- The Washington Times - Friday, September 22, 2006

Hospitalizations are the single most expensive component of the U.S. health care system and more than 60 percent of hospital bills in 2004 were sent to federal and state governments for Medicare and Medicaid patients, a new federal study says.

About 33 percent of every dollar spent on health care goes to in-patient hospital care, according to the report that researchers said can be useful in setting priorities for preventative care and research.

“As health care costs rise and the population ages, policy-makers are concerned with the growing burden of hospital-based medical care and expenses to government, consumers and insurers,” the report prepared for the Department of Health and Human Services (HHS) stated.

The largest percentage of hospital charges were for heart-related problems, such as congestive heart failure, and the delivery and care of newborns, according to researchers with the HHS’s Agency for Healthcare Research and Quality (AHRQ).

The study reported in 2004 hospital bills totaled $790 billion, and $475 billion of that amount was billed to Medicare and Medicaid patients. The charges do not include physician fees.

Medicare bills totaled $363 billion, or 46 percent, and Medicaid, $112 billion or 14.1 percent. Charges to private insurers amounted to $252 billion or nearly a third of all billings, the AHRQ study showed.

Caroline Steinberg, a trends analyst for the American Hospital Association, said “only $470 billion was actually paid to hospitals (for services provided), so there is a pretty big difference” between charges and reimbursement.

She noted physicians’ fees normally represent 20 to 25 percent of total health care expenses.

At $44 billion, or nearly 6 percent of the total, coronary atherosclerosis, or hardening of the arteries, was the most expensive condition treated in 2004.

It involved 1.2 million hospital stays, of which more than half involved patients who also underwent angioplasty or bypass surgery to relieve cardiovascular blockages, said Roxanne M. Andrews, a senior researcher for AHRQ.

Because of that, she said, charges for atherosclerosis “were pretty high in all payer” categories. In fact, they were No. 1 for Medicare; No. 7 for Medicaid; No. 3 for private insurers; and No. 2 for the uninsured.

Stays for treating pregnant women and delivering their babies was the second highest hospital charge overall at $41 billion, followed by stays for newborns, which totaled $34 billion in 2004.

Those circumstances were the two most expensive types of hospital stays for Medicaid, which covers certain groups of low-income patients. Medicare, which insures the elderly, had pneumonia and osteoarthritis among its top five priciest conditions.

Ms. Andrews acknowledged some Americans might be surprised to learn that schizophrenia was the fourth most expensive condition for Medicaid in 2004, while two other mental illnesses, depression and bipolar disorder, ranked fifth.

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