The impact of ObamaCare on doctors and patients, companies inside and outside the health sector, and American workers and taxpayers
A big hospital chain’s surprise decision to write off a slug of bad debt may be a signal of much deeper consumer healthcare strains being caused by ObamaCare.
Community Health Systems surprised analysts this week, announcing that among other things, the company would take a $169 million provision for bad debt. The write off was a big part of Community’s dismal fourth quarter earnings report, leading to a 22% drop in the company’s stock on Tuesday.
In the lexicon of hospital finance, bad debt is another word for unpaid bills.
The rising amount of uncollected co-pays and deductibles may be an early sign of consumer stress as the economy weakens. But more likely, it also reflects changes in the healthcare market that are saddling consumers with a much bigger share of their medical costs. For this, ObamaCare is playing a big role.
The Affordable Care Act changed employers’ role in the U.S. health care system. The ACA fundamentally altered the employer-based system by making the provision of health benefits mandatory rather than voluntary for employers with more than 50 employees and establishing minimum criteria for affordability and coverage. In addition, a “play or pay” model was created, providing employers with an exit: employees would no longer become uninsured if their employers dropped benefits but could instead purchase guaranteed and potentially subsidized insurance through public exchanges.
Two financial milestones are leading employers to evaluate whether they want to play or pay. In 2015, employers with more than 100 employees became subject to a shared-responsibility penalty for coverage that didn’t meet federal standards; further down the road, a 40% excise tax on coverage over a maximum dollar value (the so-called Cadillac tax) is due to go into effect (implementation was originally set for 2018, but Congress recently voted to delay it by 2 years). Although it’s still early in the game, employers are making key decisions that affect patients, health care providers, and insurers.
Medicaid’s complex federal-state financing structure has long created perverse incentives that discourage efficient care. Key to the problem is the federal government’s uncapped reimbursement of state Medicaid expenditures, which encourages states to artificially inflate their Medicaid spending. Such schemes have significantly increased over the past several years and they likely add tens of billions in generally low-value Medicaid spending each year.
This study examines states’ use of accounting schemes to inflate federal Medicaid reimbursements. The study focuses on the largest of the current schemes, provider taxes. These are assessments states levy on healthcare providers, often accompanied by the explicit or implicit guarantee of increased Medicaid payments to those same providers, financed from the federal matching funds. The study provides an economic and political analysis of these taxes and other strategies that states have employed to maximize federal Medicaid reimbursements, and recommends reforms. It contains an appendix with a case study of Arizona, which shows how the state imposed provider taxes to pay for Medicaid expansion.
California’s health exchange may require its health plans to pay sales commissions to insurance agents to keep insurers from shunning the sickest and costliest patients.
Covered California is working on a proposal that would force the plans to pay commissions effective next year, said Executive Director Peter Lee. The proposed rules could apply to regular and special enrollment periods, and would leave the specific commission amount or percentage up to insurers, he said.
Regulators in other states have warned insurers about altering commissions in a way that discriminates against higher-cost consumers, but Lee said Covered California may be the first exchange to adopt specific rules.
Earlier this month, Speaker Paul Ryan announced six task forces, each comprised of House Committee Chairmen, to develop a “bold, pro-growth agenda.” What was remarkable was that one of the task forces was on health care reform. Many had thought Congressional Republicans were investing too much time and energy grandstanding ObamaCare repeal, and not enough developing a credible alternative.
That may have changed with the selection of four Committee Chairman to the Health Care Reform Task Force. They are: Budget Committee Chairman Tom Price (R-GA), Education & the Workforce Committee Chairman John Kline (R-MN), Energy & Commerce Committee Chairman Fred Upton (R-MI), and Ways & Means Committee Chairman Kevin Brady (R-TX).
Vermont Sen. Bernie Sanders has energized Democratic voters with a proposal for a $1.38 trillion single-payer health care system that he says would provide universal coverage and make medical care more efficient.
By contrast, his opponent in the Democratic primary, Hillary Clinton, is promising to defend the Affordable Care Act and make reforms to help lower deductibles and other out-of-pocket costs.
In other words, Sanders wants revolution; Clinton wants to build on what President Obama started.
If elected, each candidate could potentially have a significant impact on the nation’s health care policies and the choices and costs facing consumers.
The leading candidates for the Republican nomination are all proposing to repeal ObamaCare. The difference between them is what they would replace it with.
Businessman Donald Trump and U.S. Sen. Ted Cruz of Texas both have said they want to increase competition to allow Americans to purchase insurance across state lines, but neither has offered a detailed plan for replacing President Obama’s signature law.
Jeb Bush and U.S. Sen. Marco Rubio of Florida would provide tax credits to help Americans purchase individual health insurance policies and give states more control of their insurance markets.
Meanwhile, Ohio Gov. John Kasich says the focus should be on improving primary care and rewarding providers that generate better health outcomes and help to hold down costs.
Whoever is nominated will have a chance to bring about a fundamental shift in health care policy.
It is common sense that people take care of their own property better than community property, often times referred to as “commons.” Because community resources are finite (say, grazing land in a pastoral society), overgrazing (and too little maintenance) is bound to occur absent any collaborative agreements. Moreover, one person’s conservation efforts cannot overcome all the other self-interested parties’ perverse incentives. Economists call this the tragedy of the commons. Unfortunately, ObamaCare proponents (and LBJ for that matter) did not understand how the tragedy of the commons would boost health care spending. Medicare, Medicaid and Obamacare plans are all examples of attempts by government to expand the health care commons — rather than encourage individuals to sustainably manage their own health care resources with appropriate incentives.
Scalia exposed that in King v Burwell, the Court elevated politics over both the rule of law and the separation of powers.
In King, a six-justice majority of the Supreme Court acknowledged the operative statutory text authorizes those taxes and subsidies only in states that establish an Exchange. But because the majority determined ObamaCare would collapse without them, it ruled the IRS could continue to implement those taxes and subsidies. Scalia’s dissent exposed that, rather than give effect to Congress’ intent, the majority simply substituted its own policy preferences for those of the legislature.
Both cybersecurity and customer service at the Internal Revenue Service have suffered because of ObamaCare, the agency’s head said in remarks to Congress on Thursday.
“Congress, as I noted in my testimony, has underfunded … the Affordable Care Act,” IRS Commissioner John Koskinen told a panel of the House Appropriations Committee.
Koskinen delivered his remarks in response to a question from Chairman Rep. Hal Rogers who pointed out that Congress had “increased funding specifically for taxpayer services” in 2014 and 2016.
Koskinen said it didn’t matter where Congress intended the money to go, explaining the agency had pulled funding for customer service and cybersecurity in order to ensure compliance with the ACA.