Assuring Hospital Emergency Care Without Crippling Competition


By Christopher Pope, senior advisor at the Gary and Mary West Health Policy Center

Hospital emergency departments (EDs) occupy a critical position in the American health care system, bearing responsibility for the most urgent acute care cases, while serving as a provider of last resort for many without insurance coverage. Emergency health care also functions as a conspicuous exception to the general principle of market exchange, whereby services are voluntarily bought and sold.

The urgent need for treatment makes it difficult for patients to shop around, while hospitals are required to treat patients regardless of ability to pay. The obligation to treat patients whose medical needs exceed their financial means places great strain on hospital emergency departments.

Various federal programs provide a total of $73 billion per year to support emergency departments and the provision of uncompensated hospital care in general. These subsidies are distributed indirectly through various adjustments to reimbursement rates, rather than directly in return for the provision of specific public health services.

As a result, the distribution of funds to hospitals inadequately ensures the provision of emergency capacity and care for the uninsured, while undermining the ability of specialty hospitals and physician offices to compete for the provision of elective care. These funding arrangements underpin much of the hospital monopoly power and convoluted pricing plaguing U.S. health care.

By consolidating these subsidies into lump sum budgets for indigent emergency care at each facility, it would be possible to reward hospitals for efficiently meeting their critical infrastructure and uncompensated care responsibilities, without hampering competition in the market for elective services.

Please click here to read Christopher Pope’s full post at the Health Affairs blog.