Proposition 8 is a truly odd duck: a proposal that ostensibly seeks to improve dialysis treatment and cut its cost, yet which is opposed by the National Kidney Foundation, the Renal Support Network and other major advocacy groups for dialysis patients.
That’s because these groups worry that Proposition 8, which would cap revenues at dialysis centers, would also end up reducing access to care and possibly even increasing costs. Those are legitimate worries, and voters should heed them by voting no.
The brainchild of the Service Employees International Union-United Healthcare Workers West, the measure ostensibly seeks to force the nearly 600 dialysis clinics in the state to spend more on patient care by limiting their profits. But its real aim is to crimp the earnings of two major chains of dialysis clinics, DaVita Kidney Care and Fresenius Medical Care, that have resisted efforts by SEIU-UHW to organize their workers. Before pushing Proposition 8 onto the ballot, SEIU-UHW tried to move a similar measure through the labor-friendly state Legislature, to no avail.
Dubbed the “Fair Pricing for Dialysis Act,” Proposition 8 would cap dialysis center revenues at 115% of specified costs related to patient care. Every penny collected above the cap would have to be paid back in rebates to private insurers, which cover less than 10% of dialysis patients (about 90% are covered by Medicare and the rest by Medi-Cal and other governmental insurance programs). Clinic operators who exceed the cap would also have to pay a fine to the state.
Note that the measure would cap revenues, not profits. And the cap would be set on an artificially narrow definition of patient-related and quality-improvement costs, apparently excluding such unavoidable expenses as malpractice insurance and janitorial services. Supporters say it’s not a problem — dialysis is a $3-billion business in California, and the average profit margin for clinics is 17%. Clinic operators counter that the revenue cap is so low, many clinics — particularly those in smaller chains — would be forced to close because they’d no longer be economic.
Given the spread of diabetes and the kidney failure it can cause, the state will need more dialysis clinics, not fewer. But even if the revenue cap doesn’t drive clinics out of business, it would give them a perverse incentive to deliver care less efficiently — to raise patient-related spending in order to raise the revenue cap. And despite what supporters claim, there’s no guarantee that forcing clinics to spend more would do anything to make care better or more available. The only guarantee is that it would make care more expensive, at a time when our goal as a society must be to bring healthcare costs down while keeping the quality of care high.
If Proposition 8 were truly about improving dialysis care, it would take steps clearly and directly related to quality, such as increasing clinic inspections or boosting competition in the market. It does none of those things. Voters should reject it.