With recent cuts to taxes meant to fund the Affordable Care Act, rising premiums and no plan to adjust for the cuts, hospital officials warn the health care system is on a collision course that could result in more uninsured patients, rising levels of bad debt for hospitals and even higher costs to people who do have insurance.
The most recent cuts to the Affordable Care Act (ACA), sometimes referred to as Obamacare, came at the end of a three-day federal government shutdown in January.
The stop-gap budget plan signed by the president to reopen the government on Jan. 22 included $31 billion in tax cuts over the next decade, in addition to the $1.5 trillion in revenue cuts approved in the 2017 tax bill.
Those additional tax cuts included a delay in implementing three taxes meant to fund ACA insurance coverage over the next 10 years: the medical device tax; the so-called Cadillac tax, which taxes employers with more expensive health insurance plans; and the health insurance tax.
Hospital officials worry that lost revenue, meant to cover the cost of the ACA, hasn’t been replaced by an alternative — leaving the possibility the system will implode, with expensive consequences to health care providers and customers alike.
“What he (President Trump) did was take away some of the funding sources for the Affordable Care Act, and we have not replaced that or significantly changed the structure of the Affordable Care Act,” said St. Mary’s Regional Medical Center CEO Krista Roberts. “So, we are on a collision course, and the system as it’s designed today is not sustainable long-term. They will have to go back and visit this.”
Unable to afford to keep it or use it
The cuts come on the heels of significant premium increases for ACA plans offered on the state exchange, which has only one provider for Oklahoma: Blue Cross and Blue Shield of Oklahoma.
Insurance plans on the state exchange increased an average of 76 percent in 2017 and another 7.8 percent increase for 2018.
Those cost hikes already have increased the number of uninsured patients showing up at the hospital, Roberts said.
“We did see patients [in 2017] that were unable to continue paying their premiums,” she said, “because their premiums rose so much in 2017 on the state exchange.”
Along with premiums, deductibles also rose in 2017, leaving many who do have insurance unable to pay the cost of using it.
“What we’ve seen is a lot of people come in who used to have a $500 deductible, now have a $1,000 or $5,000 deductible,” said Integris Bass Baptist Health Center President Finny Mathew.
Many of those patients can’t afford the deductibles, he said, making their insurance plan essentially useless to them.
“For a family living around the median household income, they’re effectively uninsured,” Mathew said.
Rising prescription drug costs also have hit patients after a visit to the hospital.
“What happens then is when we discharge patients from the hospital, if they’re not able to pick up their prescription pills, and they don’t take their medications, they go into a cycle where they end up back in our emergency room,” Roberts said.
‘We provide for people’
Roberts said the effects of rising costs, paired with cuts to government subsidies meant to pay for the ACA, are cause for concern across the health care industry.
“The concern is we’re defunding it [the ACA], and we haven’t changed the structure of the plan,” Roberts said, “and the funding is not going to be there for the plan.”
Without funding for the plan, or the implementation of a replacement, it’s likely more people will go uninsured, Mathew said.
“It is very much a concern,” he said, “because the premiums under the ACA were heavily subsidized under the government, and even Medicaid in the state was heavily subsidized under the government, so as those federal funds go away, those plans on the marketplace will be unaffordable and unattainable for a lot of the population.”
If the marketplace plans fail without a workable alternative, Mathew said the numbers of working uninsured Americans likely will significantly increase.
“The working poor will have to go without care,” Mathew said, “unless not-for-profit hospitals like us step up and continue to offer care.”
Hospitals would continue to provide care in that scenario, both Roberts and Mathew said.
“This doesn’t change how we provide for people,” Roberts said. “We continue to provide for the needs of the community, regardless of what’s going on in Washington.”
‘People with insurance end up subsidizing people without insurance’
But, decreases in insurance coverage likely will lead to more uninsured patients coming into emergency rooms for care that otherwise — if covered by insurance — would be provided in less expensive outpatient appointments.
And, that, Roberts said, could add up to increases in hospitals’ bad debt or debt that cannot be recovered.
“I think when patients come to our door, regardless of their ability to pay, we take care of them, and we worry about the money part later,” Mathew said. “But, we still have to find ways to compensate our employees and pay the utility bills, just like everybody else.”
Paying those bills in the face of government cuts means the money to care for the uninsured will have to come from somewhere else. And some of that burden, Mathew said, likely will fall on the rest of the patient population.
“Ultimately, what happens is people with insurance end up subsidizing people without insurance,” Mathew said, “whether it be through higher premiums or higher payments to hospitals.”