Tuesday, April 25, 2006

Tea Leaves Favor For Profit Healthcare

Dear President Bush,

Your health care strategies rest on two key pillars. One is that market forces will bring down health care costs. The second is that the private sector, companies with a profit motive, are more efficient deliverers of service than government or non-profit providers.

The Republican Party is deep in bed with for-profit healthcare. Why would I suggest such a thing? Both Houses of Congress held hearings in 2005 on the unfair advantages non profit health care systems have over for profit systems as they do not pay taxes. That uncompensated care provided by all hospitals reached $26.9 billion in 2004 seemed not to be a large concern by our elected representatives. If San Angelo is reflective of the country then non-profit hospitals shouldered at least 80% of that uncompensated care.

Texas is revising its taxing system to comply with a federal court order for fair funding of education. Governor Perry’s plan exempts for-profit hospitals from most of the new taxes, even though they have been paying under the old system. Does this mean for-profit hospitals will now pick a larger portion of the uninsured or will those tax reductions just fall to the corporate bottom line? My guess is it will fall straight to increased net income. How many HCA’s hospitals are in Texas? And how many HCA shares does Senator Bill Frist still own? Having already seen Gov. Perry’s sweetheart deal with a Carlyle Group affiliate should I be surprised that he wants to give more of Texas taxpayers’ money to large politically connected corporations?

Incremental change moves programs and policy in the direction Republicans desire. Senator Kay Bailey Hutcheson recently bragged about a strategy by the Republican Task Force on Health Care Costs which portends such creep. They propose to take funding for community health centers and expand it to other non profit systems.

Of course over time this would be further expanded to for profit health care systems, as they are “more efficient”, thus a better use of taxpayer dollars. While a great sounding idea, it meant reduced funding for existing and planned community health centers. Funding previously dedicated to community health centers would now be available to "integrated health systems".

Senator Hutcheson is correct that more needs to be done to provide for the 46.9 million uninsured in America. Community health centers provide primary care for approximately 7 million uninsured while serving 14 million patients overall. It appears the supply of uninsured patients greatly exceeds the capacity of the system to deliver care to almost 47 million people. Yet nobody is rushing in to meet this market demand.

Leveraging the forces of supply and demand is your stated strategy. How will this work in a market where need outstrips supply currently and is projected to grow much worse? In healthcare it is the aging of the baby boomers or a flu pandemic that will create crushing demand. What will the market’s response be price-wise? A parallel exists in the energy market today as growing worldwide demand for fossil fuels wreaks havoc on prices. Ask people how happy they are with gasoline today as it might be the health care of tomorrow?

Just as the Exxon/Mobiles are pleased as punch today so might be the HCA’s, The Carlyle Group, and the other investment houses playing their health care cards. All signs point to a rosy for profit healthcare future. That you recently covered for a Carlyle Group affiliate in your White House Lessons Learned report is just another indicator.

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