Sunrise and the cost of ‘free’ health care

If you want a glimpse of how single-payer health care would work, look at what’s happening to Sunrise Hospital and Medical Center.

As the Review-Journal’s Jessie Bekker reported Wednesday, 70 percent of the families who use Sunrise’s neonatal intensive care unit are on Medicaid. Sunrise CEO Todd Sklamberg says that Medicaid pays the hospital a flat daily rate of $1,487 per baby. That’s around one-tenth of Sunrise’s average daily charge of $14,815. That charge is significantly higher than other Las Vegas hospitals, which Mr. Sklamberg attributes to the fact that Sunrise works with the sickest infants.

Even if Sunrise’s rates are somewhat inflated, Nevada’s Medicaid officials acknowledge that its reimbursements are insufficient. “Typically, Medicaid rates don’t come anywhere near to matching the costs incurred by hospitals in that setting,” said Jared Davies, chief of rates analysis and development for the state Department of Health Care Financing and Policy.

Mr. Sklamberg said the hospital’s deficit for uncompensated infant care was $77 million last year. If the Legislature doesn’t increase Medicaid reimbursement rates this session, he said, Sunrise will consider reducing NICU services for all patients. The hospital, he said, is on an “unsustainable trajectory.”

This is the aspect of single-payer health care that Bernie Sanders doesn’t talk about.

Some single-payer advocates brag that government-funded health care is cheaper than private insurance. That’s largely a myth. But even if one accepts such bromides at face value, the purveyors of socialized medicine ignore salient facts. The government, through both Medicaid and Medicare, has long artificially lowered its costs by underpaying hospitals. If hospitals received only reimbursements from the government, many would be forced to close or cut back on their most expensive services.

For decades, hospitals have subsidized Medicaid and Medicare patients through higher charges to private insurance companies. But Mr. Sklamberg said those days are “long gone.” There simply isn’t a large enough patient base upon which to impose the additional burden.

As we pointed out last week, an Obamacare provision fined hospitals for readmissions involving certain patients. Readmissions dropped, but mortality rates for patients increased. That’s how government-funded health care balances the books. It underpays or stops paying for certain types of care to the sometimes fatal detriment of those it claims to be helping.

The market solution would be for hospitals to reconsider how they serve Medicaid patients given the financial reality of the reimbursement rates. But it’s illegal for hospitals to refuse care in an emergency. If a hospital must treat a patient regardless, a minimal Medicaid reimbursement is better than nothing.

This is also a downside to Medicaid expansion. Nevada will increase its Medicaid spending by hundreds of millions of dollars next session. But that money won’t necessarily be directed to help the sick children of the poor. Much of it will instead pay the bills of healthy, able-bodied adults with incomes above the poverty line. Thousands of them even work for Nevada government agencies.

Even without the progressive dream of single-payer health care, government can’t afford to pay its medical bills. The massive costs of “free” health care would make things only worse.

If hospitals received only reimbursements from the government, many would be forced to close or cut back on their most expensive services.