Baby Boomers stress hospital system - KTTC Rochester, Austin, Mason City News, Weather and Sports

By Fanna Haile-Selassie

Baby Boomers stress hospital system


Rochester, MN (KTTC-DT) --

The cost of health care is rising. And If you think your health insurance premiums are bad now, just wait a few years. As the baby boomer generation prepares to enter the Medicare system, hospitals are gearing up to take a bit hit financially.

As it stands today, the government does not fully reimburse Hospitals and clinics for each Medicare patient they take on. In fact, Minnesota hospitals only receive 88 cents back on every dollar they spend to treat someone on Medicare. Which means, unless something changes, hospitals better have a well-padded savings account.

$1.4 billion. That's the average of how much Minnesota hospitals and clinics lose every year by caring for Medicare patients.

"It's a big deal."

Lawrence Massa is the CEO of the Minnesota Hospital Association. He says care providers still have to find a way to fill in the financial gap. You can see it in your bill.

"One of the reasons charges are so high, is when you have a major player like Medicare that's only paying 88% of your cost, you have to charge more to everyone else to make up the difference."

The cost shift is also evident in your health premiums as they go up. It's also causing problems for business owners who provide insurance to their employees.

"The cost of our insurance probably was up by 12% for that reason, back in the 1990's. Now it's up more than 25%," says Dr. Douglas Wood with Mayo Clinic's Health Policy Center.

The Mayo Clinic campus in Rochester has lost around $400 million in the last several years. Dr. Wood says it's only going to get worse if the government doesn't do something about it. In the next 20 years, an additional 33 million baby boomers are expected to rely on Medicare as their health insurance provider, increasing the total number to nearly 79 million seniors on the government system.

"That will stress the delivery system in the United States, and it will stress providers like Mayo," exclaims Wood.

But why is the reimbursement rate so low in the state? It's because the government hasn't updated the rate since the 1980's, and it rewards inefficiency.

"Medicare pays you for what you do. They don't really care how well you do it. They don't really care what happens to the patient, they just pay you. If you do something and you file a claim, you get paid," explains Wood.

But imagine if doctors got it right the first time and didn't have the same Medicare patients returning repeatedly. Hospital costs would be lower and their patients happier.

"We score in the top 2 or 3 every year in terms of the quality metrics that are used by Medicare, and yet we are one of the lowest paid states in terms of total costs per Medicare beneficiary," says Massa.

That's why Mayo Clinic and the Minnesota Hospital Association are leading the charge on the federal level to reward providers who prove better outcomes. They say it's the only way to salvage the system.

"I think the system, you know, has seen this wave coming, and I think most of the providers and policy makers in the country realize that Medicare has to change if it's going to survive," says Massa.

In the recently passed Federal Health Reform bill, there is a measure that's intended to financially reward hospitals who provide higher quality of care. It's paid for by a 2% reduction in payment by the government for all hospitals over the next 10 years.

Wood says he's highly skeptical Mayo Clinic or any hospital for that matter will ever see that money. While the intention is good, historically speaking, Wood says there have been similar proposals that have not panned out.

Powered by Frankly