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WHERE WILL THE MONEY COME FROM? By Michael Sack

We know that, to-date, more than 200,000 newly eligible Massachusetts residents are receiving health insurance under Chapter 58 out of about 460,000 the state said were uninsured when the reform law passed in 2006. That’s great news and as I have said on these pages before, hospitals have been working very hard to help sign up people.

We also know that, to-date, according to data reported to the Massachusetts Hospital Association, free care utilization has gone down by less than 10 percent statewide – and many hospitals are actually seeing an increase in free care costs. Hospital bad debt – care the hospitals are not reimbursed for – is up about 4 percent.

So, one would think that with all these folks signing up, care is improving and the cost is being redistributed from the Free Care Pool, the State’s safety net for the uninsured, to the fee for service model as people seek care. This supposition is one of the underpinnings of health reform.

But what is actually happening? Are there more people than we originally thought who are uninsured? Have more become uninsured over the two years since the law was enacted?

It may be that we’re just seeing the effect of the lag between the free care visit a person has at a hospital and when their new health insurance kicks in. That lag can be several months and the patient can require follow-up visits in the interim.

Here’s an interesting statistic: 46,000 of the 128,000 low-income individuals in the Commonwealth Care program are new to the system. They actually applied for coverage rather than being auto-assigned out of the Pool.

Also, the number of uninsured before Reform was an estimate. While the state assumed 460,000, some estimates, including the U.S. Census Bureau estimated more than 650,000. Whatever the actual number many believed that the state’s number was set low to make Reform more politically feasible. It appears to have worked effectively on meeting the reform objective; however, the bill is now due. And, who will pick up the tab?

Here’s the concern to hospitals: While free care usage is down less than 10 percent, the amount of money available for the health safety net (health center and hospital free care) for 2008 is $232 million less than last year – about a 35 percent decline. That’s a big gap and if you’re a hospital CEO, it makes you nervous wondering where the money will come from to fill that gap and how much more will be needed in the future.

Michael V. Sack
President and CEO, Hallmark Health

This program aired on November 3, 2007. The audio for this program is not available.

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