured patient follows one of two financial pathways. While in-house or after discharge, the patient typically is screened for MassHealth. If he qualifies for this Massachusetts version of Medicaid, his payments are taken care of via Pathway A. If his income level surpasses the allowed amount--for a one-person family, this is $11,943--he is not eligible for Pathway A and falls to Pathway B, where he must pay for everything out of pocket. Pathway A has significant consequences for health care institutions. For MassHealth patients in 2003, for example, Massachusetts General Hospital spent $104.8 million and received only $53.8 million in payments. So the net loss was $51 million. Massachusetts, however, runs another program similar to Medicaid, but slightly more generous, called FreeCare. This program caused MGH an additional loss of $29 million last year. Total net loss: $80 million. Everyone pays for the uninsured, but there still is room to make this process more transparent, efficient, and equitable. --Renee Hsia In other words, even the cost of care--not just the price--is not met. MGH President Dr. Peter Slavin comments that other industries would never accept this treatment: "If the government needs paper from Staples, for example, they would never even think of paying Staples less than what it costs. But in health care, they know that part of our ethos as physicians is to take care of everyone, and it is easy to take advantage of us." Eventually, then, the number of candidates in Pathway A can grow to the point where a hospital simply cannot see uninsured patients since, very simply, they will not be able to survive this steady financial bleed. Past the Safety Net While hospitals and those of us who work in them suffer most directly from the effects of Pathway A, it is the patients in Pathway B who become trapped by the health care system. Those in this pathway either have no insurance or have some form of insurance that does not cover what they need (an increasingly common phenomenon as some employers give skimpier benefit plans), and are thus underinsured. Pathway B candidates are forced to pay the sticker price of medical care, which is inordinately more than the actual cost since the low reimbursement levels from third-party payers drive hospitals to accelerate their yearly mark-ups on care. It is encouraging to see efforts toward increasing the eligibility for government-funded programs so that fewer people who cannot afford care are left in Pathway B. Yet an expansion in eligibility without a concomitant increase (much less a decrease, which is the current situation) in reimbursement levels exacerbates the problem. In the end, if hospitals fail, everyone loses. In essence, we the insured pay for the uninsured very inefficiently through both our federal and state taxes, as well as our insurance premiums and deductibles, which are inflated due to the charges hospitals must set to cover government shortfalls. The Uncle Sam Solution What can we do? In the short-term, higher reimbursement levels from the government for indigent patients would mean hospitals could set prices for everyone else that were closer to actual cost, thereby reducing the incredible burden on those paying out of pocket for their health care. In the long-term, getting all patients a form of sustainable insurance would plug the leak in the financial hemorrhage. Shifting more of the costs of the uninsured explicitly to the government and away from the nebulous chain of events borne variously throughout the health care system would have these effects: 1) a healthcare market less skewed by price inflation since hospitals would not be forced to be in the business of income redistribution; 2) costs that were paid for in the form of federal income tax, which is income-proportional; and 3) fairer pricing, since the necessary slack in the system to pay for shortfalls does not necessarily link the money to the hospital providing the most service to the indigent. Put simply: everyone pays for the uninsured, but there still is room to make this process more transparent, efficient, and equitable. --Renee Hsia, a fourth-year medical student at HMS The opinions expressed in this column are not necessarily those of Harvard Medical School, its affiliated institutions, or Harvard University.