With President Obama signing the health care reform bill on March 23, it’s time to consider the ramifications of this historic $940 billion (over 10 years) legislation. Although it’s difficult to discuss many of the details of the massive document, there are some things we do know with regard to how it will affect us—both as health care consumers and health care professionals.
Some of the provisions of the bill will be immediate while others will not take effect until later…mostly in 2014.
Effective immediately, if you buy a policy, insurance companies will not be able to place a cap on how much it will cover. This would be especially important for those diagnosed with serious illnesses facing steep medical bills.
For those who are currently uninsured with pre-existing conditions, money will be allocated to provide them with temporary coverage until the new changes take effect in 2014.
Also, insurers will be required to provide coverage options for nondependent children up to age 26 under the new bill.
Finally, effective immediately, seniors who fall into the Medicare Part D Drug Benefit coverage gap will receive $250 to help pay for prescriptions. That coverage gap would be expected to narrow in 2011 as drug manufacturers discount name-brand drugs by 50 percent, and it would be expected to close in 2020 as all drugs are discounted by 75 percent.
The really significant changes will happen in 2014. Most notably, health insurances exchanges will be created to enable small businesses, the self-employed and unemployed to pool resources in order to purchase less expensive coverage.
Also, in 2014, the bill would require everyone to purchase coverage or face a fine of $95 or 1 percent of income—whichever is greater. That fine would increase to $325 or 2 percent of income in 2015. While employers are not required to provide coverage, large employers will be charged a “free rider” assessment if their employees purchase health care coverage through the exchange with federal premium subsidies.
Also beginning in 2014, this law requires all state Medicaid programs to cover individuals up to 133 percent of the federal poverty level.
How will the new legislation affect hospitals and doctors? While not immediate, there will be significant ramifications. Virtually every part of the health care industry will see changes including hospitals…with billions of dollars in fees and relinquished reimbursements in return for the additional covered citizens.
One of the most controversial pieces of the legislation, in my opinion, is the “savings” that the government is touting as the way to pay for the increase in coverage. These savings will be from reductions in payments to providers and improved efficiency in the delivery of care. Forgive my skepticism, but I don’t view governmental programs as being oriented towards saving money.
When the bill was being planned, several industry groups for medical providers agreed to several billion dollars in reductions in Medicare and Medicaid reimbursements to help pay for the overhaul, on the theory that expanding coverage would translate to more patients paying for the care they receive.
Those cuts ($155 billion for the hospital industry alone) in Medicare and Medicaid will obviously present a serious financial challenge to hospitals…however, we’ll have several years to prepare for it. This agreement was reached because of the increase in coverage and the related revenues that it would bring to hospitals. Once again, I’m skeptical from our numbers alone. Last year, CCMH gave over $11 million in charity care away to our community…something that is part of our mission. Our Medicare payments totaled approximately $75 million annually to our hospital for Medicare patients. If you calculate a percentage reduction on the payments, we would have to see substantial increases in coverage to offset those reductions. At this point, we are receiving information that allows us to project the cost reductions. Obtaining information on how many more local citizens will obtain coverage has not been released. Of course, the fear of the unknown is always greater than the fear of the known...and thus, my concern…we just don’t know at this point what the sum of all the changes will bring.
The bill does attempt to provide incentives for providers to work more cost-effectively…such as basing Medicare payments on a patient’s condition instead of on the number of procedures. Some analysts claim this will result in more profits for hospitals and doctors as there will likely be fewer patients who cannot pay and/or show up too late for treatment.
Other concerns I have is that the medical device manufacturers and pharmaceutical companies have also agreed to reductions. I’m concerned that we will see these reductions in our cost of supplies and drugs.
Of course, all of this is merely an overview of the new bill. As with any new legislation, it remains to be seen how this will all play out and, ultimately, how it will affect the way health care is provided in the country.
The maelstrom of controversy surrounding health care reform has been divisive and bitter. However, now that that it is law, there is likely to be a great deal of scrutiny on health care professionals.
I do remain optimistic about CCMH’s future. While it’s difficult to predict exactly how all of this will affect our hospital, one thing is certain: health care professionals will work with whatever system is imposed on us and do what we do best…take care of patients.
- Mike King, CEO