The dust up between United Health Care and Methodist health care system is the latest volley in the battle between hospitals and health insurance companies. A similar battle is brewing between Cigna and Memorial Hermann.
United claims that Methodist charges too much for health services, but Methodist argues that their costs are in line with other providers. It is hard to know who is telling the truth, because the payment schedules are trade secrets.
These opaque agreements make it vary hard for consumers to price health care. The cost of a procedure like an MRI can vary considerably from one hospital to the next, but it is almost impossible for the average Joe to figure that out.
The lack of transparency undermines competition, which in turn contributes to higher health care costs for everyone.
United and Methodist are also responding to other economic pressures of our convoluted health care system.
Medicare and Medicaid have much lower reimbursement rates than private insurance, so health care providers charge higher rates to private insurance to make up for their losses on government provided health insurance.
Hospitals also have to shoulder losses on care for the uninsured, so the losses are again shifted onto private insurance.
It would be a small consolation if ever-increasing premiums, copayments, and deductibles were at least paying for our own health care needs, but that is not the case. The privately insured are actually subsidizing care for Medicare, Medicaid, and uninsured patients.
In their defense, private insurance is under tremendous pressure from their customers to hold down premiums and deductibles. They bristle at having to subsidize non-customers.
Both the state legislature and Congress could do something about this, but the politics are too messy.
The state of Texas could expand access to Medicaid. Under the Affordable Care Act, Congress will pay 90% of the cost of expansion, but the state will still have to cough up the other 10%.
Expanding Medicaid will reduce the number of uninsured people, and hospitals will not have to eat the costs of so much uncompensated care. That would take some of the pressure off of private insurance.
Expanding Medicaid will also reduce the property tax burden. Take a look at your property tax bill, and you will see a good chunk of change goes to the Harris County Hospital District, the public hospital system for the uninsured. Fewer uninsured Texans means lower property taxes.
Harris County officials, both Republican and Democratic, have come out in favor of the Medicaid expansion, but that idea is dead on arrival in Austin.
For its part, Congress could increase reimbursements for Medicare, but they would either have to raise Medicare payroll taxes or borrow billions to shore up the Medicare hospital trust fund.
Congress has little incentive to act. America’s elderly population is mostly satisfied with Medicare. It is much easier, from a political standpoint, to let the private health sector bear the burden of spiraling health care costs.
After all, railing on the evils of insurance companies is a pretty good way to get re-elected.
Dr. Steve Showalter is a government professor at Lee College in Baytown.