Health Care Financing
SUGGESTED TALKING POINTS
Background
The way we pay – or don’t pay – for health care in this country is confusing to patients, the
public, legislators, the media and often times even providers. Hospitals are ready and willing to
work with these groups to create a logical, simplified health care financing system.
Key Messages
The confusing and complex way we fund – or don’t fund – health care in the United States
is no way to run a health care system.
While hospitals set one charge for all patients, hospitals are paid markedly different rates
from each payer.
Hospitals must accept payments from Medicaid and Medicare that are often lower than
what it costs hospitals to provide care – averaging 92 cents on the dollar for Medicaid and
92 cents on the dollar for Medicare.
Private insurers are able to negotiate lower payment rates with hospitals, usually at or
slightly above cost.
Uninsured and underinsured individuals generally pay nothing or only a small portion for
care they receive, well below the cost to provide services.
Hospitals’ economic and social contributions to their communities far outweigh their
savings as tax-exempt charitable organizations.
Ohio hospitals provided over $1.5 billion worth of care for which they were not
reimbursed in 2005, the most recent year for which data is available. That includes care
to uninsured patients, care for patients for whom Medicaid did not pay the full cost of
care and other community benefit activities such as health screenings.
Beyond the $1.5 billion, Ohio hospitals provided another $393.5 million worth of care to
elderly Ohioans that was not covered by Medicare and $313 million to low-income
patients who could not pay co-insurance or deductibles.
In spite of the fact that hospital emergency rooms are money-losers, hospitals keep
emergency departments open to all – regardless of ability to pay – 24 hours a day, seven
days a week. In what other business model would an organization willingly enter a
money-losing venture?
Ohio’s non-profit hospitals serve as the safety net for Ohio’s uninsured individuals – 1.3
million and growing! – who routinely seek services including primary care in Ohio’s
emergency rooms.
In Ohio, the average hospital operating margin in 2005 was 4.1 percent. Ohio’s not-for-
profit hospitals pump any proceeds after expenses are covered back into the facility to
reinvest in new hospital services, facilities and technology to improve care for patients
and the community.
Communication about hospital billing is a two-way street.
Hospitals are required to notify patients of their eligibility for the Hospital Care
Assurance Program, which covers care to uninsured individuals with incomes below the
federal poverty line – $20,650 for a family of four in 2007.
Hospitals communicate their discount policies for uninsured and underinsured patients
above the federal poverty line by including information in bills, providing materials in
several languages and posting signs outlining their policies.
Hospitals care first, bill later. If a patient cannot pay for care received, it is the patient’s
responsibility to notify the hospital and work out a reasonable discount or payment plan.
Updated 12-13-07
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