US federal + state + local governments spend an obscene amount of money on healthcare. Including extra funding to keep many rural healthcare facilities open etc.
Other countries spend less government money per person on Universal healthcare than the US spends right now. Considering it's far from a universal system it's already subsidizing healthcare costs.
> US federal + state + local governments spend an obscene amount of money on healthcare. Including extra funding to keep many rural healthcare facilities open etc.
"Extra funding to keep rural healthcare facilities open" is exactly what I'm referring to.
Medicare rates are below what would be needed to sustain practices if they operated solely off of Medicare reimbursement rates. Medicare reimburses about 7% less than the costs of supplies, which means they're already losing money even before they have to pay things like staff wages, building maintenance, etc. The way they stay in business is by charging privately-insured patients much more, in order to cover the difference.
Some providers don't see a lot of privately-insured patients, and for those, Medicare provides two different payment programs (separate from normal reimbursements) in order to keep them in business. Otherwise, they would end up closing shop[0], because there's no way that they could sustain themselves off of Medicare reimbursement rates alone. For various reasons, this is more common in rural areas than it is in urban areas, though the program you're referring to does apply to some non-rural hospitals too.
So yes, when you say "Medicare pays extra funding to keep rural healthcare facilities open", you're actually referring to the exact reason that private insurers would love a transparent pricing system. It's not like Medicare pays this money to any rural facilities - they are forced to pay extra money to facilities that don't see enough privately-insured patients to cover the losses that they're making on Medicare patients. Private insurers (and providers) would love to have a transparent pricing system, because that would mean they wouldn't have to bend over backwards just to break even on their Medicare patients.
This isn't hypothetical; Medicare paying extra to these hospitals is a relatively new practice, and it was passed by Congress after a large number of hospitals were forced to close because they went bankrupt treating mostly or exclusively Medicare patients.
[0] Or just stop seeing Medicare patients, which is what many have done.
As mentioned above, citation needed. You're bandying around a lot of statements without any links or stats to back it up. Having watched the health care debate pretty closely in recent years I can honestly say I haven't seen this theory on Medicare being the primary problem. Where are you getting your facts from?
> As mentioned above, citation needed. You're bandying around a lot of statements without any links or stats to back it up.
Citation for what? I'm explaining the context of the subsidies that the parent commenter mentioned (themselves without citation). Of the 49 comments on this thread at the moment, there's only one other that includes any links at all, neither of which I'd really qualify as citations of factual information.
This is part of a broader pattern I see on Hacker News when the topic of health care comes up, where comments that present anecdotal information or reasoning that fits into the narrative of the article are accepted without evidence, but those which provide mitigating contextual information are held to standards which are comically high for an Internet comment.
Even in this case, we're talking about the correction I provided to information that OP mentioned without citation. The information about the critical access program is easily verifiable on Google (or even Wikipedia), so I'd hope that OP would feel comfortable verifying it (and providing a citation) before commenting with the misinformation.
The government literally has an entire class of hospital that receives extra taxpayers subsidies because they have a high proportion of Medicare patients.
They are called Disproportionate Share Hospitals. If every hospital has a disproportionate share of Medicare patients (say 100%) then DSH payments go away and hospitals go under.
Both private payers and taxpayer dollars are required to keep Medicare/Medicaid afloat, as those programs have 40M and 70M people respectively covered. Soon there won't be enough leftover people to fund these programs.
Having a high percentage of Medicare Patients is not enough to qualify on it's own.
"Applies to hospitals that serve a signi cantly disproportionate number of low-income patients; and
Is based on the disproportionate patient percentage (DPP)."
Medicare pays enough to cover care and operating overhead. It's not enough to cover significant writeoffs for non Medicare patients.
> For the first 18 years of Medicare's existence, the program paid hospitals for the "cost" of the care provided. However, since 1983, the payments have been slowly declining in relationship to the actual cost of providing care, and now hospitals are receiving less in payments than the actual cost of the care. How do hospitals recover this shortfall? Simple: they pass it on to other payers.
There is a fair amount of Hollywood according going on with what overhead is included in those costs. Medical groups for example often have profitable out patient facilities in the same area as s failing hospital.
Many hospitals do operate just fine with high numbers of Medicare patients and few private medical facilities reject Medicare patients. Remember, when a 3rd party agrees to cover costs the incentive to lower costs gets messed up.
However, many hospitals also have issues which is why there are supplemental payments.
> Many hospitals do operate just fine with high numbers of Medicare patients
Excluding those which receive extra stipends for qualifying as DSHs or CAHs, no, most hospitals aren't operating "just fine" if they have a high number of Medicare patients. Unless you call overcharging private insurers and uninsured patients just to stay afloat "doing just fine".
> There is a fair amount of Hollywood according going on with what overhead is included in those costs. Medical groups for example often have profitable out patient facilities in the same area as s failing hospital.
There's no "Hollywood accounting". This is straightforward, textbook GAAP accounting that we're talking about. Medicare reimburses less than COGS. That's a well-documented fact - so well-documented, in fact, that you yourself linked to it with that article.
If Medicare reimburses less than COGS, there's no way for hospitals to subsist on Medicare reimbursement rates alone. You can try to tease the numbers any way you want, but that's exactly why GAAP exists - it gives a common framework for comparing these cases, and here the numbers are as clear as you can get.
That was from 2005 and there has been a world of changes in how things are paid for recently.
"Most notably, the share of total spending on hospital inpatient services declined by one-third between 2006 and 2016, from 32 percent to 21 percent, while payments to Medicare Advantage (private health plans which cover all Part A and Part B benefits) doubled, from 15 percent to 30 percent, as private plan enrollment has grown steadily since 2006." https://www.kff.org/medicare/issue-brief/the-facts-on-medica...
Anyway, I still disagree with how many of these things are calculated. You need to look at the indirect cost part of COGs critically and in context of other related government spending.
Again, the problem with GAAP it assumes all spending is prudent which is far from the truth.
That KFF quotation is saying literally the exact opposite of the point you're trying to make. Though I guess if you don't understand how Medicare Advantage works, it's easy to make that mistake.
> Anyway, I still disagree with how many of these things are calculated. You need to look at the indirect cost part of COGs critically and in context of other related government spending.
Medicare doesn't cover COGS. Private payers do. You can't get away from that fact, especially when you've now provided two separate links that corroborate it.
I am not trying to get away from COGs by saying Medicare covers it because I agree it does not. I am saying the overhead included is misleading because it includes a portion of unpaid bills from other patients. Yes, it's part of a hospital's overhead, no it's not medicares responsibility.
Midicare is often providing a disproportionate amount of funding relative to the amount of care being provided. In other words Medicare may be 70% of the fund but < 70% of the costs. But, that's frequently not enough to keep the doors open so the government added some back doors to hand out funding without strings attached.
> Midicare is often providing a disproportionate amount of funding relative to the amount of care being provided. In other words Medicare may be 70% of the fund but < 70% of the costs.
Except that's not the case. Medicare's standard reimbursements are significantly less than COGS, and that doesn't even account for overhead.
This is pretty obvious to demonstrate, because other payers are generally required by law to set their reimbursement rates above what Medicare offers for their services. So there's mathematically no way that Medicare could be providing a disproportionate share of fee-for-service reimbursements.
And I'm not sure what point you're trying to make with the link you provided. FORHP is distinct from the critical access stipends that Medicare provides, which is what's relevant here (even though critical access hospitals may also receive funding through FORHP programs).
> But, that's frequently not enough to keep the doors open so the government added some back doors to hand out funding without strings attached.
There are plenty of strings attached. One of those strings is that the hospital's payer mix must exceed a certain threshold of Medicare patients. Again, that's not accidental - the whole point is that hospitals who don't exceed this threshold of Medicare patients will use their privately-insured patients to subsidize the costs of care for Medicare patients.
> So there's mathematically no way that Medicare could be providing a disproportionate share of fee-for-service reimbursements.
Many people receive services then pay 0$.
And really that's the core problem. A hospital can send a clam to collections but collections agency's pay penny's on the dollar. And if someone dies in debt there is nobody to collect anything from by law unless someone is dumb enough to voluntarily takes on that debt.
That's actually not really true - at least not the "many" part of it. For most hospitals (including critical access hospitals), the default rate on medical bills is nonzero, but nowhere near the amount of money they lose on Medicare patients. The difference is a few orders of magnitude.
The rate you're talking about is extremely deceptive. People may pay a 500$ bill over time, but not a 50,000$ one.
"hospitals uncompensated care costs -- medical care for which no payment is received -- jumped nearly five percent to $41.1 billion in 2011" And that's just for 0$, they also get paid >0$ but less than full costs which is a separate number.
• Total net revenue: $821.3 billion
• Total expenses: $756.9 billion
• Cumulative profit: $64.4 billion
Critically, it's only hospitals in prosperous areas that are doing well and those see a much lower percentage of unpaid bills. Medicare is basically break-even, but hospitals need a lot of profit to offset these write-offs.
> The rate you're talking about is extremely deceptive.
It's not; I'm not sure why you'd assume I'd be talking about the sheer number of bills that default (at any size) as opposed to the amount of bad debt (which is closer to the relevant figure).
> Medicare is basically break-even
Medicare is not even close to break-even. From the very first page of the link you provided:
> For the first 18 years of Medicare's existence, the program paid hospitals for the "cost" of the care provided. However, since 1983, the payments have been slowly declining in relationship to the actual cost of providing care, and now hospitals are receiving less in payments than the actual cost of the care. How do hospitals recover this shortfall? Simple: they pass it on to other payers.
The amount of money that hospitals need to make to overcome this shortfall, both the operating expenses and the amount needed to cover the overhead, is a few orders of magnitude greater than the amount of noncollectable debt from uninsured patients.
> $41.1 billion = 5% of total revenue. A few orders of magnitude would mean the shortfall is greater than all of their income combined.
You're not comparing apples to apples. $41 billion is the aggregate of the bills for which they cannot collect; that doesn't mean they don't receive any money from them, and it doesn't mean $41 billion is the amount they've actually lost.
I know you "don't trust" GAAP accounting, but understanding the basic terminology and concepts makes it a lot easier to follow what's going on here.
"U.S. hospitals provided $41.1 billion in uncompensated care in 2011, according to the latest data from the AHA's Annual Survey of Hospitals. That's $1.8 billion more than in 2010. The total includes "bad debt" (services for which hospitals anticipated but did not receive payment) and charity care (services for which hospitals neither received nor expected payment because they determined, with help from the patient, the patient's inability to pay). It does not include Medicaid and Medicare underpayment."
So, no this is not all 'underpayment' but I agree it's relative to charges not costs.
US federal + state + local governments spend an obscene amount of money on healthcare. Including extra funding to keep many rural healthcare facilities open etc.
Other countries spend less government money per person on Universal healthcare than the US spends right now. Considering it's far from a universal system it's already subsidizing healthcare costs.