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May 7, 2015

Missing the Point

If followed, the findings of a recent Thomas Jefferson Institute for Public Policy report would do nothing for thousands of Virginians who today can’t afford regular health care.

Rather than closing the coverage gap to help 195,000 people get health coverage, the report concludes the best option is to give more tax dollars to smaller rural hospitals.

In making this backwards argument, the report gives short shrift to the reason Virginia needs to close the coverage gap – helping hard-working people afford to see the doctor when they need to. Instead, it focuses on hospitals’ financial bottom lines. As a result, the authors arrive at the untenable recommendation that the state should do nothing to help Amy Hedges and the other Virginians stuck in the coverage gap.

The report doesn’t seem to get it. Closing the coverage gap is about investing in Virginia residents to make our state healthier and our economy stronger.

It’s about helping 195,000 people see the doctor when they need to. It’s about helping them get regular check-ups and catching medical problems early to avoid costly complications later. It is about helping people across the state – from Norton to Norfolk – rest assured that if they get sick or hurt the doctor’s visit won’t bankrupt them.

For sure, one important benefit of closing the coverage gap is that hospitals, doctors, and other health care providers will have more patients with coverage to pay for the care they need. Virginia hospitals could see an additional $600 million in revenue, according to the highly respected Robert Wood Johnson Foundation. And doctors and other health care providers, like pharmacists and nurses, would see more than $800 million at the same time, according to our analysis of state Medicaid data.

That new revenue would help small and rural hospitals that are struggling to keep their doors open. It would also help patients that had relied on charity care to afford the care they need. And that’s the real heart of what closing the coverage gap is about.

The TJ report authors also assert that, because hospitals provide charity care and must provide emergency services regardless of patients’ ability to pay, “access to hospital care for the economically disadvantaged has not been a matter of debate.”

They couldn’t be more wrong.

Sure hospitals stabilize people – even if they have no insurance – in their emergency departments as federal law requires. Some do more, but many don’t provide additional, ongoing treatment. The fact that emergency departments can’t turn people away doesn’t necessarily mean everyone can get advanced treatments like chemotherapy for cancer when they need it. And doctors outside of the emergency department are under no obligation to accept patients who don’t have health insurance.

The fact that hospitals provide charity care begs the question of how they can afford it. And the answer is they overcharge everyone else. The average U.S. family and its employers pay an extra $1,000 in health care premiums each year to make up the cost of providing charity care.

That’s inefficient.

And so is the authors’ lead policy option that taxpayers provide cash assistance to hospitals outside of the context of closing the coverage gap.

For starters, the state – in partnership with the federal government – already pumps in $188 million a year to to help hospitals that treat a large number of Medicaid recipients and uninsured patients. And their approach, which the authors note suffers from “apparent inefficiency,” could require the state to make even more cash payments to struggling Virginia hospitals without improving anyone’s ability to get care when needed.

The alternative is clearly better. Virginia should join the 29 other states and the District of Columbia that have decided to draw down federal funds to close the coverage gap – funds made available for just that purpose. It would help 195,000 people get the care they need when they need it and help health care providers of all shapes and sizes have more paying customers.

–Massey Whorley, Senior Policy Analyst

The Commonwealth Institute

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