Commentary : Color the Health Care Crisis Poor

We are in the midst of a crisis in our health care delivery system. The report of the United Way of Orange County Health Task Force defines our current health care crisis (about 360,000 residents, 16% of the total county population, do not receive adequate health care), and it identifies the many causes of the dilemma now facing all of us.

The United Way’s effort is especially significant since it represents a consensus among employers, labor, health care providers and government representatives.

Radical changes have been made in the way health care is delivered and financed. In the late 1970s and early 1980s, government responded to the rising cost of health care by enacting incentives for greater efficiency. Private purchasers of health care soon followed with their own similar incentives.

Regulatory controls were implemented to limit the growth of the health care system. Despite great improvement in efficiency and constraints on growth, health costs continued to rise, due mostly to new and costly life-saving medical technology and the growing demand from an aging population.

The regulatory approach failed to meet objectives. A new philosophy advocating a free market in health care, including incentives for competition among providers, has taken its place. The intent is for government to be able to control its health care expenditures by having hospitals and physicians subject to the same economic forces of supply and demand that control price and production in other industries.

This new competitive era in health care has produced some positive effects. Efficiency in operating health facilities has continued to improve. The patient has many new choices as to the setting in which health care is delivered and methods of financing. However, those are benefits for patients who can afford health care. The effect that competition is having on the poor, on senior citizens, and on the hospitals and physicians that provide most of their care is negative.

Since 1983, the state Medi-Cal program (for medical care to the poor) has provided hospital services through selective hospital contracts that utilize the state’s purchasing power to secure discount rates. Across California, Medi-Cal’s reimbursement level to hospitals is now about 70% of the costs. Also in 1983, California required counties to establish programs to care for “medically indigent adults” by disenfranchising them from Medi-Cal. The state provided funds to the counties, but the level is woefully inadequate.

In Orange County, the needs of these persons are met through the Indigent Medical Service (IMS). Designed to maintain availability of medical services to the population, IMS is unique in California, operating as a partnership between Orange County government, 32 hospitals and the medical community. Unfortunately, due to under-funding by the state, IMS only covers an estimated 50% to 60% of the costs to those hospitals.

Prior to 1983, hospitals and other health care providers were able to make up for these shortfalls in government reimbursements, plus the cost of care to others unable to either afford care or qualify for government assistance, through “cost-shifting” this additional expense to private patients in the form of higher charges. The uncompensated costs incurred by hospitals alone for this type of care in 1986 totaled about $1.5 billion statewide, and about $100 million in Orange County.

Our health care delivery system cannot be segmented into independent private and public systems. Although government spends less for health care for the poor, their need for health care does not decline. So the government reductions result in added expense to be borne by the private sector.

Major purchasers of health care, large employers and insurers responded to the state reforms by seeking protection from what they knew would be a major cost shift. The state granted them this protection by allowing them to contract directly for discount rates aimed at avoiding the cost shift. Today, a high volume of care is delivered through such contract arrangements. This trend continues to increase.

The goal of providing care to the poor at less than cost is no longer compatible with the goal of succeeding in the new competitive health care market place. When a hospital can no longer meet its costs, it must consider closing, or eliminating specific services. A prime example is the numerous closures of trauma centers in Los Angeles County, which have crippled access to trauma services for everyone.

As hospitals close or services are eliminated, everyone in the community loses, because those services are no longer available regardless of one’s financial status. We are on a collision course with the day that our health care system can no longer absorb the costs of health care for the poor.

I hope that the United Way’s Health Care Task Force report will serve as a starting point for Orange County residents to begin developing an approach to provide health care to our less fortunate residents in a responsible way. It is incumbent on each of us to discuss this problem, make informed decisions and communicate to our elected officials the values we have for our own health care--and for those who need care but cannot afford it.