Michigan Healthcare Woes Could Spread

It may come as no surprise that hospitals in states like Michigan with high unemployment are struggling financially from a growing number of unpaid patient bills and charity care cases. But hospitals in other states could soon face the same problem as businesses withdraw from or lower their contributions to health care premiums, said David Seaman, executive vice president of the Michigan Health & Hospital Association (MHA).

“We’re (Michigan) just first and foremost at this point,” he said. “Right now we look like the poster child for uncompensated care.” 

Michigan hospitals are expected to post a record $1.6 billion in bad debt expense this year because of unpaid medical bills and charity care, Seaman said. That’s up from $883 million in 2001 (“Michigan Hospitals to Post $1.6 billion in Charity Care, Unpaid Bills” 10/15). The MHA, a state advocacy organization for hospitals and patients, blames Michigan’s 7.4 percent unemployment rate and Medicaid cuts. But states with healthy economies aren’t immune to the problem, Seaman said.  

Companies don’t want to be in the health care business, Seaman said. He expects many will seek to copy General Motors’ historic deal with the United Auto Workers, setting up a trust fund to pay for health insurance costs for employees and retirees. While such trusts theoretically may offer equal or better health care insurance for their members, Seaman suspects that many may not, resulting in working people with fewer or more costly healthcare benefits.  

“Healthy economies can be hit hard by this,” Seaman said. “Sometimes a healthy economy comes at the expense of other programs. People are working but that doesn’t mean they are receiving a full range of benefits that they may have been accustomed to.”

Jeffrey Englander, a healthcare analyst with Standard & Poor’s agreed. He cited New York State’s “decent” economy, but 2.5 million uninsured citizens. “You see a larger portion of companies no longer offering employer sponsored healthcare,” Englander said.  

In fact, the percent of companies with 199 or fewer employees offering healthcare dropped from 68 percent in 2000 to 60 percent in 2006, Englander said. And while the percent of employers with 200 or more workers offering healthcare dropped just 1 percent during that period, the plans they offer now require workers to pay higher deductibles and co-pays, he said.