Hospital bills

C. Duane Dauner is president of the California Hospital Association, a position he’s held for an astonishing 22 years. The CHA represents almost 450 hospitals and health-care systems in California, and lobbies on their behalf at the state and federal level. As part of an ongoing series of interviews with the major players in California’s health-care debate, Dauner sat down with Capitol Weekly to assess the current crop of reform proposals.

[B]What’s your overall assessment of the governor’s plan?[/B]

I think the governor’s plan is visionary, bold and aggressive. The vision that is created in that proposal, we support. We support covering the maximum numbers of people that you can. We support shared responsibility. We believe that the plan should have some state responsibility in it. As you know, everybody is sharing in helping to cover it, but there’s no new state general-fund money in it.

We believe that the employer and individuals should play a role and have responsibilities. However, it is our opinion that the 4-percent assessment on the employers that choose not to provide coverage is inadequate. It’s not enough. In the case of our organization, it’s more like 9 percent of payroll.

[B]That’s not out of line with a lot of industries.[/B]

No. Almost all employers that provide coverage for all employees, it’s between 7 [percent] and 9 percent.

[B]Some industries, like the restaurant industry, say that 4 percent is going to make people go out of business.[/B]

You can understand if you’re running a restaurant, they’re one of the highest-volume employers in California. Many of them don’t work full time and many of them good a good amount of their compensation through tips and gratuities.

There are some legitimate concerns. It boils down to this: We only have a limited number of ways to finance health care. You’ve got government, individuals, employers and then other kinds of taxes on products and services. One way or the other it involves the tax system or the participation of people that use the system. Everybody wants it, but nobody is willing to step up and pay for it. That’s the dilemma.

[B]There’s a proposed 4-percent tax on hospitals in the governor’s proposal.[/B]

If you think about that, half of our hospitals are net money losers now. At the end of the year they are in the red. The theory is that if you put up this money, you’re going to get increases in Medi-Cal payments and some of the uninsured are going to be covered, and you’re going to end up being “better off.” Well, all the modeling we’ve done shows that a large number of our members will still be net losers. We believe there are better ways of getting the money than taxing the providers who provide the care.

[B]One of your big concerns is Medi-Cal reimbursements.[/B]

If you look at the California MediCal program–if you look at what California is paying out for medical services per Medi-Cal beneficiary–we’re 50th out of 50 states. We’re dead last. The payments to the providers are the lowest in the country. This has been endemic in the state for several decades. This governor has been the first chief executive of California in the 22 years that I’ve been here to publicly acknowledge that there’s a huge costs shift in health-care costs because of Medi-Cal’s failure to cover the costs of care to its beneficiaries.

The gap that’s created, Medi-Cal is a big contributor to the problem. The way that Medi-Cal should be increased is general-fund money should be put up to match federal funds to get it up to where it should be. This proposal relies on everybody else except for the state to put up the money.
The 4 percent on hospitals, that’s a quarter of the governor’s plan. How do you make that up?[/B]

The way it should be raised is that the state puts up the general fund money to match. The Medi-Cal program is not a provider program. It’s a social program to meet the health-care needs of economically disadvantaged people in this state. It’s our responsibility to do it. This plan tries to achieve some very good results for low income people who cant afford it and of improving Medi-Cal. We support that.

[B]What about single payer, Senator Kuehl’s approach?[/B]

Philosophically, I think the single-payer bill by Senator Kuehl, while seemingly attractive, based on the experience of other countries, doesn’t end up producing the results that many of the proponents say are there. Philosophically, I think we’re better of with a public-private partnership.

The legislative leaders say that, in the end, what we’re moving toward is single payer.

Single payer can mean different things to different people. If all we did was put the money into state government and state government started paying all the providers, we probably would eliminate some of the inefficiencies that exist.

But what you’ll end up with is probably worse fragmentation on the delivery side. And the political process will take over and determine how health-care services are delivered. The countries that have had government systems for years and years have a much different culture than ours. If you look at nations like Great Britain, they are going through the throes of under-funding and rationing.

In the U.S. if a person goes into a hospital and has had a heart attack needs bypass surgery, they get it as soon as the patient is physically capable of enduring it. In some other countries, it’s months. The way they control costs is to limit capacity and limit the service. No nation in the world has created a system to date that meets the goals of cost effectiveness, efficiency, efficacy, justice, equitability, affordability and aligning the stakeholders. Because it’s not easy to do.

But we have some responsibility to subsidize people who aren’t wealthy.

If you take somebody who’s making $35,000 a year, lets say a couple. By the time you pay your food and rent and basic necessities of life, you don’t have any money left over. So it’s unrealistic to expect that they are going to have money to pay for health care. One-hundred dollars to them is far greater than $10,000 to a person who makes $300,000.

But we also have this unrealistic expectation that everybody should get exactly the same amount and quality of health care. That doesn’t exist in any other phase of society. Housing, cars, lawyers, education. We have a standard. Public education, you can go and pay less. If you want to go to Harvard you can go and pay a lot more. If you want to go to the Mayo Clinic and spend a week and spend $20,000 you can do it. We should not expect that every single resident of California is going to get the same amount and quality of health care. But what we do need to have is, like education, we need to have a baseline. And we need to have a system that accommodates everybody regardless of their social or economic status.

[B]Let’s back up a second: We don’t accept a minimum standard, or any differences in public safety–police protection, fire protection. [/B]

Right. And the closest thing to that in the hospitals is emergency care. Emergency services are what people rely on. People need to be able to get emergency care when they need it. A lot of people do go into the emergency department when they don’t need to be there. If people had options to get to care when they need it, and its not emergency care, and it costs them less, they would take it.

Contact Cosmo Garvin at

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