In Part 7, I’ll once again offer some support to author Steven Brill rather than continue to cut down his arguments in the TIME article “Bitter Pill: Why Medical Bills Are Killing Us“. This is a minor point but an important one that it seems the American public and Congress have not yet learned.
Section 2: Medical Technology’s Perverse Economics
Brill points out that non-profit hospitals use their “charity” care to tug on the collective sympathy of the political establishment. The American Hospital Association, one of the biggest spenders of lobbying dollars, always urges Congress not to allow cuts to hospital payments because it would “endanger the $39.3 billion in uncompensated care for the poor that hospitals provide” – care that is either through charity or because patients cannot afford to pay. Brill notes that based on the formula hospitals use to calculate the cost of this charity care, that amounts to approximately 5% of their total revenue for 2010.
$39.3 billion is a lot of money, and no one wants to see the amount of “charity care” hospitals provide diminish given the tremendous barriers to access we have in this country. In particular, politicians are loathe to cut payments to hospitals because it looks bad to their constituents – you know, those people they need to re-elect them. The problem here is that $39.3 billion figure is what hospitals would charge for providing that care, not what it actually costs to provide said care. The $39.3 billion is essentially the “chargemaster” price for the care that hospitals provided but did not receive reimbursement. The actual cost of providing that care is significantly lower. Since few hospitals know the actual costs of providing care, they continue to use the $39.3 billion figure for their own political gain.