Fresh pain for healthcare providers, too

I like to keep up with what others are writing about healthcare, especially healthcare finance. It's kind of my job, you see. As part of that chore, I subscribe to several different magazines, e-mail newsletters and the like. So you might imagine I was quite interested in BusinessWeek's cover story last week that focused on the problems of the uninsured, titled "Fresh Pain for the Uninsured." Depending on whether you believe the hype or not, there are up to 47 million uninsured in this country. When they get sick, they go to your emergency room. For years, you have taken care of them and written off their debts. So you've been training people not to pay for years, and now it's coming back to bite you with a vengeance. You can't afford to do that anymore.

Nonprofit hospitals today face a world of financial pressures their forefathers and foremothers never did. With Medicare, Medicaid and commercial insurers cutting payments and loads of people choosing to go without health insurance, healthcare cost increases are unsustainable, and the government is pushing back with payment cuts while commercial insurers are negotiating contracts with tougher tactics. Employers are forcing their employees to pay more of the cost of their care, too, putting heretofore never-seen burdens on hospitals to collect that money. None of this is new to readers of this newsletter, I'm sure.

Back to the BusinessWeek article. I enjoy the magazine. I even enjoyed this article and thought, for the most part, that it was well-balanced--eliciting sympathy for both the hospitals and the working people in debt up to their eyeballs from medical problems. I did feel pity for those personal stories. It's much easier to tug a reader's heartstrings with stories of individuals who have gotten caught in the vicious cycle of medical debts than to tell a story to a general audience about the variety of factors that have forced hospitals to start trying to collect on bills they usually just wrote off. Now, you're getting flack for trying to collect those debts.

But my major beef with BusinessWeek is their choice to make Mia and Jase Redick their poster children for the plight of the uninsured (they grace the cover of the magazine). We're talking about a couple, with two kids, who make about $90,000 a year. They're certainly not rich, but are solidly middle class with that income. As the story points out, Jase lost his full coverage when he left his job with the state of Georgia to become a state contractor. Jase and Mia voluntarily decided to go without insurance "to save money." What happened next was predictable, though not desirable. Mia had a minor stroke due to a congenital heart condition and the next thing you know, they're more than $30,000 in debt, and because they chose not to take the hospital's offer of a 15 percent discount in return for paying off the balance within 90 days, they took a payment plan with a 14.5 percent interest rate.

I feel some sympathy for them, especially with the fact that they counted on their local hospital's no-interest payment plan that had been in place for years. But the bottom line is that they gambled and they lost. That 14.5 percent interest is extreme, and perhaps the hospital could have worked harder to find a more patient-friendly financing partner, as did Cadillac, Mich.-based Mercy Health in this story I wrote for HealthLeaders magazine's October issue, but ultimately, the Redicks' plight came down to personal responsibility. Although this particular story is for the most part well-balanced, it never ceases to amaze me, and you too probably, that hospitals are so often painted as the villain in these cases. The reason is simple--the buck stops with you.

The truth is, until very recently, those of us who pay for insurance footed the bill for people who could afford but chose not to buy health insurance and then defaulted on their medical bills. It's good to see that it's not quite as easy to game the system this way anymore.

A little-discussed reality about the uninsured is that according to the Census Bureau and many economists' studies, between one-fourth and three-fourths of Americans without health insurance can afford it. Like the Redicks, they choose to spend the money elsewhere. We all know someone who is currently dealing with health problems. Most of them wouldn't dream of going without health insurance for fear what happened to the Redicks would happen to them. But some of us are gamblers, and the odds for such gamblers just went lower.

When no one is willing to subsidize risky decisions like the Redicks' anymore, someone has to pay. And it's not going to be the hospital any longer.