August 11, 2013

Blinded by hubris

Hospitals across the country could find themselves in a financial squeeze next year thanks to federal health care reform.

The 2010 Patient Protection and Affordable Care Act, also know as Obamacare, cut payments to Medicare, the federal program that provides health care to the elderly, by $155 billion. At the time, hospital officials agreed to the cut, believing that patients covered by the law who had not had health insurance before would more than make up the difference.

But hospital officials are growing increasingly worried as it becomes more apparent each day that the law may not expand health care to as many people as they’d hoped and expected.

For instance, the law required states to expand Medicaid, the joint federal-state program that provides health coverage to low-income persons, to individuals earning up to 133 percent of the federal poverty level. That was expected to provide coverage to 17 million Americans who didn’t have it.

But the U.S. Supreme Court last year, while upholding most of the Obamacare law, also said Congress could not require states to expand Medicaid. Currently, roughly half the states, including Georgia, do not plan on expanding Medicaid coverage, with leaders in most citing concerns about the long-term cost of such an expansion.

The law also set up health care exchanges where those who don’t have health coverage at work or who aren’t covered by government programs such as Medicare and Medicaid can buy insurance. And it set up carrots, subsidies for those who fall below certain income levels, and sticks, a $95 fine taken from tax refunds for not having health coverage, to encourage those who don’t have health insurance to buy it on the exchanges.

But the Congressional Budget Office estimates that in 2014 six million individuals will take a chance on having part of their federal income tax refund withheld rather than buy health insurance.

So hospitals face the certainty of lower Medicare payments and the certainty of more regulation and paperwork under the law, but it’s looking less and less likely that the number of uninsured patients they treat will drop dramatically. That has the potential to hit them financially and hit them hard.

And it’s what happens when Congress passes a vast and sweeping law aimed at making fundamental changes in one of the largest sectors of the economy. The law counted on all of its parts working exactly as supporters hoped. Government rarely works that way, and those who voted for the law should have known that. But their hubris blinded them.


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