Opponents figure that they pretty much killed the Affordable Care Act in December when they ended the individual mandate. They may be right. The mandate – the part of the ACA that required Americans to buy health insurance or face a minor penalty – was a key to trying to broaden and deepen the insurance pool, mitigate payers’ risk and, not least, keep premiums at least remotely tethered to people’s ability to pay.
Another part of the ACA is also under threat. The law allowed states to agree to an expansion of Medicaid that was meant to help people who couldn’t afford to meet the mandate on their own. Still another: it also offered subsidies to help payers meet the expenses of covering all the previously untreated people they’d have to insure and of covering everyone’s pre-existing conditions.
Premiums in fact did not grow as fast in states that accepted the Medicaid expansion during the past three years and as an estimated 40 million more people gained some form of health insurance.
The end of the individual mandate, the junking of one of the subsidies for health insurers and last year’s drastically truncated open enrollment period for the remaining Exchange plans, however, have again started to reduce the number of Americans with health insurance.
These changes affect more than practice volume. They impact operations for practices that retain patients, too.
For without increased attention to “revenue cycle,” all health care providers can expect to be doing more direct billing of patients, doing more collections work and assuming more bad debt from people with higher, tougher-to-pay deductibles in the coming months and years.
Here’s why: No one yet knows how many people who bought insurance only because they were required to. There’s reason to believe the end of the individual mandate will start making them drop out of all kinds of plans during the next open enrollment period.
A federally truncated open enrollment period October-December, 2017 has already reduced the number of insured people in the nation. A number of forces are leading fewer people – and fewer younger, healthy people – to buy plans, and some predictions have premiums rising an extra 10 percent this coming year.
More shrinkage is coming. Newly permitted work requirements for Medicaid coverage promise to push still more people into the ranks of the uninsured. Kentucky’s new rules, for example, will drive an estimated 40,000 people out of Medicaid coverage during the next five years. As of this writing, nine other states are considering imposing new restrictions on who can qualify for Medicaid coverage.
The increase in the numbers of the uninsured obviously has disturbing implications for the nation’s health as a whole. It will also force payers to raise premiums to make up for the rising costs of being able to spread their risk across smaller, riskier customer pools.
The uninsured aren’t the only ones threatening practice finances.
Rising premiums, in turn, are leading employers to offer employees more high-deductible health plans. These HDHPs have lower premiums but higher risk for patients, who in addition to their premiums must pay an average of the first $2,400 of their families’ medical bills out of their own pockets. Some plans have deductibles as high as $10,000.
The lower premium costs, however, are attracting more and more people.
They are also higher risks for physician practices, which have a harder time collecting from patients with HDHPs. Thirty-seven percent of the people working for employers who offered plans in 2017 chose high-deductible plans. That’s up from 28 percent in 2016. The same year, that accounted for 39.3 percent of all Americans on employer-based health plans. All told, up to 37 percent of insured Americans, regardless of where they bought it, were using HDHPs.
But there have been dire unintended consequences. With the costs of care so high, 64 percent of those with high-deductible plans say they’ve put off care because they didn’t want to or couldn’t pay the deductible. And 62 percent said that, despite the lower premiums, they end up spending more on health care than under their previous plan.
People with the high-deductible plans thus tend to be bigger financial risks for providers.
Of HDHP customers, 15.5 percent reported having trouble paying medical bills in 2016 (versus 10.3 percent of those with “traditional” plans).
In sum, this means everyone in health care – providers, hospitals, practices – are going to chance offending more patients by billing them directly and, at minimum, going to have to devote more resources to revenue cycle and collecting what patients owe them.