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What Reform Really Needs to be About: Part II

Christine Craig is the Director of WakeMed’s Government Affairs Department

One of WakeMed’s top priorities for health care reform is focused on preserving Medicare and Medicaid payments to hospitals.  Currently, individuals 65 years and older qualify for our county’s public insurance program, Medicare.  The federal government pays for Medicare services delivered by hospitals and health care providers.

The Medicaid program is run by states, and covers the poor and disabled.  The federal government contributes a two dollar match for every one dollar that the state pays to hospitals and providers under this program.  Most recently with the passage of the American Recovery and Reinvestment Act, Congress recognized that more and more individuals were flooding states’ Medicaid programs and that states could not keep up with these rising costs.  Congress temporarily increased its Medicaid match to help offset states’ budget deficits.

From the outside looking in, all of this looks and sounds good.  Government reimburses health care providers for the services they provide to the elderly, poor and disabled through these public insurance programs.  However, there is a caveat – government programs do not reimburse hospitals and providers the full costs of treating Medicare and Medicaid patients.  

I don’t know of any other business that does not get paid full costs for their products and services.  For example, let’s say you were to go to the grocery store to purchase an apple. Under the Medicare and Medicaid model, even though the apple cost one dollar you would really only pay 65 cents for it at the register. 

We always hear about the rising costs of health care services.  Health care providers lose millions of dollars caring for Medicare and Medicaid patients as well as millions for those who don’t have health insurance all together. 

I challenge our readers to devise a successful business plan for hospitals where the payments you receive for services delivered for over half of your customers fall short of covering your costs.  The trick is, the plan can not include increasing the cost of services to those who have private insurance plans. 

Expanding Medicare and Medicaid programs to cover even more individuals – as proposed in the House and Senate reform bills – will put an increased financial burden on hospitals and states.  Last year, the unreimbursed cost for WakeMed to treat Medicare and Medicaid patients was nearly $63 million. Adding more people to these government programs will only stretch our nation’s safety net hospitals farther. We have asked our Congressional delegation to limit an expansion of these public programs and continue to provide states with additional matching funds to help offset these costs.

This post is the second in a series about WakeMed Health Care Reform priorities