Healthcare Crisis Goes Untreated, but the Cancer Is Spreading

Ethical tempests often expose problems that extend beyond the individuals involved. Whether or not Rep. Tom DeLay (R-Texas) is convicted of conspiring to evade Texas campaign finance laws, for instance, his indictment highlights the Sisyphean difficulty of controlling the flow of money into politics.

An even bigger story is buried in the dust-up over whether Senate Majority Leader Bill Frist (R-Tenn.) skirted the law when his financial trust unloaded his holdings in HCA Inc. before the company’s stock tumbled this summer.

Federal investigators are examining whether Frist benefited from inside information -- which he denies -- in the sale of his stock shortly before HCA, the giant hospital company his family founded, announced its second-quarter earnings would not meet analysts’ expectations.

The question policymakers ought to be examining is why the company didn’t meet its target. It turns out a significant factor was the growing cost of providing uncompensated care to some of the nearly 46 million Americans without health insurance.

In July, HCA reported that in the previous three months, it spent $459 million providing free or discounted care for low-income patients without insurance. What’s especially head-turning is that the company is treating more uninsured patients even as the economy is improving.

In 2004, HCA admitted about 10% more uninsured patients than it did in 2003, said Jeff Prescott, a company spokesman. This year, the number of uninsured patients has increased about another 4%.

The rising number of uninsured in HCA’s emergency rooms highlights an ominous erosion of the link between health coverage and work. The share of Americans receiving health insurance at work has fallen in each of the last four years, from 63.6% in 2000 to 59.8% in 2004, the Census Bureau recently reported. The decline has continued despite a recovering economy that has created jobs in each of the last three years.

That reverses the pattern of the late 1990s, when an expanding economy led employers to compete for workers by offering health coverage. The share of Americans receiving health insurance on the job increased, if often slowly, every year from 1993 through 2000.

Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute, a business-sponsored think tank, says the decline in employer-based coverage is likely to continue regardless of the economy’s performance because it is driven by unrelenting healthcare cost increases.

As premiums soar, he says, “you have employers -- mainly small business -- dropping coverage, and you have larger employers asking employees to pay more, so you have more people choosing to go without.”

Medicaid and the Children’s Health Insurance Program have plugged part of the gap. Enrollment in the two programs, which provide care for low-income families and are jointly funded by state and federal governments, has jumped by about 8 million (or 27%) since 2000.

But these programs’ growth has squeezed government budgets, especially in the states. Medicaid consumes more than one-fifth of all state spending, slightly more than primary and secondary education. Tennessee and Missouri this year severely cut eligibility, and other states seem guaranteed to follow if costs keep rising.

In that way, the erosion of the employer-based system is destabilizing the other pillar of the healthcare safety net -- public programs. It won’t be possible to steady the public system without fortifying the private system.

Tax breaks for small businesses that insure their workers could help. But the best idea for encouraging employers to provide coverage remains the plan Sen. John F. Kerry (D-Mass) proposed in his presidential campaign.

Under Kerry’s plan, Washington would pay most of the bill once patients’ healthcare costs reached a catastrophic level of about $50,000 annually. Removing those catastrophic cases from the private insurance pool would lower premiums for everyone else, by some estimates as much as 10%. That would help more employers offer coverage -- and more employees accept it when offered.

Eventually, Washington and the states also need to negotiate a better long-term division of responsibilities under Medicaid.

One answer might be to better focus the program on the uninsured. Today, more than two-fifths of Medicaid spending covers long-term care and other expenses for low-income seniors also eligible for Medicare. If Washington assumed all those costs through Medicare, which it fully funds, it could reasonably ask the states to apply the savings toward covering more of the uninsured.

Washington couldn’t shoulder responsibility for catastrophic cases or low-income seniors until it improves its finances; sooner or later, that will require the sort of spending-cut and tax-hike package that Presidents George H.W. Bush and Clinton signed. And the federal government couldn’t accept new healthcare obligations without demanding much tougher measures to contain costs, such as better disease management and more prevention.

But without more federal help, all indications are that employers and state governments will continue to step back, increasing the number of uninsured.

That would have real costs too. Reducing the number of people without health insurance doesn’t reduce the number of sick people who need healthcare. In many cases, it just shifts the burden of paying for them to healthcare providers such as HCA or public hospitals and to the insured (who face higher premiums to offset some of the uncompensated care). In other cases, Americans pay the cost through untreated illnesses that stunt lives, sap productivity and create health risks for others.

Either way, it doesn’t take any inside information to recognize that the costs of inaction on healthcare are dangerously mounting.