On Chicago’s west side, Mount Sinai Hospital cares for sick people who live in overwhelmingly poor African American and Latino neighborhoods. Many of the people here have no medical insurance whatsoever; and to obtain some reimbursement for the expense of treating them, the hospital has assigned six full-time employees to the task of trying to place these patients on Medicaid.
This unenviable record of high cost, inequity, insecurity, and spotty performance can easily be explained: the United States is the only industrial country (except for South Africa) without national health insurance.
Who pays what at a hospital is an exceedingly complex issue. At Mount Sinai, 46 percent of the patients are on Medicaid, the inadequate federal-state health insurance for very poor people; the average for city hospitals is 14 percent Medicaid patients, for suburban hospitals 5 percent. Medicare, the federal insurance for the elderly, pays for another 23 percent of Mount Sinai patients; in the city as a whole it pays for 42 percent, in the suburbs 41 percent. Blue Cross and commercial insurance companies together cover only 8 percent (compared with 21 percent for the city as a whole, 32 percent for the suburbs). Health maintenance organizations or preferred provider organizations (HMO/PPO), which provide care through a defined group of doctors and providers, cover another 16 percent, about the same as in the city and suburbs. But 10 percent of Mount Sinai’s patients don’t pay at all, compared to 7 percent for city hospitals on average and only 4 percent for suburban hospitals. Patients from each category may also pay quite different amounts for similar procedures.
The juggling of costs even threatens to impinge on medical decisions. Several years ago Mount Sinai began using laparoscopic surgery to remove gall bladders, making a few small incisions and working with a probe rather than cutting a large incision and moving aside internal organs. The laparoscopic operation took longer and was more expensive to do–about $5,000 for the new surgery compared to $2,000 for the traditional operation. But recovery was easier and shorter–often less than a day rather than up to a week.
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What about a laparoscopic patient who, because of her medical history, ought to stay overnight for observation? That one night would make her an inpatient. With Blue Cross, the hospital would lose money by keeping the patient till morning–receiving just $1500 instead of several thousand. With Medicaid, the hospital would lose heavily by sending her home. With unrestricted commercial insurance, the hospital could cover its costs either way.
As insurers attempted to control costs in the 80s, they forced hospitals to “unbundle” their charges, leading to much more complex billing. A hospital bill that once would have consisted of the number of days at so many dollars a day now might report 200 separate costs covering seven pages, and the typical hospital maintains a list of prices for 30,000 different services and supplies. The consulting firm Booz Allen & Hamilton concluded that a typical hospital devotes 30 percent of its staff expense to documenting each little service performed and item used, while just 24 percent is devoted to direct patient care.
To handle them, Mount Sinai maintains a special intensive-care unit where these infants remain an average of 28 days at a cost of about $2,000 a day. While Mount Sinai usually manages to cover those expenses, such births add to the nation’s health bill, and the children are likely to remain a financial burden throughout their lifetimes.
