Medicaid Expansion: What You Hear vs. What You See

By Dr. G. Keith Smith
Reposted from

The strongest advocate for expanding Medicaid—and the likely source of funding for the massive advertising campaign—is the hospital lobby.

We hear that hospitals are going broke. They can’t make ends meet. The uninsured are breaking the hospitals’ backs from emergency room over-utilization. Hospitals won’t survive unless Medicaid is expanded. (This is the most interesting claim, as hospitals simultaneously complain that underpayment by Medicaid justifies their cost-shifting to others!)

These are the lies that are primarily responsible for bringing us ObamaCare.

But if we look around us, what do we see?

Hospitals are building everywhere. They sponsor sports franchises. They buy advertising in high-priced media outlets. They are ceaselessly buying physician practices—and also buying rural hospitals they destroyed by having bought all of the small-town physician practices and diverting their referrals. They are expanding their emergency rooms—and even building free-standing emergency rooms, so-called loss leaders for their institutions. They make multi-million-dollar “logo” changes. Their administrative staffs are huge and extremely well paid.

Why are patients terrified of becoming uninsured, or driven into bankruptcy by medical bills? It is not because of doctor bills. How many doctors have extracted such huge payments from patients as to cause them to lose their homes? It is hospitals that do that. Routinely.

After reading the recent article in Time magazine about abusive hospital billing practices, in which Oklahoma City’s own Mercy Hospital was named, one of my partners remarked that the rotating cross on top of their hospital should be replaced with a dollar symbol! My father recently asked me if any of the hospital administrators whose billing practices have bankrupted countless patients ever had face-to-face contact with those whose lives had been ruined by their greed. Or, he asked, were they like drone operators, destroying people’s lives in a remote, impersonal way, while they themselves remain safe in their office?

The truth is that, economically, hospitals are not unlike utility companies in that they have high fixed costs. As Thomas DiLorenzo explains in his brilliant book Organized Crime: the Unvarnished Truth about Government, once the plant is built and the power lines are present, the cost of adding another utility customer approaches zero. Once the emergency room is built and staffed, the actual cost of an additional patient approaches zero, other than the actual supply costs. As a physician who owns and operates a medical facility, I can tell you that the supply costs are not that high, even in a surgical environment.

Also, while the hospital spokesmen claim that they have to take everyone regardless of ability to pay, hospitals get paid even when they don’t get paid through the uncompensated care scam. As hospitals wave the charity flag with one hand, they are fleecing the taxpayers through this scam with the other.

When Jim Epstein of Reason magazine was writing an article about our facility, Surgery Center of Oklahoma, he discovered that the amount Medicaid paid local hospitals exceeded the prices we post publicly at Hospitals claim that these “horrible reimbursements” by Medicaid are one of the primary excuses used to justify the “hidden tax” they impose on uninsured (self-pay) and privately insured patients.

Think about this: if the costs for the indigent are shifted to others who do pay, or to taxpayers, how is it that the hospitals are providing “uncompensated” care? One way or the other, the hospital gets paid for everyone who comes through its doors.

We make a profit at the prices we have listed online. These prices are one-sixth to one-tenth of the prices charged for the same procedures at most “not for profit” hospitals. This is what you can see for yourself. What you now hear if you listen closely is a quiet panic engulfing those in the medical-industrial complex, as this free-market, transparent pricing model is getting noticed and gaining ground.

This movement, if allowed to grow, will reduce the cost of care and raise the quality bar, just like competition does in every other sector of the economy.

Why expand the bureaucratically encrusted waste and corruption-ridden Medicaid model that is bankrupting government, when freedom works so much better?


Dr. G. Keith Smith is a board certified anesthesiologist in private practice since 1990. In 1997, he co-founded The Surgery Center of Oklahoma, an outpatient surgery center in Oklahoma City, Oklahoma, owned by 40 of the top physicians and surgeons in central Oklahoma. Dr. Smith serves as the medical director, CEO and managing partner while maintaining an active anesthesia practice. 

In 2009, Dr. Smith launched a website displaying all-inclusive pricing for various surgical procedures, a move that has gained him and the facility, national and even international attention. Many Canadians and uninsured Americans have been treated at his facility, taking advantage of the low and transparent pricing available. 

Operation of this free market medical practice, arguably the only one of its kind in the U.S., has gained the endorsement of policymakers and legislators nationally. More and more self-funded insurance plans are taking advantage of Dr. Smith’s pricing model, resulting in significant savings to their employee health plans. His hope is for as many facilities as possible to adopt a transparent pricing model, a move he believes will lower costs for all and improve quality of care.

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