
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, June 16, 1990                   TAG: 9006180333
SECTION: EDITORIAL                    PAGE: A9   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

MEDICAID HOSPITALS, STATES CAN FIGHT IT OUT

THE U.S. Supreme Court has cleared the way for hospitals in Virginia and elsewhere to sue their state Medicaid systems for higher rates. Thus does America stumble toward the goal of a more equitable, inclusive and efficient system of health care.

The rash of suits expected to follow will leave blood on courtroom floors. Both hospitals and state governments will be compelled to reveal things they would rather not. Many states will be shown as niggardly in their attitudes toward the poor. Many hospitals will have to justify decisions, treatments and billings that could leave them looking careless, costly, unfeeling and grasping.

It could be an absorbing tale. But it is only one chapter of an ongoing saga: the American public's battle with the dragon of health-care costs. Nothing seems to halt the growth of this monster, which has chewed away at national and state budgets for decades. Lately its victims include the millions of people who cannot afford health care or the insurance to cover it, or who cannot qualify for public aid.

Poor and disabled Americans are supposed to get needed health care through Medicaid, a federal-state insurance program. But the states set the standards, and it's estimated that 40 percent or more of those below federal poverty levels can't qualify for Medicaid where they live. That's one way state governments hold down expenses.

Another way, contend such organizations as the Virginia Hospital Association, is to underpay health-care institutions for treatment given to Medicaid clients. The association says hospitals in this state get only 71 cents of every Medicaid dollar they're owed and, collectively, are losing $1 million a week on such patients. Nationwide, says the American Hospital Association, hospitals lose $8.5 billion a year on care for indigents. Without more money from the states, the hospitals contend, they'll have to shift the unpaid costs to other patients and payers.

Common sense suggests that, as health-care providers, hospitals ought to be in robust financial condition. Instead they're being squeezed. From health insurers to corporate health plans, campaigns are under way to reduce use of hospitals. Many institutions are losing money. Roanoke Memorial and Community hospitals are among those that have merged in an effort to contain costs and remain solvent.

States are being squeezed too. Medicaid costs Virginia $1.3 billion a year, twice the cost in 1985. For courts to order states to make larger Medicaid reimbursements would help the hospitals. But it would only make the health-care-costs dragon fatter and fiercer.

Hospital lawsuits are far from the ideal path to health-care reform. But their effects may not be entirely bad. They could help expose some of the waste and fraud endemic not only to Medicaid but in general to health care. That might, indirectly, show the way to better cost-containment. If suits compel the state and federal governments to put yet more funds into Medicaid, this might in turn compel those governments to confront the dragon more directly. For now, he rages uncontrolled.

by CNB