Why cutting federal payments just ends up costing more
Sadly, most people in healthcare had to know this day was coming. It was no surprise that President Trump wanted to eliminate the Affordable Care Act in the worst possible way.
It’s why health insurers offering policies on exchanges through the ACA jacked up health insurance premiums in anticipation of the uncertainty that crucial subsidies would be continued.
Hopefully, providers could see the writing on the wall as well. They’ve been riding on an extreme rollercoaster over the past several months, hopes plummeting as Congress pursued repeal and half-replace provisions, then soaring as the initiatives failed to gain enough support.
However, the president’s actions yesterday are another plunge on that rollercoaster. It’s difficult to see a scenario in which providers come out of this unscathed. The moves likely will mean a return to the days when the nation had as many as 50 million uninsured—that portends a return to the days of rising amounts of uncompensated or charity care, and patients delaying preventive or early care only to show up when conditions have worsened and are more expensive to treat.
Margins are already tight for providers, and some of them—such as safety net hospitals, and rural and critical access hospitals—have no margins to speak of. Reductions in revenue will mean reductions in staffs, less capital investment and other more ominous changes, such as reductions in services.
From an information technology standpoint, it’s likely that scenarios such as the above will increase the digital divide. Organizations with cash reserves will be able to make additional investments in IT and the ancillary efforts needed to optimize it, thus achieving a return on investment. Organizations that don’t have that kind of spare change frankly will fossilize with their systems, unable to achieve critical benefits, such as cutting costs, improving patient care and increasing efficiency. I’m generalizing, to be sure, but the digital divide has been a concern of most IT leaders for years. It’s not likely to get better.
But what will be the eventual effect of these cuts, when you really get down to the bottom line?
The federal government would “save” money—or would it?
A statement from Sen. Mark R. Warner (D-VA) notes that a Congressional Budget Office (CBO) study found that eliminating the CSRs is expected to cost the government an additional $194 billion over the next decade, compared to current law.
Insurers? They will raise ACA premiums for next year by an estimated 20 percent as insurers raise prices to make up for the lost payments, Warner’s office estimates. It’s also expected that the number of uninsured Americans would rise by 1 million in 2018, relative to current law, and by 2020, premiums are expected to increase by 25 percent.
How will providers make up expected shortfalls? Raising prices, negating declines in rising medical prices that have been experienced in recent years.
And patients? Ah, you’ve hit upon the people that have no option. They will see less support from the federal government, higher insurance premiums and higher charges from providers.
And really, it’s all U.S. citizens paying for this. Healthcare costs will not just vanish because an insurance mechanism has been sabotaged. Those costs still exist—paying for staff, clinicians, supplies, ancillary staff, administration, IT—and the total amount will still need to be paid by us all. It’s only a question of whether we are spending dollars effectively or ineffectively. Getting it off the federal government’s budget just puts it on the bill of someone else—and we’re all the someone else.
So depending on your political persuasion, you could be cheering this development yesterday. If so, you are hoping that, somehow, some previously unleashed and currently unproven economic levers will have some kind of impact on healthcare spending. Some conjecture that Trump is hoping this action will shock Congress into taking action on healthcare reform, just to save the country from consequences that can’t be foreseen.
As if you couldn’t tell, that’s not my position. It seems like wishful thinking that this is a good approach for managing one-sixth of the nation’s economy and all of the nation’s healthcare. This is not an experiment to see what works—this is the result of longstanding desires to undo whatever the previous presidential administration has done.
Many of us spend at least part of our days dumbfounded by the political machinations emanating from Washington. It’s so much theater, so much drama, so much posturing and upstaging and vitriol. Unfortunately, when it’s healthcare, it’s not reality TV. It’s people’s lives.
The healthcare system absolutely needs to be reformed. But shake off the cobwebs, folks—we are nowhere near having a discussion about reform. The nation’s will must be enforced to have a discussion about changing the system into something that actually achieves ends that we all want. If this is how we continue to approach it, well, it moves us further away from a solution that actually works.