By Hon. Michael Flanagan
In the immediate years after the passage of the Affordable Care Act (also known as Obamacare), the cost of healthcare predictably shot up. It has been rising ever since and Illinoisans are paying the price.
Healthcare spending per person in the state grew 25% between 2013 and 2021, and in ever increasing numbers, people are skipping healthcare essentials like medicine, doctor visits or ordinary care because of the higher costs levied. In short, the promise of “free” healthcare has proven illusory.
Over this same time, access to care has also been limited even for those able to afford it. In Illinois, 5 rural hospitals have closed since 2005 and nearly 1 in 5 are at risk of closing, according to one study. This is a concerning statistic that does not bode well for the future of healthcare in the state.
In short, healthcare has become increasingly unaffordable, hospitals are closing, and people dying as a result of expanded government control of the healthcare system. When Washington picks the winners and losers, we all lose because Washington rarely gets it right.
Like most legislators dedicated to government control of the healthcare system, Senator Bernie Sanders (I-VT) believes that only government can make healthcare safe and available at a low cost. Time has proved him wrong in every detail but that has not stopped his deep desire to further interfere.
Recently, Sanders offered legislation that among other things would change the way government pays for medical care by creating “site-neutral payments.” It is yet another ham-fisted, Washington-knows-best idea which will deeply and negatively affect healthcare affordability and availability – especially in rural areas of the Prairie State.
The concept is simple. Medicare and Medicaid would reimburse doctor’s offices, clinics and hospitals at the same rate for outpatient services. What could be simpler?
Pay the low staffed and minimally capable office setting at the same rate and in the same way we will pay a hospital reimbursement with all of its equipment, 24/7 patients and capabilities. Brilliant!
In its simplest terms, there is a reason why a doctor can give you an aspirin when you visit her office, and a hospital charges twenty dollars for the same aspirin. The costs in the doctor’s office are very low compared to a 24/7 capable, fully staffed hospital. The overhead is not only hugely disproportionate on a per capita basis, but the costs are also of a different character and purpose.
Physicians’ offices regularly only employ a few people, other than the doctor. They have set hours of operation, and provide limited, onsite treatment options.
On the other hand, hospitals are operating 24 hours a day, 7 days a week, and employ doctors, nurses, administrative staff around the clock. They also house the necessary equipment for all types of treatments and procedures that independent physicians don’t have at their offices. Therefore, their operating costs are not only different but much higher. Hospitals are dependent on payment from their patients for the services they provide, with their operating costs built in.
Data shows that hospitals on average only received 87 cents for every dollar they spent caring for Medicare and Medicaid beneficiaries, patients that are disproportionately served by rural and safety net hospitals.
In some cases, like Loretto Hospital in Chicago, which are heavily reliant on reimbursements from the government to treat patients, the situation is even more dire. A full three-quarters of Loretto’s patients have no insurance or Medicaid, with the latter only reimbursing Loretto at about 25 to 30 cents on the dollar. With this legislation, Sen. Sanders wants to further reduce what are already woefully insufficient reimbursements.
There is another aspect of this proposal of which Washington is almost certainly ignorant. The doctors seeing patients in offices are often not of the same caliber as surgeons in hospitals. Surgeons train much longer, rack up larger educational bills and accordingly are usually paid a great deal more as a result. Hospitals are where surgeons practice and to close the hospitals is to correspondingly lose the surgeons. By failing to make this distinction, Washington will not only severely jeopardize hospitals, but the pipeline of trained surgeons in the long-term.
Congress has again proved it has no concept of what it is doing with healthcare and meddles in ways that do more harm than good. “Site-neutral payments” are a direct threat to patients and hospitals that woefully misunderstands the basic economics of healthcare.
The Republicans representing Illinois in Congress – Representatives Mike Bost, Mary Miller and Darin LaHood – must reject any legislative effort to expand it, for the good of healthcare both in Illinois and across the country.
Michael Patrick Flanagan is a former U.S. Congressman who represented Illinois’ 5th District.