With the health-care debate raging in Washington and throughout the country, Medicaid is the insurance program that has received the most attention for potential cuts. It is estimated that about 20 million may lose health insurance if these cuts go through.
But there is another, less talked about, consequence of Medicaid cuts: Hospitals are at severe risk for closing. This includes many Philadelphia hospitals that are dependent on Medicaid dollars to stay afloat.
Philadelphia holds the distinction of being the only major city in America without a city hospital. There’s a city zoo; a city park; a city-owned, world-class museum; a college; and many libraries. But no city hospital.
This wasn’t always the case. Philadelphia General Hospital served the city’s needy for 246 years. It began at Third and Spruce Streets as the Philadelphia Almshouse, formed by the Quaker group Overseers of the Poor. It moved to 34th and Civic Center Boulevard in 1832, and had a great run taking care of the sick and indigent of Philadelphia until it was closed in 1977 by Mayor Frank Rizzo.
Further consolidations have occurred since then, notably the Medical College of Philadelphia in 2004, Graduate Hospital in 2007, and St. Joseph’s Hospital in 2016. These were hospitals that took care of the poorest and the sickest. They were reliant on Medicare and Medicaid dollars, but this traditionally reimburses at lower levels than commercial insurance. Especially Medicaid.
With further cuts in Medicaid looming, it is easy to envision more hospitals closing. For hospitals without research dollars, a big referral network, and a slick ad campaign, it appears their days are numbered. Philadelphia would still have a few big hospitals that make a lot of money and do a lot of great research medicine. But at what point are we going to stop closing the hospitals that serve the people?
These big hospital systems are great. But if you dig deeper, you’ll find that those hospitals are benefiting from a massive imbalance in the system. That’s because private insurance has the benefit of the largest tax break in the federal tax code. Under current law, employers are tax exempt from money paid in health insurance premiums, to the tune of $250 billion dollars annually. This is, in effect, a massive government subsidy to those hospitals that are able to get private health insurance dollars.
Medicaid support from the federal government helps bring some balance back, but now Congress is in the process of debating whether to drastically reduce this support, citing costs and deficits.
So if you have a rare type of leukemia that qualifies for genetically engineered white blood cells and you have great private insurance, Philadelphia is a great place to find a hospital. If you’re a wheezing asthmatic because of pollution in your neighborhood who needs some inhaled steroids and a nebulizer treatment every once in a while, pretty soon it seems that you’re going to be out of luck in this town.
Michael J. Stephen, M.D. is an associate professor of medicine at Drexel University College of Medicine.