Editorial: Finding a cure for 'charity care' ills

  • Updated: January 23, 2012 - 9:02 PM

Hospital data, study underscore insurance mandate's value.

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A new Minnesota Hospital Association report detailing soaring "charity care" costs is a sobering reminder not only of a still-weak economy, but of the need for a health insurance mandate -- a key but controversial component of the new federal health reform law.

From 2009 to 2010, there was a 27 percent increase in the amount of care provided to those "from whom there is no expectation of payment," according to the industry group, which released its report last week.

When coupled with bad debt from patients who didn't or couldn't pay their bills, the state's uncompensated-care costs totaled a stunning $497 million last year.

The Hospital Association report, released just before the beginning of the legislative session, is somewhat self-serving. It's meant to remind politicians of the hospitals' community service and to guard against payment cuts.

But there's a broader point to be drawn from the findings.

The uninsured, the underinsured and those unwilling to pay still get sick and get medical care, with the cost shouldered mostly by taxpayers and providers. It's a practice that isn't sustainable in Minnesota or elsewhere -- a key reason that mandated insurance is a pillar of the 2010 Affordable Care Act (ACA).

Nationally, the uninsured generate about $62 billion a year in uncompensated care costs. The federal government covers about 35 percent of those costs, with state governments typically providing hefty assistance as well.

Some of the costs potentially get passed along to the privately insured, too.

The mandate has been derided as a big-government invasion of privacy. Instead it is a tool -- one previously embraced by conservatives -- to get people to take responsibility for their health care costs.

Those who can't afford policies will get subsidies under the ACA or may qualify for public health programs, but they'll have to take steps to make this happen. Those who can pay but refuse will be penalized.

There will be accountability and preparation instead of the usual -- showing up at an emergency room when crisis strikes.

The U.S. Supreme Court is expected to rule this summer on the mandate's constitutionality.

A new study from the respected Robert Wood Johnson Foundation and the Urban Institute offers further evidence why those concerned with individual responsibility will celebrate the mandate's legal survival.

According to that analysis, the ACA will cut the number of uninsured from 50 million to 26 million, and in doing so, cut the amount of uncompensated care by about half. If the mandate is stripped from the law, up to 42 million will still be uninsured, substantially reducing savings in uncompensated-care costs.

The analysis also found that the mandate is critical to making the private insurance market work better.

Without the mandate, there would likely be less demand for insurance, and those who do buy insurance may be sicker because insurers will not be able to turn away people with preexisting conditions.

In turn, that could drive up the cost of insurance premiums -- in some cases by 25 percent -- for those buying individual plans through the new online health insurance marketplaces.

High participation in the exchanges, which would spread risk and cost, could help hold down costs if the mandate is stripped from the law, researchers found.

This is yet another reason why the new exchanges -- which are being built by the states -- must be easy to use and smartly marketed. Minnesota lawmakers have dallied in building the state's exchange, which must be operational by 2014.

This study provides another reason to get it done and get it right.

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