Saturday, January 31, 2009


During Blogo's numerous press conferences prior to his impeachment, he hammered on a few themes that I started to think may be a precedent for the nation as a whole.

From his impeachment speech (whole text here):

And then I would say to all of you, think about the things we've been able to do together. Health care for all of our kids, first in the nation

In speech after speech and interview after interview he hammered home the "fact" that he had granted insurance coverage to so many in Illinois, through various means.

How has this actually been implemented in Illinois? State payments to medical providers has been dramatically slowed. From this article titled "State Owes Area Health Care Providers Millions"

"This is the worst it's ever been it's historically been this way, nursing home providers have had to in this kind of environment in Illinois for quite a long time"

I have personal experience with the State of Illinois delaying payments (I used to be an auditor) but apparently the situation is worse than ever for health care providers. When watching the local PBS news program "Chicago Tonight" (which I have been following during the impeachment process) I noted many legislators from the State of Illinois house and senate saying that they had to intervene with the State of Illinois to expedite payments to some of their local hospitals that were on the verge of major financial distress since they hadn't been paid.

Note that delaying payments is "net" the same as reducing reimbursements since the state doesn't really catch up for a long time. Thus if the state moves from a 60 day payment cycle to a 90 day payment cycle that is essentially a permanent reduction to health care providers. Also, the variable nature of the payment delays ensures that rational health care providers need to hold a big "rainy day" fund since ostensibly their employees want to be paid cash rather than IOU's (like the State of California recently did with tax returns).

There is little that these medical providers can do except complain to their local legislator. You can't "sue" the State to make payments happen faster, and if you do the state doesn't care. Unlike insurance, which may be (popularly) perceived as unfair, there are no avenues of appeal if you feel the state is killing your business.

In this way the US will likely move to some sort of backwards medical socialism program - by increasing coverage under existing programs and then squeezing providers with reduced and slowed reimbursements, or by not increasing Federal transfers to states to make up the difference on the unfunded mandates.

You will watch a version of this unfold at Illinois and other states that increased insurance coverage at state expense, as medical providers begin to financially crumble and move away from treating state and Federally insured patients, or do it in the most bare-bones and cheap manner possible.

The parallel process will occur as people with means move out of the state and Federally controlled medical industry where possible and necessary to preserve their health, with ultimately a two-tiered system emerging with failing public facilities and walled-off private facilities. Unlike Canada, where it is illegal to practice private medicine, in the US those types of laws won't get widely passed, and a backwards two-tiered process will stumble into being.

Watch it first in Illinois, then the nation. Sadly enough we are the bellwether.

Cross posted at Chicago Boyz

1 comment:

Mark said...

You've probably seen this already, but just in case: