In Sickness and in Wealth

Medicaid patients could be facing death by a thousand cuts.

But while political decisions have certainly deepened the Medicaid crisis, the real culprit is the rising cost of medical care. For the past two years, health-insurance premiums have risen by more than 12 percent per year, well over the rate of inflation. Many of these increases are the result of rising expenses for drugs and new technology. Those costs, combined with growing numbers of uninsured Coloradans, have sent Medicaid expenditures through the roof.


One of the ways Colorado has tried to restrain the growth of Medicaid spending is by cutting back on what it pays doctors to see patients. As a result, more and more physicians are refusing to care for Medicaid patients.

Alex Watson receives care from a home health aide, 
paid for by Medicaid.
Anthony Camera
Alex Watson receives care from a home health aide, paid for by Medicaid.
Pediatricians such as Dr. Lee Thompson are being 
forced to turn away Medicaid patients because of 
budget cuts.
Anthony Camera
Pediatricians such as Dr. Lee Thompson are being forced to turn away Medicaid patients because of budget cuts.

Arvada resident Amy Mayberry spent weeks trying to find a doctor who would see her pregnant sixteen-year-old daughter. She called all of the doctors listed in literature given to her by Colorado Access -- one of the state's managed-care Medicaid providers -- and was turned away by all of them.

"It's Colorado Access in name only; nobody takes this insurance," Mayberry says. "They all said, 'We don't take that anymore.' I just wanted to get her looked at to make sure she's okay."

It's a regular phenomenon: The Jefferson County social services office told Mayberry that they often get calls from Medicaid patients in tears because no doctor will see them.

"Most pediatricians in Colorado are not accepting any new Medicaid patients," says Dr. Steve Berman, a local doctor who is the former president of the American Academy of Pediatrics. "Doctors are losing $30 every time they see a Medicaid patient."

Such losses have led many pediatricians to make the gut-wrenching decision to stop serving families on Medicaid.

"We've always seen as many Medicaid patients as we could," says Dr. Lee Thompson, a partner in Aurora Pediatric Associates, one of the biggest children's practices in the metro area. "We felt we could provide a good medical home for everyone, regardless of what kind of insurance they had."

Thompson estimates that he and his partners were seeing Medicaid patients 10,000 times a year -- about 10 percent of their total number of patient visits -- and were being paid $65 per visit, which he figured just covered basic expenses.

"In 2001, it cost us $65 to see a patient. That covers all expenses except the doctor's salaries," he says. "Most of the insurers paid us $70 to $80 per visit -- which is where the profit comes from for the doctors. We felt we could see [Medicaid patients] at cost as part of our commitment to the public."

But when the state announced last year that it would trim Medicaid reimbursements for pediatricians to $45 per visit, Thompson realized it would cost the practice $200,000 a year. So he and his partners made the painful decision to turn away thousands of children on Medicaid. "We had to make a business decision," he says. "We had to drop 2,000 of these families. All of the doctors were distressed about it. It disrupted care for these families. Many of them couldn't find a new primary-care physicians and had to go to emergency rooms."

The Colorado Department of Health Care Policy and Financing agrees that the state has gone too far in slashing doctors' rates, but director Reinertson also knows it will be difficult for the state to find the money to reverse it. "We've been pretty open about the fact that we are not paying doctors enough," says Reinertson, who is the governor's spokesperson on this topic."I've had pediatricians say, 'It was one thing when you paid the gas and light bill; now you're not even doing that.'"

When doctors turn away Medicaid clients, those patients head for the same place as the uninsured: hospital emergency rooms. "Everybody except hospitals can walk away from patients," says Larry Wall, president of the Colorado Health and Hospital Association. "Employers don't have to provide coverage; physicians don't have to see Medicare or Medicaid patients. But hospitals are required to see people."

The United States spends more money per capita on health care than any other country -- $1.4 trillion, or more than $5,000 per person, last year -- but millions still go without health care, often letting problems fester until they wind up in hospital emergency rooms. People with serious illnesses are dying for lack of a physician's care when symptoms are first noticed -- exactly the time when many diseases, like cancer, can be successfully treated. Of course, at that point, the cost of treatment is much higher, leaving an even heftier burden for hospitals to cover.

In 1998, Colorado hospitals incurred a total of $467 million in losses from treating the uninsured; by 2001, that total had climbed to $736 million statewide. In just the last twelve months, Wall estimates, the cost of treating the uninsured has gone up another $100 million. "Hospitals have taken those costs and shifted them to other payers," he says. "Hospitals will continue to do that to the extent they can, but there will be a point where it will be difficult for hospitals to continue to provide care."

A recent study by the Colorado Coalition for the Medically Underserved estimated that those with health insurance paid $144 million more for care in Colorado in 2000 to make up for those who couldn't pay. And although the uninsured are often viewed as freeloaders in the health-care world, the study found that they paid $722 million out of pocket for care.

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