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GOP Death Panel

What happens to city hospitals if Obamacare gets cut?

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On March 23, a few hours after President Obama signed into law the Affordable Care Act, a.k.a. Obamacare, I met with a group of some of New York’s leading health-care-policy wonks at the offices of United Hospital Fund, a nonpartisan research group. St. Vincent’s Hospital was weeks away from going belly-up, and its failure to survive in the increasingly costly, chaotic, and inequitable health-care environment was a stark sign of the woes that the new law sought to tame. It turned out that the problems that desperately afflict New York’s hospitals—surging costs, limited revenue, and a reliance on wrongheaded strategies to bridge the gap—were the American norm. James Tallon, the UHF president and former majority leader of the New York State Assembly, noted that health-care costs in the U.S. have persistently grown, at a rate of at least 6 percent annually—two to three times as fast as every other industrialized country, all of which, incidentally, have universal insurance. And the new law, Tallon said at the time, was a long-overdue blueprint for “a coherent and aggressive public policy that looks at the behavior of the entirety of the system and tries to make the necessary fixes.”

Of course, that’s not what one is hearing these days, with presumptive Speaker of the House John Boehner declaring, “This health-care bill will ruin the best health-care system in the world, and it will bankrupt our country,” and vowing repeal.

After the midterms, James Knickman, CEO of the New York State Health Foundation, emphasized to me that there’s no such thing as cherry-picking the law. It’s impossible to preserve its popular elements—ending lifetime limits on benefits, insuring preexisting conditions, extending coverage to adult children of the insured—without maintaining some version of its most unpopular feature, the mandate for businesses to provide insurance and for uninsured people to buy it. Without a larger pool of customers, insurers will have to raise rates steeply to cover their new obligations, if they stay in the business at all.

What, though, would a full repeal mean? Some 1.4 million of the lowball estimate of 51 million uninsured U.S. residents live in New York City. As expensive as it is to extend coverage to the uninsured (the lion’s share of Obamacare’s ten-year price tag, an estimated $894 billion, is devoted to providing benefits to 32 million people), their care is currently picked up by providers and paying customers, and the strain this produces leads to bad health care. For years, New York’s hospitals have scrambled to make up their losses—the total cost of unreimbursed care in the city’s hospitals in 2008 was $3.38 billion—by booking as much high-end, high-profit service as they can. It makes sense as a survival mechanism, but it’s incredibly wasteful.

For all its mocked complexities, Obamacare has a simple, pragmatic core: that what is better for the health of patients preserves the health of the system. Providers, it maintains, should be rewarded, not impoverished, for helping people stay out of the hospital, while the excesses of the system—duplication of services, unnecessary treatment, and lax follow-up care resulting in hospital readmission—should be obsessively curbed. “The one hope for the system is to transform the way health care is delivered by transforming its cost structure, and the law really gets that effort going,” says Knickman. “Without it, we would be heading into a period, locally, where there would be more and more St. Vincent’s.”

The most forward-thinking New York providers—North Shore–LIJ, the Bronx’s Montefiore—have begun to remake themselves in ways that dovetail with Obamacare’s initiatives. But as Tallon notes when I called him back after the midterms, “If the law is defunded or otherwise picked apart … the existing health-care dynamic—costs going up, more uninsured people, even the ones with insurance having less coverage, paying much higher out-of-pocket costs—continues. The movement toward improving quality is stopped in its tracks.”

Have good intel? Send tips to intel@nymag.com.


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