Tweet This
The nation’s doctors and hospitals are bracing for an increase in unpaid medical bills after President Donald Trump's decision on Friday to stop funding subsidies that low-income Americans use to pay their out-of-pocket costs.
Trump’s decision comes just before the beginning of open enrollment on Nov. 1 for subsidized individual coverage sold on public exchanges for 2018 under the Affordable Care Act. Cost-sharing reductions (CSRs) help purchasers of subsidized silver plans pay their co-payments and deductibles.
" Hospitals should see rising bad debt in 2018 as these co-pays/deductibles go unfunded ," said Sheryl Skolnick, healthcare analyst for Mizuho Securities USA.
Trump’s move also comes with Americans, beyond just those in Obamacare plans, already seeing a jump in their out-of-pocket healthcare costs. Employee benefits consultancy Aon says out-of-pocket costs for workers at large employers will, for the first time in 2018, eclipse $2,500, and that trend has impacted providers.
At HCA Holdings, the nation’s largest hospital chain, uncompensated care including bad debt and charity care is rising faster this year than last. HCA owns 177 hospitals and 119 surgery centers in 20 states. “We’re seeing roughly a 4% to 5% growth in uninsured admissions,” HCA chief financial officer William Rutherford said in July during the company’s second-quarter earnings call. “That’s a little higher than we ran in the last half of 2016 and first quarter.”
Trump’s decision to end CSRs could reverse a historic trend that started during the Obama administration of reducing the number of Americans without insurance if purchasers of Obamacare plans can now not afford coverage. Because the ACA expanded health insurance to more than 20 million Americans, uncompensated care costs for the nation’s 4,862 hospitals dropped below 5% to 4.2%, or $35.7 billion in 2015, the American Hospital Association’s most recent numbers show. The 2015 level of uncompensated care costs were the lowest amount since 2007, AHA said.
Inside Obamacare: The Fix For America’s Ailing Health Care System explores the ways the Affordable Care Act will impact your health care.
Another large hospital operator, Tenet Healthcare, said that uncompensated care costs, which dropped from 2015 to 2016, are now on the rise. “In our hospitals, volumes have been softer than anticipated, and an increase in uninsured revenue has resulted in upward pressure on uncompensated care expense," Tenet CFO Daniel Cancelmi said on the company’s second-quarter earnings call.
Deductibles are much larger for those in the individual insurance market and for those purchasing coverage on public exchanges without subsidies. Without CSRs, insurers say, Obamacare patients will see costs jump 25% or more in 2018 .
In Texas, where HCA and Tenet operate many hospitals, CSRs help 550,000 pay for their healthcare.
“By ending funding for these benefits — which are passed from the federal government through health plans to physicians and providers who care for low-income individuals — the administration is jeopardizing health care for hundreds of thousands of Texans and access to critical care such as cancer treatments or medications for other chronic or terminal illnesses,” the Texas Association of Health Plans said Friday. The association’s members include Blue Cross Blue Shield of Texas, Cigna, Molina and Oscar Health.
“We need constructive solutions that provide greater choices, affordability and accessibility to quality health care for all Americans,” TAHP said. “Terminating these benefits for millions of Americans earning less than $30,000 achieves the opposite. Costs will inevitably rise while choices dwindle – not just for those who have received subsidies in the past, but for all Texans in the individual market."
Watch on Forbes: 6 Tips For This Year's Health Insurance Open Enrollment
Trump’s decision ends funding that had been disbursed on a month-to-month basis and medical care providers are now pressing Congress to rescue their Obamacare patients.
In the Senate, there is bipartisan legislation slowly moving through the health committee that would fund the CSRs. The payments have been made on a monthly basis thanks to a lawsuit filed three years ago by Republicans in the U.S. House of Representatives who questioned their legality. A federal judge agreed, but health officials under former President Barack Obama appealed.
On Saturday, a coalition of organizations urged Congress to permanently fund CSRs. The group includes the American Medical Association, the American Academy of Family Physicians, the American Hospital Association, America’s Health Insurance Plans, the Blue Cross Blue Shield Association and the U.S. Chamber of Commerce.
“As providers of healthcare and coverage to hundreds of millions of Americans, we are writing to you again to urge Congress to take action now to fund cost-sharing reduction (CSR) benefits for the millions of Americans who depend on this critical program,” the letter says. “Since our original letter to you more than six months ago, we have come together with one voice to call for much-needed legislation to fund CSR benefits. With the administration’s decision to terminate this funding, Congress must take action immediately.”
