5 things to know about the new report on NC hospital profits

Many North Carolina hospitals have justified high health care prices by saying they are losing money treating Medicare patients, according to a report by Treasurer Dale Falwell. But a new report finds that most of these hospitals actually profit from using Medicare to treat older patients.

People in North Carolina who purchased private insurance or a national health plan paid 280 percent more than Medicare patients, the report said. National health plans could go bankrupt by 2025 due to high costs, the report said.

“The hospital cartel overcharges you because they can, not because they need to,” Falwell said. “Hospital executives can’t hide behind Medicare all the time. They’re trying to claim huge losses to justify financially restraining their patients. But now we know that most hospitals actually profit from Medicare.”

Falwell, a Republican, commissioned the report from researchers at the North Carolina Health Plan and Rice University’s Baker Institute for Public Policy.

What did the researchers find?

The first line of the report is blunt: “Too many hospitals in North Carolina are overcharging patients and taxpayers.”

The report noted that hospitals and their lobbyists justified these high prices by saying they were losing money treating Medicare patients. Medicare is a federal program that provides coverage for people 65 and older. The problem, the researchers found, is that most hospitals in North Carolina actually profit from Medicare.

Do hospitals make money from health insurance?

The researchers used the tax filings of nonprofit hospitals and their community benefit reports, where they report things like charity care and treatment under Medicare and Medicaid.

“While hospitals claim Medicare patients are losing billions of dollars, their data shows a starkly different picture,” the report noted.

According to the report, Atrium Health claims it lost $640 million in 2019 treating Medicare patients. But the hospital company actually made nearly $120 million that year treating patients under one of its Medicare plans.

“Allegheny Memorial Hospital cited a Medicare loss of $968,868 on its 2019 990 tax return while reporting a profit of $90,960 on its Medicare cost report,” the report states.

Hospitals in North Carolina make more money from Medicare than hospitals in almost any other state, the report said. In 2020, North Carolina hospitals averaged nearly 2% profit margins, making them “the sixth-highest Medicare profit margin in the nation,” according to the report.

“These findings confirm what many economists have long suspected,” said Rice University economist Vivian Ho, who helped write the report. “Hospital prices paid by privately insured patients include more than just the cost of caring for Medicare patients. Those prices are much higher—high enough to generate lucrative profit margins for many hospitals.”

What was the hospital’s response?

The North Carolina Health Care Association, which represents the state’s hospitals, disputed the report.

“The current reality in North Carolina is that most hospitals have negative operating margins this year, and both Medicaid and Medicare reimburse hospitals for patients who are less than the actual cost of providing care,” the association said in a statement. care costs.” .

“The latest report commissioned by Treasury Secretary Falwell continues a pattern of reporting that uses misinformation and half-truths, and draws inaccurate conclusions,” NCHA said. The association said the report did not take into account the health care system and the role of insurers in driving up costs.

“He did not explain that the biggest culprits were health insurance companies. Blue Cross Blue Shield of North Carolina controls 97 percent of the individual private health insurance market and is the administrator of the state health plan overseen by Mr. Folwell,” the association said.

Will the National Health Plan go bankrupt?

The state treasurer has been warning that rising costs could push North Carolina health plans to the edge. The plan insures more than 700,000 people in North Carolina, including teachers, state employees, retirees and their families, according to state data.

“State employees must work one week a month to pay home insurance premiums,” the state treasurer said. “Unless costs are cut, the national health plan will face financial bankruptcy in less than three years.”

If health care costs continue to rise, figuring out how to pay could fall on state employees.

“While hospitals claim they are poor and make secret profits from taxpayer money, the solvency of state health plans is at risk,” said Ardis Watkins, head of the North Carolina Employees’ Association. “Without the price transparency that Treasurer Folwell is looking for and that hospitals are fighting, we’re likely to see the cost of the program passed on to the backs of public officials over the next few years.”

This isn’t Falwell’s first hospital visit

Falwell has long called for health care reform and has demanded that hospitals shoulder high costs.

“It’s the Wild West,” he said in the release of the latest report. “No one is watching. No one is holding them accountable. We need a commitment from the cartel to restore its original mission and stop putting profits on patients.”

In June, Falwell said North Carolina’s seven largest hospital systems had reaped huge windfalls during the height of the COVID-19 pandemic.

“Taxpayer-funded COVID relief has transferred huge wealth to wealthy hospital systems. Despite their complaints of financial losses, wealthy hospital systems have enjoyed record profits and a $7.1 billion surge in cash and investments during the pandemic,” The Office of the Minister of Finance said.

“These systems have huge reserves, but they still take the bulk of the relief money for struggling hospitals – and then fail to spend a fraction of their windfall on increasing awareness of suffering,” the finance minister’s office said. Charity care for patients.”

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