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Is uncompensated care for the uninsured driving up medical costs?
No, say Jonathan Gruber and David Rodriguez:
We measure uncompensated care as the net amount that physicians lose by lower payments from the uninsured than from the insured. Our best estimate is that physicians provide negative uncompensated care to the uninsured, earning more on uninsured patients than on insured patients with comparable treatments. Even our most conservative estimates suggest that uncompensated care amounts to only 0.8% of revenues, or at most $3.2 billion nationally.
Can any of you find an ungated copy of this paper?
Posted by Tyler Cowen on November 6, 2007 at 05:27 AM in Medicine | Permalink
Comments
Wow, this certainly shakes up some deeply held beliefs of mine.
I had always thought the exact opposite. Unfortunately, deeper comment will require reading the full paper.
Posted by: sa at Nov 6, 2007 6:56:52 AM
I would look at the details before I gave up those beliefs. My belief is that the uncompensated care patient is difficult at best.
Posted by: Huggy at Nov 6, 2007 8:00:25 AM
Robin, would you write (if you haven't already) about the economics of why academics accept the terrible deal they get from the publishers of academic journals? Why they publish in places that make it extremely difficult for the public-at-large to view their work?
Posted by: Bill Mill at Nov 6, 2007 8:10:07 AM
I'm fairly skeptical of this assertion and would appreciate seeing this paper.
Anecdotally this is hard to swallow. A pharmaceutical executive from Texas, who sits on his
local hospitl board, said his hospital lost $75 million in 2006 in uncompensated
care to undocumented aliens.
I'm open to the evidence, but it would have to be very compelling.
Posted by: Jip at Nov 6, 2007 9:01:28 AM
Their data seems to include only office visits, which wouldn't take into account uncompensated care provided during hospital admissions or ER visits. I would suspect these are two major sources of uncompensated care.
Doctors don't have to see uninsured patients in their offices. I've even heard of private docs calling 911 to transport an uninsured patient to the ER-- from the doctor's own waiting room-- instead of risking non-payment.
I'd suspect the results here are perhaps a lower bound for the amount of uncompensated care.
Posted by: Anon at Nov 6, 2007 9:07:30 AM
It really puts things into perspective when $3.2 billion can be dismissed as an inconsequential trivial sum :)
Posted by: Peter at Nov 6, 2007 9:19:40 AM
If the paper only looks at office visits, I'd say that would be a very skewed set of data.
Anecdotally, I would say that I've observed that the insured make more office visits compared to ER visits, and the uninsured tend the other way. I think there is a perception (true or not) among the uninsured that it's either not possible, or is a difficult or time-consuming process, to become a new customer of a general practitioner.
Thus many treat the ER as a kind of substitute. They don't do regular office visits or checkups, and will not bother to get set up with one in order to see them over what they perceive to be more minor health complaints. Often they will later end up in the ER if what starts off as a minor pain or illness gets worse because it goes untreated. Oddly enough, uninsured persons also seem to go to ERs for more minor things than the insured, such as when a child has a nasty cold/flu, something that an insured person would be more likely to schedule an office visit with their general practitioner for. The ER is seen as the convenient, if not the only, alternative available to the uninsured.
Posted by: chuck at Nov 6, 2007 9:39:25 AM
as the managing partner of a busy medical practice and someone who has written and spoken on medical costs I would have to say that the study is FOS. Uncompensated care is just that, uncompensated. Office visits are the one cost that you can control, ie no pay no office visit. The real cost of the uninsured is in Er visits, hospital procedures, etc. These are things that the MD must do even knowing that not only will you not get paid but you are also exposing yourself to real risk by provising the care. Most Docs know exactly how much uncompesated care they provide, they have to write it off the billing system each year. Unless you looked at that number you have no clue about uncomensated care.
Posted by: MD JD at Nov 6, 2007 9:45:26 AM
Gotta see the paper, this really bothers me.
Background: accounting, budgeting and financial analysis for physician
groups for 30 years.
I have never in 30 years found a medical practice ( 1 to 100
doctors) in which this would be true (excepting cash only service
providers, and odd practices, e.g. dermatology).
Since the majority of practices either don't track this well or track it
inconsistently, how would an economist gather the data?
For many docs the ER is a place where uncompensated care is
routine and extensive (the orthopaedist on trauma call, for example).
How could this be? Well, many uninsured patients do pay some or all
of their bills. Some services (breast implants) are a strictly cash
business. Some wealthier people simply pay cash. Add all of that up
and it still doesn't work for me.
Posted by: save_the_rustbelt at Nov 6, 2007 10:06:16 AM
"I've even heard of private docs calling 911 to transport an uninsured patient to the ER-- from the doctor's own waiting room-- instead of risking non-payment. "
This sounds like an urban legend. A lot of ER visits are referrals by doctors, because that is the only place you can get some tests done within hours. Doctors can not handle real emergencies in their office.
Posted by: joan at Nov 6, 2007 11:42:06 AM
My girlfriend is a nurse case manager at a major teaching hospital in Boston. She had this same debate a couple years ago with some left-leaning (Gee, in Boston? Go figure) colleagues, so she decided to track the insurance status of her cases. Her purview is Neurology only. In 18 months:
Mass Health (Medicaid)-33%
Medicare-27%
Private insurance-21%
Uninsured-19%
We see that almost 80% of her clients' care was paid at well below "market" rates (Medicare/Medicaid) or vastly below (uninsured) from the infamous "Free Care Pool" set up by the commissars her in the People's Republic of Massachusetts.
How long is this sustainable?
Posted by: Brutus at Nov 6, 2007 12:04:34 PM
My girlfriend is a nurse case manager at a major teaching hospital in Boston. She had this same debate a couple years ago with some left-leaning (Gee, in Boston? Go figure) colleagues, so she decided to track the insurance status of her cases. Her purview is Neurology only. In 18 months:
Mass Health (Medicaid)-33%
Medicare-27%
Private insurance-21%
Uninsured-19%
We see that almost 80% of her clients' care was paid at well below "market" rates (Medicare/Medicaid) or vastly below (uninsured) from the infamous "Free Care Pool" set up by the commissars her in the People's Republic of Massachusetts.
How long is this sustainable?
Posted by: Brutus at Nov 6, 2007 12:05:30 PM
My girlfriend is a nurse case manager at a major teaching hospital in Boston. She had this same debate a couple years ago with some left-leaning (Gee, in Boston? Go figure) colleagues, so she decided to track the insurance status of her cases. Her purview is Neurology only. In 18 months:
Mass Health (Medicaid)-33%
Medicare-27%
Private insurance-21%
Uninsured-19%
We see that almost 80% of her clients' care was paid at well below "market" rates (Medicare/Medicaid) or vastly below (uninsured) from the infamous "Free Care Pool" set up by the commissars her in the People's Republic of Massachusetts.
How long is this sustainable?
Posted by: Brutus at Nov 6, 2007 12:05:39 PM
The paper is here-
http://nber15.nber.org/papers/w13585.pdf
After going through it in detail, I have to congratulate Gruber & Co. on an excellent paper and I think an on-target paper.
Why the reality-perception gap? The authors very correctly point that the most measures of uncomp care come from list prices whereas insurance prices are the actual prices they get.
There are some weaknesses in the paper esp the sections on sample construction where they do some algebraic gymnastics and one on effect biases. I recommend everyone to read this section. The authors have addressed most of the concerns the junta has.
All in all, a pioneering paper in the field of healthcare econ and behavioural econ. There is lots of other interesting info in the paper as well such as how a large fraction of uninsured overpay compared to insurance prices. Really interesting.
Posted by: sa at Nov 6, 2007 12:27:42 PM
I don't have the cite anymore, but some time ago I read that gunshot injuries are among the worst things from a hospital's financial point of view because something like two-thirds of them involve uninsured (and usually low-income) people. They also can be extremely expensive to treat.
Posted by: Peter at Nov 6, 2007 12:29:00 PM
try here for ungated:
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V8K-4PK7P25-1&_user=18704&_coverDate=09%2F04%2F2007&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000002018&_version=1&_urlVersion=0&_userid=18704&md5=0eba358bcbe174dc3cfa0f74a6618aa7
Posted by: tp at Nov 6, 2007 12:50:41 PM
"I've even heard of private docs calling 911 to transport an uninsured patient to the ER-- from the doctor's own waiting room-- instead of risking non-payment. "
Doctors offices call 911 because a medical situation has developed that requires emergent care,
and the office is not equipped to provide such care. Insurance status is not relevant.
Standard protocol is for the doctor to provide triage care will waiting on EMTs. EMTs are equipped and trained to transport.
If the office transfers a non-emergent patient, that is not proper.
Posted by: save_the_rustbelt at Nov 6, 2007 1:57:45 PM
When will we see a paper that estimates the portion of physicians' income which is due to rent-collecting as a result of the monopoly they have acquired and the barriers to entry they use to protect it. I'd bet it's at least 50%.
Posted by: anon at Nov 6, 2007 6:53:28 PM
This is the key sentence in the paper, describing their assumptions / methodology:
"For example, if an uninsured patient receives a procedure with a list price of $200, but insurance companies would only pay that doctor $90 on average, we say that patient received $90 worth of care. If the patient paid nothing, we
call that $90 of uncompensated care."
Posted by: KP at Nov 7, 2007 5:21:47 AM
KP:
Good catch....
Have to read more in depth today.
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