No doubt, certain hospitals are suffering financially. However, the numbers are as clear as they've ever been (or, at least since I analyzed Governor Schwarzenegger's attempt to impose mandatory coverage in California): Uncompensated care is simply not a driver of health spending. According to the article, uncompensated care was worth $36 billion in 2008. We just learned that total health spending was $2.5 trillion in 2009. So, uncompensated care accounted for 1.44 percent of the total. This is a trivial issue in health reform.

Which is not to say it's not important for hospitals who give uncompensated care. There are perverse incentives facing these institutions: EMTALA, the federal law that requires them to take care of anyone who walks in the door; as well as Medicare and Medicaid payment rules that create perverse pricing incentives.

However, hospitals will always experience some amount of uncompensated care. Look at the case discussed in the NY Times article: A man presented at the ER exhibiting symptoms of alcohol withdrawal, alcoholic hepatitis, and respiratory failure. There is a certain fraction of the population that will find themselves such a condition, no matter what the policy environment is.

Which brings me to my greatest frustration with our hospitals' continuous lobbying for more government handouts: The two hospitals discussed in the article are a non-profit Methodist hospital in Minneapolis and a Jewish hospital in New York. They are supposed to be giving some uncompensated care. One of the experts quoted in the article claims that hospitals should not be "insurers of last resort." Funny: I thought that's why these religiously-affiliated non-profit institutions existed.

— John R. Graham is director of Health Care Studies at the Pacific Research Institute.


02/09 07:12 PM

This blog post originally appeared on Critical Condition.