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By James Nicholson
Mention the
topic of healthcare and one must immediately address the topic of
the uninsured. Mention the uninsured and, in Missouri, the topic
of the growing number of the uninsured enters the discussion. All
wise people realize that the fail-safes of the healthcare system
as it currently exists in this country simply do not work and that
change, if not necessarily inevitable, is inevitably necessary.
Here the universal agreement ends and the disagreements as to the
form of the solution commence. Recently, the Regional Chamber and
Growth Association gathered local Healthcare, Social Advocacy and
Business leaders at Washington University in St. Louis for a roundtable
discussion of the problem. Each speaker brought a personal perspective
to the discussion, each heard other’s, sometimes impassioned,
counter-perspectives and all left with, at least, some form of consensus.
We are one of the only countries in the world that treats the poor, the near poor, the middle class and the rich with highly differential benefits as it relates to
healthcare. Nobody else does it this way.
Steven H. Lipstein, president and CEO, BJC HealthCare |
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The Keynote Speaker, Gary Claxton of the Henry Kaiser Family Foundation
and Director of its Healthcare Market Project opened the event by
carefully explicating the connection between Medicaid and the uninsured
with approximately one-third of the spending nationally going towards
people who are actually very sick and that do not qualify, by employment
or personal savings, for private insurance. Medicaid covers over
60 percent of poor children in the United States.
Missouri’s numbers of the uninsured are increasing as Missouri
has experienced a larger fall, vis-à-vis the national average,
in employer sponsored health insurance coverage. The key question
as to who ultimately pays for medical treatment for the uninsured
was answered all too predictably—hospitals, physicians and
public money, most of the latter coming from ‘hidden’ taxes on businesses. As all businesses pay a tax for healthcare,
those who also provide healthcare coverage for their employees,
in essence, pay twice while those, which provide no coverage, only
pay the state and federal tax.
The government has to show leadership, because that is the only means of improving the situation.
Dr. James Kimmey, president and CEO, Missouri Foundation for Health |
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The panelists in the discussion—Robert Fruend of the Regional
Health Commission, Dr. James Kimmey of the Missouri Foundation for
Health, Ronald J. Levy of SSM Health Care, Steven H. Lipstein of
BJC HealthCare, Michael Neidorff of Centene Corporation and Scott
Schnuck of Schnuck Markets with Dr. William Peck of Washington University
moderating—then provided their own insights into the problem.
We have to find a new approach
and a solution that removes all of the special interests: this
will require strong leadership,
a unique perspective as well as
a commitment to healthcare coverage for everyone.
Ronald J. Levy,
president and CEO, SSM Health Care-St. Louis |
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Dr. Kimmey pointed out that, as geographic pockets of the uninsured
become more concentrated, those areas lose access to health services,
because providing those services becomes a money-losing proposition
for primary care physicians and community medical centers. The lack
of preventative care, in turn, affects the ability of the
uninsured to work simply because they are more susceptible to illness
than those who have a doctor to whom to turn to prevent them from
becoming ill. The State’s changes in Medicaid coverage, in
fact, have resulted in Missouri “moving from a ranking as one
of the 12 states with the least uninsured citizens to one of the
12 states with the most uninsured citizens.”
Kimmey cited a Foundation-commissioned study on the level of healthcare
spending in Missouri in a given (2004) year—$30 billion. When
the study tackled the next question—how much more would it
cost us in Missouri to take care of the uninsured?—The answer
was a surprising $2.3 billion less than we are currently spending.
Less expensive or not, as the Foundation did not specify the system
used, Kimmey realizes that the method used to obtain the lesser
figure “would be unpalatable in Missouri at this time because
the study used a single-payer government based system”.
“The government has to show leadership,” Kimmey bluntly
states, “because that is the only means of improving the situation.”
He points out that other states are tackling this issue in a variety
of ways. Massachusetts, for instance, is contemplating mandating
individual coverage in a manner similar to that of automobile insurance—if
you have no coverage, you lose your license. Kimmey views such single-payer
mandates as being “politically unrealistic. I believe some
mixture of governmental programs which can subsidize the small employer,
and universally mandate coverage affecting the larger employers,
would be more effective.”
If we, as a society, took better care of children, pregnant women and adults by providing preventative care and explicating the underlying consequences of bad health habits, we would have a better chance at decreasing the social burden of healthcare in the present system.
Tom Rockers, CEO, St. Anthony’s Medical Center |
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Robert Fruend, CEO of the Regional Health Commission points out
the irony that the St. Louis area has a comparatively poor health
status despite its nationally ranked healthcare facilities. He also
points out that those hospital facilities are no longer distributed
equally throughout the region. “There are only two hospitals
—St. Mary’s and Barnes-Jewish—left in the entire
quadrant north of 40, east of the Inner Belt and south of 270.”
He rattles some startling statistics from the RHC’s “Building
a Healthier St. Louis” report from the community. “There
is at least a $160 million shortfall in the region’s healthcare
safety-net funding. Approximately 20 percent of the region’s
population is either uninsured or underinsured. Some ZIP codes in
the region have much poorer health outcomes than others; for example:
in 63105, the life expectancy is 82.7 years; in 63121, it’s
73.5 years; in 63113, it’s 66.9 years. The dedicated property
tax in St. Louis County for healthcare has dropped from a $.300
tax rate to a $.165 tax rate over the last twenty-five years. The
City’s health budget has dropped from over $40 million to approximately
$15 million in the same time frame.”
This trend in spending for local health public and preventative
healthcare services has reaped unenviable rewards. “We’ve
made a great deal of progress in St. Louis over the past five years
in how we organize and provide healthcare services to the uninsured
and uninsured in our region. Despite our progress, AIDS in our community
is still growing faster than the national average, we continue to
have over a quarter of a million diabetics or pre-diabetics in the
area and
our local rates of low birth weight and infant mortality are among
the highest in the country. A baby born in Cuba has a better chance
of reaching the age of five than a baby born in certain local neighborhoods.
St. Louis has at least three world-class, neo-natal units and, unfortunately,
we keep them all quite busy. We’re very good at treating low
birth weight babies in our region; unfortunately, we have far too
many of these babies to treat in St. Louis.”
“Compared to many other communities,” Fruend explains,
“we’ve not invested as much in our preventative healthcare
infrastructure. This, of course, produces a key competitive issue
when it comes to matters of economic growth. “The St. Louis
business community winds up paying in the long-run through higher
health insurance premiums. Therefore, the business community could
be a key player in helping to solve this issue in the long-run.”
In passing, Fruend also mentions that Missouri currently has the
third highest smoking rates in the country, while it has the second
lowest tobacco tax in the country. He noted an initiative to raise
that tax to help pay for smoking cessation efforts, as well as offset
the cost of treating smoking-related illness. It’s a refrain
that came close to circling the roundtable.
We need to ½nd ways to keep people out of the emergency room. They (the uninsured) need to be able to receive
primary care.
Michael Neidorff,
chairman and CEO, Centene Corporation |
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Given that their hospitals provide the two emergency rooms available
for the large north city population often limited to using emergency
rooms as a substitute for day-to-day healthcare, perhaps it is not
surprising that Ronald J. Levy of SSM and Steven H. Lipstein of
BJC HealthCare proved to be the two most provocative speakers at
the roundtable.
Lipstein commenced by saying, “We are the only developed country
in the world that organizes its reimbursement system like this.
We are the only country in the world that provides differential
benefits and pays doctors and hospitals differing rates for treating
people who are under 21, people who are between 21 and 64 and people
who are over 65. We are one of the only countries in the world that
treats the poor, the near poor, the middle class and the rich with
highly differential benefits as it relates to healthcare. Nobody
else does it this way.” He provided charts, which showed which
(hospital) payment rates are legislated and which are negotiated.
The result of the economic shortfall from public payers is an increase
in prices to the private employers.
He further sent minds reeling by reminding everyone that relief
for Hurricane Katrina (at the federal level) was being funded (in
part) by cuts in both Medicare and Medicaid. “Thus there is
a direct link between higher premiums and the very necessary Katrina
relief.”
Referring to the State cuts in Medicaid and realizing he was speaking
to an audience of businesspeople; Lipstein sounded the warning that “businesses know which states are under funded and have increasing
populations of the uninsured and they steer clear of those states.”
Such situations “makes it difficult to sustain economic development
and job growth.”
Pragmatically, Lipstein illustrates that, once the Baby Boomers
turn 65 and are covered by Medicare, if you factor in those already
on Medicare or Medicaid and the many millions who are covered as
employees by governmental insurance programs, our tax dollars are
already providing coverage for a major percentage of Americans.
“If at 65”, he muses, “why not now?” Answering
his own question, he explains that “would increase Medicare
payroll taxes” and, stating the obvious, “eliminate premiums.”
“Who would it matter to? Doctors and hospitals, because the
current private system pays better than Medicare. The insurance
companies, pharmaceutical companies, medical equipment providers…inside
the industry, there’s little momentum for national health insurance.”
Ronald J. Levy of SSM began with an impassioned voice calling “the
lack of healthcare coverage for Americans an absolute travesty”
saying, “it is our national disgrace to be the only industrialized
nation in the world lacking a vehicle to provide its citizens healthcare
coverage.” Food for thought?
He goes on to explain that Medicaid is a federal/state partnership
provided differently in fifty states. It operates as three programs
in one: it provides healthcare for the poor and low income, care
for disabled citizens, and long-term care for those who cannot afford
it. “It is an incredibly complex and expensive program costing
the U.S. nearly $350 billion annually,” he continues. It is
also the biggest healthcare program in Missouri, which covers one
out of five citizens. Like virtually everyone else in the roundtable—healthcare
advocate, healthcare administrator or business executive, he feels
the recent cuts in the Missouri Medicaid program are “short-sighted”
and, in the long run, “far too costly.” The cost to the
State, in federal matching funds, will be $250 million compared
to the $150 million dollars the State cut from its budget.
As more states begin to gather data on who is receiving state aid, they are finding that some of our nation’s largest companies are not paying their fair share of the cost of health care for
their employees and their families.
Scott Schnuck, president and CEO, Schnuck Markets Inc. |
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Healthcare is about caring for and curing people, but what is often
forgotten is its value to our economy as an employer and as a business
in its own right, Levy explains. “It produces well-paying jobs
with benefits, produces supplies and invests heavily in our communities.
Taking money away from the healthcare system has a rippling affect
across the entire economy. The bottom line is it will result in
hurting people in need, as well as creating a huge cost to the State
over the long run. The economic impact of losing the federal matching
funds and the Medicaid cuts in the State will result in an even
greater cost shift to employers and the citizens of Missouri. Middle-income
families will have a more difficult time maintaining private healthcare
coverage. The ripple affect is major once one considers the impact
on families that are suddenly at medical risk. One way or another,
people throughout the State will pay for the reductions in Medicaid
coverage.”
“The irony,” Levy continues to explain, “Is that
Medicare (federal program for insuring those over age 65) is a more
efficient payer than private insurance. It requires merely a five
percent administrative cost, as opposed to private insurances nearly
double 10 percent. In addition, there is no built-in profit motivation
or cost through the federal Medicare program. Levy concludes, that
“we have to find a new approach and a solution that removes
all of the special interests: this will require strong leadership,
a unique perspective as well, as a commitment to healthcare coverage
for everyone.”
Michael Neidorff, chairman and CEO of Centene Corporation, presented
a more conservative approach to the problem. “There is enough
money in the (current) system” he believes. “What’s
missing is the coordination and the management of care.” He,
too, expresses concern over the cuts in Medicaid: “It’s
only going to drive people into the emergency room” and “will
result in cost shifting back to the employers, which will result
in increased premiums.”
He is hopeful of an increase in healthcare funding and fervently
believes “we need to find ways to keep people out of the emergency
room. They (the uninsured) need to be able to receive primary care.”
He refers to a program in Wisconsin called Badger-Care, which pays
the co-pays for the working poor, and states there are many models
to follow (which work better than the non-model in place in Missouri).
He adamantly believes that gains in technology will ultimately result
in benefits to the current system, and that paying Primary Care
Physicians more (“rewarding them for doing the right thing”)
for caring for the uninsured, will result in the cessation of the
emergency room cycle of medical treatment for those lacking primary
care physicians.
Lipstein provided a quick rejoinder to the assertion that there
is currently enough money in the system: “If we were to insure
per capita spending on Medicaid at the same rate we insure all of
you, we are about $166 million short for just the 310,000 people
that are either uninsured or underinsured in St. Louis city and
county. The idea that their health outcomes are as good as ours,
that they have reasonable access to healthcare, and that there’s
enough money to provide that care I think is erroneous.”
If we insure the uninsured and provided better insurance for the underinsured in the long run we would save money.
Dr. William Peck,
Director of the Center for Health Policy, Washington University |
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Tom Rockers, CEO of St. Anthony’s Medical Center, expressed
the sentiment that the United States is “already into socialized
medicine, but we just don’t say it.” His business principal
simply states, “if we, as a society, took better care of children,
pregnant women and adults by providing preventative care and explicating
the underlying consequences of bad health habits, we would have
a better chance at decreasing the social burden of healthcare in
the present system.”
He also refers to the vicious cycle of the current system and points
out that “the cuts to Missouri’s Medicaid program whereby
the former recipients can no longer receive primary care does not
make physical or social sense.” By mandating that all hospital
emergency rooms must provide medical services to the uninsured to
meet the community need “does not solve the basic problem.
We serve the people in our community by providing quality and efficient
care in our emergency room. When the emergency rooms of hospitals
have to provide primary care to patients who are not seen in a primary
care physician’s office, because they have no insurance, that
puts additional strain on the emergency rooms of each hospital.
Cost-wise, we play Robin Hood. We are mandated to accept the cost
of treatment for those who cannot pay and obligated to pass those
costs on to those who can afford treatment. The majority of hospitals
lose money on Medicare and Medicaid inpatients. The shortfall of
Medicare and Medicaid reimbursement is covered by a hidden tax on
businesses that are charged more.”
“Illness,” he continues, “is the great equalizer.
It is a constant that when you hurt, you go to the doctor so the
pain will can be reduced. But there is no constant in the method
of payment. The government does not pay its full share, business
pays more than its fair share, and the poor pay little or nothing.”
All of this is obvious to Scott Schnuck, president and CEO of Schnuck
Markets Inc., whose family grocery company has been challenged continuously
by rising healthcare costs. Couple that with the fact that big box
competitors typically have significantly lower labor costs and you
have two of the major contributing factors to today’s highly
competitively charged business environment.
An internal Wal-Mart document mentions that less than one-half of
Wal-Mart employees take advantage of the Wal-Mart healthcare coverage.
It would follow then that a majority of Wal-Mart employees and their
children are uninsured and, (and many are eligible for) thus, on
Medicaid.
Schnuck says, “As more states begin to gather data on who is
receiving state aid, they are finding that some of our nation’s
largest companies are not paying their fair share of the cost of
healthcare for their employees and their families.” He added,
“That essentially pushes the burden onto tax payers and other
businesses.”
In 2003, healthcare was one of the primary catalysts to the grocery
work stoppage. At that time, Schnucks, Dierbergs and Shop ‘n
Save, the region’s largest union grocers lobbied union leaders
for healthcare restrictions. The grocers said restrictions were
needed to reduce the companies’ need to provide insurance to
spouses who were eligible for coverage elsewhere. In addition, Schnuck
says it’s important that the companies and the unions continue
to work together to help teach their associates to be responsible
healthcare purchasers.
Dr. Kimmey reinforced this illustration with some sobering figures. “If you look at the total that was spent for working adults
in 2004 as $268 billion, about $158 billion of that was provided
by ‘own employer insurance.’ That left about half of that
money coming from some other source and $31 billion came from employee
insurance from the employer of another person in the family unit,
so you’ve got a big free rider phenomenon. The businesses that
are being responsive and socially conscious in their policies are
supporting those who are thumbing their nose at the system.”
Schnuck, as a pragmatic and currently embattled businessman, argues
that “the (insurance) burden can not be placed on those already
paying an unfair share (of the total costs). It must be equally
spread out.”
Dr. Peck’s analysis, “In my view, the major liability
in this country in addition to the high rising cost of healthcare
is the problem of the uninsured and underinsured, which I believe
trumps almost any other problem you can think of. 145 million Americans
have no health insurance and an untold number of Americans are underinsured
and this extracts an enormous toll on the population in terms of
morbidity, life expectancy and cost. (There are studies that prove
that.) If we insure the uninsured and provided better insurance
for the underinsured in the long run we would save money,” bluntly summarized the problem, while providing a key to its solution.
A discussion in which all agreed the system, per se, did not work
and in which a model for a fair system beneficial to all ended most
pointedly in the words of Dr. Kimmey. He visually surveyed the audience
and asked for a show of hands for those in attendance in the healthcare
field? Then he asked, “How many are in the insurance industry?”
Noting the response, he concluded, “How many are in a business
that has no relationship to healthcare or insurance?” On seeing
the response, he concluded, “I’m glad to see you folks
here. The rest I’ve been talking to for 25 years.”
REGION'S OUTSTANDING HEALTHCARE INSTITUTIONS
GENERATE SUBSTANTIAL ECONOMIC BENEFIT.
By Bryan Bezold
The healthcare industry is an important part of the St. Louis region’s
economy. St. Louis’ hospitals, and their affiliated medical
schools and research facilities, are among the nation’s best.
The quality and quantity of the region’s healthcare sector
affects the region’s economy in a number of ways. It’s
large, so it supports employment and income for thousands of St.
Louisans. The quality is superb, so it is in effect an export sector
for the St. Louis economy, as people literally from around the world
seek medical care at the region’s hospitals. That quality also
makes the healthcare sector in St. Louis a magnet for talented medical
professionals, because doctors and researchers from across the country
come to St. Louis to work. The medical research conducted at the
region’s hospitals also helps the region’s economy to
grow in the long run by helping to develop ideas and innovations
that will become the healthcare practices of the future.
The healthcare industry is a large and growing part of the St. Louis
region’s economy. According to the U.S. Bureau of Labor Statistics,
approximately 59,300 people were employed at hospitals in the St.
Louis region in 2004. That’s large relative to the size of
our region. As a share of regional employment, the hospital industry
here is twice what the national average would predict for a region
our size. It’s also growing. From 1995 to 2004, employment
at local hospitals grew from 51,900 to 59,300. That’s an increase
of 14.3 percent, which significantly outpaced overall regional employment
growth of 6.5 percent.
Employment at St. Louis Area Hospitals
1995 - 2004
The region’s hospitals have a correspondingly large impact
on the region’s economy. The 59,300 jobs at our hospitals support
approximately 54,400 other jobs throughout the region. 24,600 of
those 54,400 jobs are due to the hospitals’ business activity–they
are jobs at firms that the hospitals do business with, from maintenance
and repair services to accountants. The remaining 29,800 jobs are
due to the household spending of the hospitals’ employees on
everything from clothes to food to financial services. That’s
total employment impact of over 113,000 jobs. In dollars, the direct
and indirect economic activity associated with hospitals in St.
Louis is approximately $10.9 billion annually.
The hospital segment of the St. Louis economy isn’t just large
and growing, it’s also nationally recognized for its excellence.
Awards and recognition that local hospitals have earned in recent
years include (but aren’t limited to) Barnes-Jewish Hospital’s
ranking as the 6th best hospital in the nation by U.S. News &
World Report; St. Louis Children’s hospital’s spot in
Child magazine’s list of the top 10 children’s hospitals
in the nation; and SSM Healthcare’s receipt of a Malcolm Baldridge
National Quality Award. The Washington University Medical School
is the 3rd best in the nation, according to U.S. News & World
Report, and the same magazine ranked Saint Louis University’s
Medical School 62nd (out of 143), and rated Saint Louis University’s
geriatric medicine program the 10th best in the nation.
The excellence of the region’s hospital system benefits the
region in a variety of ways beyond jobs and income. Obviously, it
means St. Louisans have access to excellent medical care at places
like the Siteman Cancer Center. But the region’s economy also
benefits because of the talented people who come to St. Louis from
around the world to work and study at the region’s medical
institutions. When you have the nation’s 3rd best medical school,
you’re going to attract some talented doctors and medical students.
Some of these medical professionals put down roots in St. Louis
and stay for the long haul.
The hospitals provide other economic benefits for the region. In
2004, Washington University’s medical school was a magnet for
research dollars; it ranked 5th among all medical schools in 2004
with $388 million in NIH awards. And the research that doctors at
the hospitals and medical schools conduct can have another payoff
as well–sometimes that research turns into new businesses.
Estimated Annual Economic Impact of Hospitals in the St. Louis Region
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Direct |
Indirect |
Total |
| Output |
$5.4 billion |
$5.5 billion |
$10.9 billion |
| Employment |
59,390 |
54,400 |
113,700 |
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