Prosperous Hospitals and Insurance Companies Thriving on Eve of 'Healthcare Reform'

BUZZFLASH NEWS ANALYSIS
by Jeffrey Joseph

Senate Democrats appear to finally have enough votes to pass their version of the health-care reform bill despite all the rhetoric and lobbying against it. As the critical vote draws nearer, though, the bill deserves an evaluation of how it might affect some of the private industry forces who are said, in the corporate press, to be economically harmed by the Senate bill.

Some hospital industry experts have made their opposition to reform salient for months. Richard Umbdenstock, president and CEO of the American Hospital Association, wrote disparaging remarks about the reform effort, fearing "many of America's hospitals will not be able to withstand the cuts that the administration and the Congress are considering. They already are experiencing increases in charity care and nonpayment for services as the economic downturn affects more and more Americans and their employer-provided insurance coverage." He later lamented the possibility of expanding Medicare coverage to 55- to 64-year-olds by comparing it to "living in a house with a crumbling foundation and trying to repair it by adding more bedrooms." After the White House and Senate removed the public option and proposed Medicare expansion, the Hospital Association officially decided to support the bill, no doubt to remain on the inside of negotiations that were going their way.

Huge swathes of America suffered from the economic downturn Umbdenstock mentioned, but as Bruce Jaspen of the Chicago Tribune reports,hospitals "are spending unprecedented amounts on new buildings and seeing some of their best improvements in cash since the dot-com boom of a decade ago." The same may not hold true for hospitals serving primarily poor patients, but large hospitals have had few economic setbacks in getting larger and often "charging higher prices when that money could be used to lower costs or subsidize hospitals in a hole." Jaspen notes that "Critics say large hospital operators that are amassing cash are doing so at the expense of patients."

Insurance companies also appear to face less of a struggle than commonly reported in the mainstream media. Just after the Democrats reached a deal that would ensure passage of the reform bill, the market responded by investing in insurers. If stock prices stand as a fair indicator of an industry's projected success, the jump in the insurance industry's stocks suggests the industry and its proponents in the Senate are more amenable to the current bill than their public opposition might otherwise suggest.
Insurance appreciation of the bill may have to do with the mandate for more Americans to enroll in insurance without federal competition, a veritable gift to the industry, as a way of improving national health care. Since opponents of the bill already suggest a lack of correlation between health and insurance coverage, a corollary should be that gifting the insurance companies conservatives aim to protect would also have little effect on improving the nation's health-care system's position as thirty-seventh in the world. The headline of the Chicago Tribune article cited above best captures the reality: "Big hospitals flush with cash despite industry's dire warnings."

The Senate Healthcare reform bill has as its central purpose, we are told, the coverage of more people, and one would logically expect those in the health or insurance industries to sacrifice some profit, excess revenue and inflated salaries as part of the process, but stock market gains for the profitable insurance companies and balance sheets of many large hospitals suggest otherwise, leaving the cost of extended coverage largely on the back of the federal government and insured individuals. If that is the best option the Senate could provide, the U.S. may be further from real reform than the D.C. Democrats, and the nation, would like to believe.

BUZZFLASH NEWS ANALYSIS