With insurance exchanges set to open Tuesday, effects still unclear

Last updated: September 28. 2013 12:35PM - 8989 Views
By - mstrother@civitasmedia.com

Dr. Srinivas Bramhadevi checks out a patient.
Dr. Srinivas Bramhadevi checks out a patient.
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When West Georgia Health CEO Jerry Fulks sums up how the Affordable Care Act is going to affect operations at the hospital, it’s quick:

“I don’t have a clue,” he said, open palms in the air.

Fulks isn’t ignorant of the health care act’s provisions, and he isn’t dismissing the coming regulation.

“I’ve talked to other hospital CEOs and executives, and no one else does either,” Fulks said. “Nothing is finalized. We know what the law said, but that has to be translated into regulations. … The regulations are still being written, the rules are changing right in front of us.”

Set to open Tuesday is one of the Affordable Care Act’s biggest components – the insurance exchange. The exchange, set to provide a market for those currently uninsured an online source to buy insurance policies that are required to provide coverage for ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and treatment of substance abuse disorders, prescription drugs, rehabilitative and habilitative services and devices, laboratory service, preventive and wellness services and chronic disease management and pediatric services.

The marketplace also offers the assistance of subsidies and tax incentives for those at 400 percent or below the poverty rate. Starting Jan. 1, 2014, anyone without health insurance would be charged a fee on their year-end tax return.

The goal is to have more people insured and able to see primary care physicians, reducing the amount of people seeking care in emergency rooms or going untreated altogether.

How it affects local health care providers

As part of the health care act, providers already received a 2 percent cut in reimbursements for the largest block of patients the hospital has – medicare and medicaid patients. The compensation was that with the exchanges, more insured would mean more business for doctors, Fulks said.

However, the same effect may not be seen by outpatient facilities like Emory-Clark Holder Clinic.

“Initially, it probably will not have a huge impact” for Emory-Clark Holder Clinic, said Dr. David Howard, an associate professor in the department of health policy and management for Emory University. “One way that the the Affordable Care Act finances expansion of coverage is by reducing payments to hospitals. That could eventually take a big bite out of hospitals’ revenue, but for an outpatient clinic, they should not see payments reduced.”

In theory, if more people are insured, they would be less likely to crowd emergency rooms and more likely to see primary care physicians, which potentially could mean increased traffic to places like Clark Holder Clinic. Some reports even questioned whether there are enough primary-care physicians available to handle a potential inundation of newly insured patients.

“Some people have asked whether more people will flood the health care system, and if so, will they all be able to see a doctor,” Howard said. “No one knows yet. In places where it’s expanded, like Massachusetts, that largely hasn’t been the case. The wait times go up, but not to a ridiculous degree.”

Howard said Emory has been acquiring more physicians to increase the variety of health care services it provides.

“Emory traditionally been very specialty-focused organization, like academic medical centers,” Howard said. “But primary care will be a bigger focus, partly because of the Affordable Care Act.”

Fulks said West Georgia Health has focused on increasing its offerings, upgrading facilities, being more efficient and increasing customer satisfaction over the last several years, but none of those were spurred by the ACA. He said those strategic changes may help the hospital be better equipped for changing trends caused by the health care act.

Change with the exchange?

The health care exchange is a primary component of the Affordable Care Act designed to give residents of each state an online database and marketplace to find insurance policies and sign up for them, as well as qualify for tax credits and subsidies on policies for those eligible.

Fulks said last week he didn’t believe the exchanges would make much of a difference in the number of people that are insured, at least in the short term.

“I will predict today that it won’t make one bit of difference with the uninsured levels in the state of Georgia,” Fulks said.

According to a report released by the U.S. Department of Health and Human Services Wednesday, a health insurance plan in Georgia will cost an average of $304 a month when purchased on an exchange run by the federal government.

Federal officials said the cheapest silver-level health plan in Georgia will average about $304. Consumers can pick from four levels of coverage, from bronze to platinum. While the plans cover the same benefits and cap out-of-pocket expenses, the lower-tier plans require that consumers pay more in deductibles and co-payments.

Prices can vary depending on where people live, the size of their families, age, tax credits and whether a consumer smokes. For example, a 27-year-old consumer living in Atlanta would pay $188 a month for the low-cost silver plan before a consumer receives tax credits to defray the cost.

If taxpayers do not have health insurance by Jan. 1, according to the Affordable Care Act, they will pay a penalty at the end of the year. The fee for 2014 is 1 percent the applicant’s yearly income, or $95 per person - whichever is the higher amount. In 2016, when the act is to be in full effect, the fee is expected to increase to 2.5 percent or $695 – whichever is higher. Those for whom buying a plan would cost more than 8 percent of their household income, or do not make enough to file income taxes are exempt.

“There is no real compulsion for individual citizens to seek that and pay for that coverage today,” Fulks said. “The penalty that they would have to pay for not being covered is significantly less than the cost of the premiums.”

Fulks said people would likely continue to go uninsured and come to the emergency room when they’re sick, because the hospital is required by law to provide emergency care. For those whom the hospital cannot collect from, it has to write off the expense.

The hospital’s medical indigent care costs – the amount it loses for unpaid services – have risen significantly. Fulks said when he began at West Georgia Health in 2001, the annual indigent care budget was $12 million, and now it’s around $30 million. And those numbers are unpredictable. Last month the hospital had $3 million in indigent charges, which was twice the amount it expected.

Although Fulks’ outlook wasn’t optimistic, he said he wants the Affordable Care Act to work.

“Anyone in the field wants to see people receive care and ensure patients receive the care they deserve,” Fulks said. “In health care today, it’s a unique thing, because you can’t walk into a grocery store when you’re hungry, and because you can’t afford groceries, demand they give them to you. Yet in health care, if you come to the ER, we must, by law, attend to your emergency care and make sure you are taken care of.”

‘Unintended consequences’

According to an analysis by researchers at Stanford School of Medicine and published in the journal Health Affairs, as many as 37 million Americans covered by their employers may be better off with the exchange’s government-subsidized insurance plans. However, employers also may choose to stop insuring employees, instead directing them to the exchanges.

“Currently, employers are bearing the cost and they’ve got to get it under control because it’s hitting their bottom line,” Fulks said. “So instead they go, ‘here’s the money, you go to the exchange and pick the policy that fits your needs.’ So there’s very likely to be a movement from employer-based insurance to employee-based insurance through the exchanges.”

Sept. 20, Bloomberg News reported that retail chain Home Depot was dropping coverage for 20,000 part-time employees and directing them to the exchange. It followed similar moves by companies UPS and Trader Joe’s.

Troup County has faced a similar problem with the act, which requires any employees who work more than 30 hours per week to be covered. Instead of dropping coverage, however, the county has decided to enforce a cap on part-time employee’s hours to ensure they do not work more than 30 hours so they won’t have to offer insurance.

County Manager Tod Tentler suggested the move to the County Commission, which approved the move, along with a proposal to hire more part time employees to cover shortages in duties the hourly cap will cause. Tentler said hiring more people to cover the additional hours will be cheaper in the long run than insuring many of the part-time workers, which mostly are in the county’s Parks and Recreation and sanitation departments.

Many of the part-time employees are either retired and receive Medicare, or work primarily for another business that covers their insurance, Tentler said.

“Those are hourly positions that were never covered before and if we ended up having to pay for health insurance for those employees … then it would cost more,” Tentler said.

Tentler didn’t foresee any changes to full-time county employees’ insurance with the onset of the Affordable Care Act.

If more employers do drop coverage and leave their employees to opt into the exchange, more people could end up going uninsured.

“The mechanics of the Affordable Care Act are just unfathomable,” Fulks said. “We cannot begin to see the unintended consequences that flow out of the regulation.”

However, with the current provisions of the Affordable Care Act, Fulks said there will likely be little to no noticeable difference in the immediate future.

“I think for Georgia in the next two to three years, it will be business as usual,” Fulks said.

— The Associated Press, Raycom New Network and Reuters contributed to this report.

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