FTC Needs To Review Merger Inability To Cover Costs

August 26, 2002
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The debacle of Spectrum Health’s shoving match with Blue Cross Blue Shield will likely be settled before Spectrum’s self-imposed deadline of Sept. 1, based on Grand Rapids Business Journal’s reporting interviews with the two parties. While patients may sigh in relief for the immediate moment, business owners have been whacked no matter how the issue is resolved — or even if it is unresolved.

Spectrum pushed the Blues to pay an additional 30 percent in Muskegon and 15 percent in Grand Rapids above its current reimbursement, which always pays the cost of services plus a negotiated amount. Spectrum wants the Blues to pick up the unreimbursed costs of Medicare and Medicaid patients, which it says it can no longer cover.

First, the debt created by the federal and state governments in acknowledged refusal to pay the price of health care services has increasingly become the bear eclipsing all other issues, especially as American Baby Boomers hit the age of increased health problems.

The government has cost-shifted to the business community, including the businesses providing health care services. Now the health care institutions are cost-shifting a greater burden on to business owners. This while federal law denies a business owner’s ability to claim health care costs against taxes, as all other employed Americans are allowed. Blue Cross has told Spectrum it believes it is inappropriate for its subscribers to be taxed for Medicaid through taxes and again through health premiums.

Business owners have endured five consecutive years of double-digit health care benefit increases, many saying just one year ago they would begin cost shifting to employees, or dropping benefits all together. Increasing the number of uninsured employees will certainly not benefit the cost shifters, because in the end, the patients come back to the health care institution, with even less money to pay for services.

The Grand Rapids Business Journal reports this week that regardless of the settlement, or lack of one, “ultimately, it’s not going to cost (business owners) any less… either way there’s a higher cost to the employer and the employee.”

Spectrum Chief Financial Officer Mike Freed admits in the report, “We don’t feel business should cover that (Medicaid), but it has not historically been covered and there has been a shift to business.”

At the same time, Spectrum refuses to allow an independent mediator to review the cost burden, or make recommendations. Blue Cross has invited such oversight.

Spectrum, a merged entity that has touted its 70 percent market share, is absolutely inviting the review of the Federal Trade Commission. Escalating health care cost has prompted the FTC this year to begin a review of past hospital mergers, all of which promised cost reductions to their service areas. Further, the FTC is reviewing the merger of physician groups with an eye on price-fixing. (The Gambro price fixing for dialysis patients is still fresh in the memories of West Michigan patients.)

Grand Rapids business owners have had enough of the national corporate greed headlines, and are unlikely to be at all tolerant of any such finagling in their midst, and especially at their expense.

Perhaps it is time the FTC comes to measure the success of the Blodgett-Butterworth merger, and its stated inability to continue to cover costs. Business owners, after all, are not mandated to provide health care benefits. At least not yet.     

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