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Health care: As lawmakers debate, hospitals feel the crunch

By Jason Lesley
Coastal Observer

Bruce Bailey, president and CEO of Georgetown Hospital System, says hospitals are getting the short end of new health-care laws, both federal and state.

He told members of the Waccamaw Neck Republican Club Monday that he expects an $11 million annual budget shortfall because of reimbursement changes in the Patient Protection and Affordable Care Act and the state’s plan to refuse federal funding to expand Medicaid. The biggest loser, he said, will be people with health insurance who will see higher premiums as costs shift.

Bailey, state Sen. Ray Cleary and state Rep. Stephen Goldfinch participated in a panel discussion about health care this week sponsored by the Waccamaw Neck Republican Club.

The discussion was a moot point, Cleary said, because the state House has already rejected $11.2 billion in federal funds that would completely pay for Medicaid expansion over the next three years.

“Whether we accept it or not,” Cleary said, “it’s going to be spent, just like the stimulus. Does it work better for us if we take it or if we don’t? How we are going to pay for it is not necessarily the question right now. The feds pay for the first three years. You don’t control that. At the end of the day, it doesn’t cost the taxpayer of South Carolina a dime. We are concerned about the fiscal cliff when they start paying 90 percent or 80 percent. How are we going to handle it three years down the road when they stop paying 100 percent? That’s the real issue.”

Cleary asked people at the meeting if they would rather be fired today or in three years. Given three years, people would have time to plan, he said. That is what the state should be doing, accepting the money to fund 100 percent of Medicaid expansion for three years and working on sustainable alternatives in the interim.

Cleary sees little chance of that happening, given the House’s 73-45 rejection of Medicaid expansion and Gov. Nikki Haley’s promise to veto it should it emerge from the state Senate.

The Obama administration and health-care trade groups made a “grand bargain” in 2010 to get the Affordable Care Act done, Bailey said. It took $150 billion in hospital reimbursements from the Medicaid program in return for the agreement that the act would mandate coverage.

“The theory,” Bailey said, “was that hospitals wouldn’t need all that reimbursement from Medicare if there was no more ‘charity care’ that we had to provide. Everybody would have insurance.”

Bailey said he had his doubts about the government’s math and the zero sum game the deal proposed.

Once the health-care law was approved, South Carolina and a number of other states challenged it in court.

“We were surprised that the individual mandate was upheld,” Bailey said. “The wrinkle that nobody anticipated was that the justices ruled that the federal government could not coerce states to expand Medicaid programs by threatening to hold back base funding for Medicaid.

“With that ruling, hospitals gave up $150 billion on the promise of coverage, and in South Carolina we are not likely to have that coverage. We’ll continue to have the bad debt and charity care we provide as part of our mission and what we do, but your local hospital will be out $9 million a year in reimbursements without the promise of coverage. Fast forward to sequester Friday and another $2 million was lost over the next seven years from the Medicare-Medicaid program as it looks right now.”

Bailey said the $11 million deficit will reduce local investment in new doctors and facilities, including a proposed new tower at Georgetown Memorial Hospital.

“It will be very difficult for us to do that if we can’t figure some way to plug this $11 million hole,” Bailey said.

The bigger question, he said, is what to do about the 700,000 uninsured in one of the poorest states in the country from both an economic and health point of view.

“South Carolina people have a lot of chronic conditions,” he said. “It’s not healthy, and people use a lot of health-care services because of that. Wrap that up with being uninsured, and that’s a bad combination.”

The uninsured use emergency rooms to see a doctor. “That’s a very inefficient, wasteful place to receive primary care,” he said. “If we deliver care, somebody is going to pay for it: Medicaid, Medicare or we jack up our rates so those with insurance end up paying.”

Goldfinch said he and Bailey are “90 percent on the same page” concerning health care.

“We have to figure out the underlying problem: a growing population of uninsured people that are unhealthy,” he said. “We often miss that second part: unhealthy.”

Goldfinch said Medicaid will continue to cover the poor, the elderly, single pregnant women and children. Expansion would add a new group: people who can work.

“Do we want to pay for people who can work? It’s a moral issue that we as a society have to work through,” he said.

Medicaid expansion only affects the working poor, Cleary said, “the guy waiting tables or the guy who does your car. He works 10 hours a day but doesn’t make enough to pay $1,500 a month for insurance. That’s who we are covering. We are not covering people who don’t want to work. They are covered.

“Expand or not, these people will still go to the hospital. They will still be treated.”

Cleary said nobody knows what will happen when hospitals lose reimbursements for treating the uninsured.

“They can only cut so much,” he said. “Your insurance is going to go up. They will cost shift. When Obamacare says we’ll cover children until they are 26, your costs will go up. Obama says no pre-existing conditions, your insurance goes up. At the end of the day, the hospital has to pay.”

Cleary said state Health and Human Services director Tony Keck believes he can only get reform if hospitals are in crisis mode. “That’s verbatim. Tony Keck said, ‘If I can get hospitals in crisis mode, I can get them to change.’ For the next three years, we may be in crisis mode.”

Cleary said he worries about turning down $11.2 billion and 44,000 new jobs. “Maybe we need to do that,” he said. “I don’t think you take money to create federal jobs, but Keck seems to have made the decision without possible alternatives.”

Cleary said other states are proposing waivers to help contain costs after three years. A member of the state House, an emergency room doctor, said he was told at a caucus meeting before the legislative session began that the governor had already decided against Medicaid expansion.

“I’m sorry,” Cleary said. “Maybe she is making the right decision, but that’s what the panel was supposed to look at. That’s what Tony Keck was supposed to look at. I think we should be given different options.”

Judy Clarke, president of the Waccamaw Neck Women’s Republican Club, said Cleary was kicking the can down the road.

“Refusal permits us to stand up and make a decision for ourselves without us being beholden to the government,” she said.

Goldfinch said the state is considering directing $80 million to hospitals in an effort to send the uninsured to primary care clinics.

He said Bailey has great ideas about controlling costs. “Hospitals need a voice in addressing programs,” Goldfinch said. “Expansion is not happening, but we’ve got to look at what we are going to do to address the real problems.”

Goldfinch said hospitals should use their own infrastructure to shuttle patients away from their emergency rooms without endangering the quality of care.

Bailey said Georgetown Memorial ran an experiment four years ago to identify people using the emergency room the most and find a doctor for them. “We had no takers,” he said. “They wouldn’t show up. They wouldn’t take advantage of what we were handing them on a silver platter.”

Bailey said Palmetto Health tried a similar experiment, and five of 100 people accepted the offer.

“It’s a cultural problem and an expectation problem,” he said. “The community realizes that if they show up at the ER sick enough, they have to take care of me, and I may pay or not pay. That’s a real problem.”

County Council Member Bob Anderson said he had been crunching numbers and found 46 million uninsured people in the nation who are capable of working.

“We need to address an attitude adjustment on this 46 million people,” he said.

Anderson told a story about a farmer whose son said it was too cold to plow one morning. The farmer said: Plow or die.

“That’s what we need to start doing,” Anderson said, “forcing the government to tell people to work or die. If these people start getting turned away, they would change their diets and start buying insurance.”

Cleary said dental patients can have implants, bridge work, dentures or gum it. “That’s how dentistry works. Health care doesn’t work that way. Dentistry is a privilege. Health care is a right. Look at all the diabetic and obese children coming along and it doesn’t look good on the horizon.”

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