I wish California children were doing as well as California children’s hospitals.
Even as the Golden State has maintained the nation’s highest child poverty rate and struggled to fund schools, it has developed a system of children’s hospitals that seems to occupy a parallel California in which kids’ needs actually come first. California has 13 children’s hospitals — eight private not-for-profits and five within University of California medical centers. One of the private not-for-profits is Valley Children’s Hospital just north of Fresno. Collectively, they receive more than 2 million visits from injured, disabled, and sick children annually.
In these hospitals, you can see California’s ability to be generous to a fault — and how our budget politics and piecemeal policymaking frustrate our highest aspirations for children.
Children’s hospitals offer a rare place where California’s rich and poor mix; the surgeon who operated on TV comedian Jimmy Kimmel’s son also performs surgery on kids on Medi-Cal, the name for California’s Medicaid. Nearly two-thirds of patients are eligible for Medi-Cal, compared to about one-third of patients in community hospital. And virtually everyone in children’s hospitals is covered, since all California children are insured because of Obamacare and state law.
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Children’s hospitals thrive on this mandate: While they lose money on Medi-Cal patients, they make up for it by being aggressive with commercial insurers who cover some patients, through other programs, and via powerful private fundraising operations.
And like other interest groups, children’s hospitals have won taxpayer dollars through the ballot. This November, California voters are likely to approve Proposition 4, the third general obligation bond for children’s hospitals in the past 14 years. Through this and other support, these hospitals have become juggernauts, with large medical centers, leading pediatric research and training programs, suburban satellites and well-paid executives.
California’s children’s hospitals have thus come a long way from their humble origins as facilities for disabled children. Their greater scale today also reflects the state’s health care and demographics.
Even though the number of children in California has stagnated, technological advances have created new avenues for care, especially for children with diseases that are rare or difficult to treat.
And with California’s population aging rapidly, hospitals are handling more Medicare patients. Since Medicare reimburses at higher rates than Medicaid, it’s inefficient for traditional hospitals to accommodate the special needs of child patients, who are overwhelmingly on Medicaid.
This means kids are increasingly referred to these specialized hospitals. As a Southern California father of three, I’ve been redirected to Children’s Hospital Los Angeles by pediatricians, after-hours clinics, and the Huntington Hospital emergency room for my kids’ minor maladies — a broken finger, a plastic toy piece stuck up a nose, a painless bit of swelling in the groin. A generation ago, my two siblings and I never saw the inside of a children’s hospital.
These hospitals are not merely comfortable; they are among the nicest buildings you’ll ever enter. Children’s hospitals in L.A. and Orange counties I’ve visited are carefully designed for juvenile happiness. My only problem with visiting a Children’s Hospital Los Angeles outpatient center in Arcadia was tearing my sons away from the most robust entertainment system they had ever encountered.
These comforts, funded by private donations, reflect a growing marketplace. Parents can shop among all these new alternatives for children. Competition also comes from lower-cost retail clinics and telehealth services. That’s healthy. So is pressure for children’s hospitals to produce more data to allow for better evaluation of their quality.
While the hospitals are nice, they aren’t heavens. They face challenges — pressure on Medicaid funding from congressional Republicans and efforts by health insurers to control costs via narrower networks of providers. As children’s hospitals grow in importance, they will face more scrutiny of their operations, charitable care, and results in the future.
You likely won’t hear much of this context in the run-up to the November voting on Proposition 4, the $1.5 billion bond for children’s hospitals. But the measure raises an important debate.
Should we help fund children’s hospitals’ capital needs through general obligation bonds? Those bonds are paid back from the general fund — $1.5 billion in bonds thus costs $2.9 billion over 35 years — which cuts into funds for other programs that serve children.
I, for one, would prefer a dedicated tax for children’s hospitals to avoid debt service costs. But securing that might be politically impossible. And depending on the state budget is dicey. The children’s hospitals turned to bond measures after a hospital infrastructure program was eliminated in the 1990s.
To the children’s hospitals’ credit, spending on previous bonds has been responsible. And the Proposition 4 bond is small, especially compared to November’s $8.9 billion Prop 3 bond for water.
So you could ask whether children’s hospitals offer children too much. But the better question is why other programs for California children offer so little compared to children’s hospitals.