Now Isn’t the Time to Stint on Our Public and Teaching Hospitals

Just when Americans are turning to their major metropolitan medical centers as the first line of defense against bioterrorism, federal agencies are getting ready to yank critical funding from these beleaguered institutions. And while this will affect hospitals across the country, California will be hit the hardest.

Teaching hospitals and hospitals that care for the indigent and uninsured in California will lose more than $300million a year once a proposed rule dealing with an arcane Medicaid provision called the “upper payment limit” is fully implemented. For the first five years after the rule goes into effect next July, our state will lose at least $1billion in Medicaid funds.

In addition, the federal Department of Health and Human Services announced last week that California’s Medicaid reimbursement will be cut by another $400million annually starting in mid-2002 because of a change in the way payments are calculated.

It’s no exaggeration to say that these reductions could devastate Los Angeles County’s public and teaching hospitals, which are facing significant expenditures to prepare for a potential bioterrorist attack.

Changes in the health care industry over the past decade have had especially severe economic consequences for academic medical center hospitals such as UCLA and USC. The changes include the shift from traditional fee-for-service health insurance to managed care, significant reductions in federal and state reimbursement for both Medicare and Medicaid and a marketplace that doesn’t take into account the increased costs of taking care of the uninsured or training the next generation of doctors.

The rationale for making cuts to the upper payment limit is that some states used this provision to fund projects that had nothing to do with health. But that is not the case in California. In fact, all of the federal dollars the state receives in these payments are used to provide low-income patients access to medical services and to protect emergency and trauma care services throughout the state.

The cuts in California’s overall Medicaid reimbursement will come about because the formula for calculating that allocation is based on the average income of all state residents over the past three years, not on the number of residents who live in poverty. Thus the new reimbursement level is based on a time when the California economy was booming and per capita income rising. California’s high percentage of super-wealthy people also skews the average. The new level certainly will not reflect today’s economic reality and the rising number of unemployed.

Meanwhile, the American Hospital Assn. has estimated that it will cost each big-city hospital more than $3million to prepare for a mass casualty event such as a biological, chemical or nuclear attack. The total cost for the nation’s hospitals, the AHA believes, will be $11.3billion.

Now is not the time to make policy decisions that will put undue financial pressure on public and teaching hospitals.

The Hippocratic oath, which doctors swear to, reads in part: “I will follow that regimen which, according to my ability and judgment, I consider for the benefit of my patients and abstain from whatever is deleterious and mischievous.”

Washington should do no less.

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Gerald S. Levey is dean of the UCLA School of Medicine. Harvey Kibel is chair of the public policy committee of the school’s Board of Visitors.