RAND study: Air pollution costs $193 million in hospital visits

A new study from the RAND group in Santa Monica says air pollution is raising the cost of payouts for health care insurers in California. KPCC’s Molly Peterson says the study digs deep into one kind of air pollution cost.

RAND researchers looked only at certain hospital visits, and only from a three-year span — from 2005 through 2007. They didn’t include every hospital visit that air pollution could have caused, only admissions for respiratory and cardiovascular problems, and emergency room visits.

Economist John Romley says the goal was to put credible evidence in front of insurers and the healthcare lobby, among the groups who work with these issues every day. "And these are folks who may have greater or significant influence in the political debate about air quality," Romley adds.

The tab for those three years: $193 million spent by Medi-Cal, Medicare, and third-party private insurers. Romley says that money could have been saved if California’s air were as clean as federal pollution standards require. And much of the money saved would have been taxpayer dollars.

"Overall, of the $193 million hospital spending over this period due to the failure to meet federal clean air standards, about 2/3 of that is on these public programs — and the taxpayers are on the hook for that," Romley says.

Together, Los Angeles and Orange Counties account for more than half of that statewide total.

Romley and the RAND researchers wrote case studies of two hospitals in the South Coast air basin. At Riverside Community Hospital, cleaner air would have prevented 329 hospital admissions and ER visits. Private insurance companies paid most of the bill for almost half these patients -— around $700,000.

Romley says the costs were spread around a little differently at St. Francis Medical Center in Lynwood. It serves a mostly black and Latino community. Romley says at St. Francis, the government health programs Medicare and Medi-Cal paid for much of the care for health problems linked to air pollution.

"The Medicare folks are elderly and more likely to be admitted to the hospital rather than to have ER visits. So that’s just relatively costly care, in relative terms," Romley says. "Medi-Cal tends to pay less for the same kind of care than do other insurers or public programs. And so we’re using the actual spending. Not sort of the 'list price' but what these organizations really pay to measure their spending."

What John Romley calls the “list price” — the total on a hospital bill before the insurer’s discount — would be around $750 million. The RAND economists say their research doesn’t address the debate about the price of health care. But Romley adds it could encourage policies that cut costs.

"We can’t solve the cost problem we’re experiencing through improved air quality, but we can make some progress while improving the health of Californians," he says.

A future study will look at the effects of California’s air pollution on minority populations.