MADISON, WISC. -- Madison Mayor Paul Soglin wants to know why area hospitals charge nearly double for healthcare fees for private insurance. Is cost shifting bearing an unfair burden on people with private health insurance?
According to Wisconsin Public Radio (WPR), he is asking the Madison Common Council to approve a resolution that would require hospitals in the jurisdiction to share the actual costs of services.
The practice of cost shifting by some health care providers may help them make up for treating the uninsured by charging patients with private insurance higher prices. One recent study published in the the May Journal of Health Affairs looked at healthcare charges nationally in order to aid policy reforms. The researchers looked at the net income per service charge at the most profitable hospitals in 2013. They also looked at national Medicare data. Seven of the 10 most profitable hospitals were non-profit. But in general, for profit hospitals, including in states with price regulation, made more money. Conversely, hospitals treating a higher proportion of Medicare patients, located in states with dominant insurers or more health maintenance organizations, had lower profitability.
Gundersen Lutheran Medical Center in La Crosse, Wisc., a two hours drive west from Madison, actually topped the study’s list of most profitable hospitals in 2013. However, the non-profit hospital has numerous locations, and serves many of the region’s rural populations as part of its charitable mission.
Dara Bartels, chief financial officer for Gundersen Health System, admitted it’s the profits from La Crosse that supports the less profitable rural locations, according to the earlier WPR report on the study.
There are various reasons hospitals may negotiate higher prices. For example, some hospitals may offer higher quality service and expertise. But Mayor Soglin wants to have a closer look to see if there are vast discrepancies in payments those with private insurance must pay to Madison hospitals.
If you look at the column, go down every one of these items, you’ll see that the private insurance payment is almost twice of what is the payment for Medicare patient,” Soglin said of a list of hospital services provided by the Wisconsin Hospital Association Information Center.
According to the WPR report, Soglin hopes mayors in other cities will follow suit and look into the fairness of hospital prices for patients with private insurance paying the highest prices.
Some Madison Common Council members say that the deeper cost data the mayor is asking for would be almost impossible and too costly to produce.
Soglin had to break a tie on the resolution when it went before the Madison City Council previously.
The Common Council is expected to discuss the issue tonight.
