Under ex-President Obama, Medicaid coverage in some states expanded as a function of money allotted by Obamacare to state governments, allowing them to increase Medicaid benefits to their residents.
In Denver, Colorado, healthcare provider Denver Health, the largest such enterprise in the region, hired more than 250 new employees and constructed a $27 million primary care facility and two school-based clinics. 80,000 newly insured patients got treatment at one of 10 community health centers in the city where newly hired mental health therapists and social workers cared for many of the county’s poorest citizens. The new primary care clinic saw tremendous demand almost immediately.
But under the new healthcare plan proposed by Republican Speaker of the House Paul Ryan, there’s enormous uncertainty over whether revenue that was realized during the administration of President Obama will still flow in. Ryan’s American Health Care Act (AHCA) would reduce Medicaid subsidies for states and replace them with tax credits that would be age-adjusted.
According to the chief financial officer of Denver Health, his firm could see losses of between $50 million to $85 million by the year 2020, or between five and nine percent of the company’s annual revenue. At the same time, this care provider and all others across the country would still be required to treat the same patients — even those without health insurance.
That would mean in all cases that either they or local governments — or effectively, wealthier citizens — would have to foot the bills. “If it’s full removal of Medicaid expansion, we would have to make cuts on our system, and I really think that those cuts would roll back our progress and could paradoxically increase the cost of care by driving care back to where it shouldn’t be — the emergency rooms,” stated Dr. Bill Burman, the interim chief executive officer of Denver Health.
Other hospital CEOs nationwide are saying much the same thing as President Trump and members of Congress debate the finer points of the replacement for the Patient Protection and Affordable Care Act (PPACA), otherwise known as Obamacare.
Not only would the new ACHA limit federal subsidies to states for expanded Medicaid, it would overhaul Medicaid itself, so states would only receive limited amounts based on their costs and enrollment. Healthcare analysts say this would mean less Medicaid money for states and diminished Medicaid coverage in general.
Some Republicans are quick to point out that under the ACHA, hospitals would receive more funds to care for disproportionately higher shares of uninsured patients. But the CEOs of numerous hospitals say this wouldn’t be enough to make up for lost revenue to their organizations if large numbers of people lost their healthcare coverage.
Both the American Hospital Association and the Catholic Health Association of the United States wrote to Congress, warning that the ACHA will lead to significant cuts to programs that provide services to many of the nation’s most vulnerable citizens. “We’re likely looking at situations where hospitals would close down service lines, shorten clinic hours and lay off staff,” said Beth Feldpush, senior vice president of America’s Essential Hospitals.
The idea of Obamacare was to get more people covered by insurance and get them access to primary care physicians, in theory increasing the quantity of paying customers at hospitals while diverting people away from emergency rooms, where care can cost a multiple of what it does in other parts of health care institutions.
Currently, under Obamacare, 22 million people have gotten health coverage through Medicaid and/or by buying health insurance privately in government-sponsored marketplaces, which offer health plans with subsidized premiums. This has helped bring down the nation’s uninsured rate to less than nine percent, a historically low figure.
Moody’s Investors Service says that it expects that this Medicaid limitation of the ACHA would cause states to begin reducing payments to hospitals by 2020. This would mean more uninsured patients and unpaid bills, particularly for older patients who could face much higher premiums.
“We believe that the effect of older enrollees losing coverage will outweigh the positive effect of younger people gaining coverage, given that older people have greater health care needs, and as they lose coverage, hospitals would incur greater uncompensated care and bad-debt costs,” declared a recent Moody’s report. Standard and Poor’s Global Ratings said the ACHA would add to stresses on hospitals and result in rising costs for drugs and salaries.
New York City Health + Hospitals Corporation (NYC HHC), the largest public healthcare system in the country, serves mostly low-income residents. In 2013, New York State created an insurance marketplace tied to NYC HHC, so it could maximize revenue under Obamacare’s terms.
One of NYC HHC’s health plans created under Obamacare offers premiums of just $20 per month or less to more than 70,000 low-income enrollees. Under another one of NYC HHC’s plans, an additional 96,000 people were able to gain health coverage due to the aforementioned Medicare subsidies.
Under the ACHA, one of those plans would be entirely eliminated, while under the other one, tens of thousands of patients would lose coverage. According to Stanley Brezenoff, this is “particularly appalling,” given that many of these same patients spent years without any insurance to speak of. Many of them are in need of substantial medical care, and under Obamacare, they were able to start receiving it. “It’s a brutal assault on the health care system, especially as it applies to the people in greatest need with historically the least access to care,” Brezenoff said.
For rural hospitals, the risks are particularly great. That’s because many hospitals are expected to make up revenue losses by charging privately insured patients higher fees. But hospitals in rural regions have less leverage with insurers because they have fewer insured patients to start with.
At Jackson Health, a small hospital in Marianna, Florida, 90 percent of people needing treatment receive charity care because they have no insurance, or their Medicaid won’t cover all their costs. Most are working, but earn too little to receive Obamacare subsidies and too much to get Medicaid under Florida’s strict terms (nearly all Medicaid recipients in Florida are either disabled, pregnant or children).
Nearly 60 percent of these patients work in agriculture. Emergency room visits at the hospital are continuing to rise at the rate of two to three percent per year, according to Kevin Rovito, the hospital’s chief financial officer. “If they keep cutting the reimbursements for the hospital one way or another, and we do disappear, where are these patients going to go?” he asked.
These issues are just some of the dilemmas members of Congress must face when debating the ACHA and the replacement of Obamacare generally. Everyone seems to agree that Obamacare must be repealed, but its replacement is clearly where the devil lies in copious details.
So far, some representatives in Congress claim to have every angle worked out as far as making sure healthcare premiums don’t increase, but in terms of the number of people who will still be insured, there’s much more work to be done.
