Health Care and the Economy Part 2: Q&A with Steve Walter

Steve Walter, chief financial officer of Community Medical Centers, the largest non-profit health care network in central California, sat down with Michelle Van Valkenburg for a candid interview. Van Valkenburg, director of communications for Community, asked Walter some questions for Valley residents concerned about health care in this current economic recession.

This is the final part of a two-part series.

Consolidated Omnibus Budget Reconciliation Act (COBRA)
MVV: So if you don’t have insurance, it’s up to you to weigh your options?
SW: You have to be proactive. You can’t just be an innocent bystander. If your insurance is tied to your employer, you can’t sit idly by. Once you’re no longer employed, the first thing that kicks in if you had benefits tied to your employment is COBRA. The Obama administration now has provided funding to help you with that – I think it’s up to 35%. [The funding help is only for involuntary job terminations and the laid-off employee pays only 35% of the COBRA costs for 9 months under this legislation.] In an emergency, we have, in the past, looked at helping [our patients] with their COBRA, so that they can get something. Say you the patient were involved in an auto accident and you lost your job two

Steve Walter

months ago, and you said, you know what, I’m a healthy person, I’m just going to wait until I get my next job, and then suddenly you’re  involved in an auto accident. Rules change. We will actually help people, depending on the situation – it has to make financial sense to us – pay their COBRA, get it caught up. Say they’re in the hospital for 10 days, they have a $60,000 bill and we can catch it up by paying out $2,000 or $3,000, to get $45,000? Yeah, I’m gonna do that in a heartbeat. But if they come to the emergency department for services and it’s a thousand dollars, and it would take $2,000 to catch them up on their premiums, we obviously can’t do that. So, we have to evaluate their situation before making that determination. It’s on a case by case basis. 

MVV: That’s interesting. So you can still take advantage of the benefits even if you don’t sign up right away?
SW: COBRA is required to cover people, but they only have so much time to activate it [60 days]. That is something they need to conscientiously think about, you know, during that window of time, before it expires. So there’s certain things you have to decide, obviously, before you get laid off or once you’re laid off – do you or don’t you do the COBRA? And we do help people. We’ve paid premiums. If somebody comes in with a massive heart attack, or something like that, obviously, it makes sense for us to do that.

MVV: It’s a tough call because it’s expensive and most of us think we can stay healthy for a few months until we can land another job, participate in a spouse's plan or obtain insurance elsewhere.
SW: They have a window of time, and they have to decide that. Do you do it or not? Obviously, if you get laid off, can you afford the $700? Yours is $700, OK, I know that – $700 for you to retain your COBRA benefit.

MVV: Per month?
SW: And you don’t have a job.

MVV: Wow!
SW: So, unless you saved up lots of money, which is not the typical situation people find themselves in. And, again, because we’re an employment based health care system … It’s dysfunctional.
Editor’s note:  A helpful link to the Department of Labor that lists frequently asked questions about COBRA benefits.

Other coverage options
MVV:  Fresno County has a program – the Medically Indigent Services Program or MISP – and Community contracts with them to care for these patients.
SW: People don’t qualify for MISP if they make more than $500 a month. With MISP, if you make, I think it’s like $502, or something ridiculous, then you don’t qualify for MISP. So, unless you’re completely unemployed … but if you’re working part time at McDonald’s, you don’t qualify. It’s very low and we don’t set the dollar amounts on that, [Fresno] County does. There are other counties that have much higher limits.

MVV: That’s not an option for many of us. How can we be proactive?
SW: There may be plans out there … our financial counselors often recommend this Web site. This is a really good site that we recommend when people ask, “How do I know what I can get?” There is a matrix that tells you quickly what you might be eligible for.  They have links to insurance companies that do all that for you.

MVV: And that’s coverageforall.org?
SW: Yes. This will help you analyze your situation. So, while you’re still employed, when you’re post employment, you need to look at basically, these options – COBRA, private insurance, a government program like MISP or nothing.

Financial pressures
MVV: How has the current economy affected hospitals? How has it affected Community Medical Centers?
SW: What we’re seeing? OK. There’s multiple aspects of this question. Multiple parts to it. One is obviously the impact the economy has had on and people with insurance. You know unemployment is rising so people are going from commercial insurance to MediCal. And for us the reimbursement is less. There are no positives. I mean, we make no money on MediCare, we make no money on MediCal, we make no money on MISP. Employer based, commercial insurance, is the only thing we make money on. And if that goes down, we lose money. And that’s happening to almost everybody.

The other aspect is that people decrease their elective surgeries for two reasons. One is they have high deductible co-pays that they don’t want to spend the money now. They think, "You know what, that knee’s not really bothering me that much. I’m not going to be away from my employer because they might figure out that they don’t need me." That’s the market psychology of that: "I’m not going to leave my job, because I need my job. And if I’m out for three weeks, that when I come back, they’re going to lay me off."

And then also what we’re seeing is a credit crunch. Capital is harder to access. A not-for-profit hospital gets its cash from two sources; its operations and the ability to go out and borrow from the marketplace – banks basically. It’s hard to borrow money from banks right now. Without that we can’t do certain capital projects that have multi-year benefits. So, that’s our challenge right now. Another aspect is that as the stock market has gone down, the value of the money that we put aside for future projects – our bank account – the value of that has decreased.

MVV: So, if we just think about it as it relates to any private citizen, even me … my house isn’t worth as much, my investments aren’t worth as much, and if I wanted to get money for something, it’d be challenging.
SW: And if my employer starts hurting, I may not have a job and now I need to be concerned about my health benefits.
MVV:  Exactly.

It hits home
MVV: Fresno County already rates pretty high in terms of the poverty level?
SW: We’re one of the top in the state. I mean, you know we’ve been referred to as the Appalachia of the West? The San Joaquin Valley. There’s been several studies on that. We have, what is it? ... 25% of the population eligible for MediCal? And that’s unfortunate.

MVV: But your message is that you’ve got to be proactive.
SW: You've got be asking for help. You cannot wade this economic river by yourself.

MVV: Even if you have no insurance, and you land in the hospital for some reason, there may still be a way that you can get that hospital visit covered, if you move swiftly?
SW: Yeah, sometimes. The bottom line is you have to be proactive. You can’t just be an innocent bystander. Especially if your insurance is tied to your employer, you can’t sit idly by. We have people in our patient financial services department who will come to the hospital bedside and help families work these things out.

This story was reported by Michelle Van Valkenburg. She can be reached at mvanvalkenburg@communitymedical.org.

Tuesday, May 19, 2009