May 3, 2014
Most people think of the Patient Protection and Affordable Care Act as a law that provides health insurance for people, and many of its provisions do cover that.
At the same time, the law has massive implications for medical device manufacturers, health care providers, and employers generally as it redirects as much as 16 percent of the entire U.S. economy.
Last month, I wrote about what this means primarily for individuals. In this column I’ll discuss the local effect on health care providers and employers.
Robeson County’s largest health care provider is Southeastern Health, including Southeastern Regional Medical Center. As I mentioned last month, the Affordable Care Act is voluminous and consequently includes many interdependencies, both intended and unintended.
One of the largest interdependencies is that the Affordable Care Act reduces the “disproportionate share” — payments to hospitals that serve a large percentage of indigent patients — and Medicare — health insurance for senior citizens — payments to providers, because it assumes there will be more patients paying for health care because of a mandated Medicaid — insurance for low income people — expansion and an increase in paying patients generally.
The Supreme Court found the mandate unconstitutional, so that part of the interdependency became severed. North Carolina is one of 24 states that elected not to expand Medicaid. Consequently, Southeastern Regional Medical Center is one of the medical systems that will suffer financially because the Medicare mix will go down but the Medicaid mix will not go up.
Southeastern Regional Medical Center has always been well-managed and will find a way through this financial maze, but there are additional financial pressures on them. When I spoke with Chief Financial Officer Thomas Johnson, he also mentioned that it is too early to tell whether some of the other goals of the Affordable Care Act, such as reduced use of the Emergency Room, are being achieved.
Southeastern Regional Medical Center has also fallen victim to a one-size-fits-all aspect of the Affordable Care Act. In 2012, it received a Medicare penalty of $400,000 and in 2013 an additional $800,000 for having a hospital re-admittance rate that is higher than average. In my judgment, it is unfair to apply the same standard to a county with the illiteracy rates and socioeconomic conditions we have and unless these levels change, we will always be below average. Again, the hospital is well-managed and making every improvement it can. It simply has limited ability to influence patients’ behavior when they return home.
Other local implications of the Affordable Care Act affect physicians themselves. Although perhaps not an intention of the law, a result is that it is more expensive for a small practice consisting of less than five physicians to operate independently.
Consequently, you may have already noticed that some local independent practices are now owned and operated by Southeastern Regional Medical Center. The goal is to have better communication among all doctors we see as they are able, for example, to share health information about our care electronically.
I also interviewed Donna Lowry, CEO of Caring Touch Home Health Care. She reported that the home health care business is largely untouched by the Affordable Care Act. The biggest change she has noticed is that, because of the delay of the employer mandate, her employees are eligible to purchase subsidized insurance on the exchange.
Employees making less than $25,000 annually are finding that the subsidies are reducing their monthly expense to as low as $18. When the employer mandate portion of the law is restored, these employees will have to receive their insurance from their employer. Caring Touch intends to offer a benefit providing 50 percent of the cost of a Blue Cross Blue Shield policy that is typically $500 to $600 a month.
These are some of the immediate changes. We also know that most counties in North Carolina are served by only one insurance company on the exchange, Blue Cross Blue Shield. Historically, such a lack of competition has resulted in higher prices. We know that North Carolina was one of the most successful states in getting people enrolled through the exchanges. But even here, the number of “young, invincibles” was lower than necessary to maintain the rates in place this year. We won’t know the full scope of the Affordable Care Act locally until several of the law’s provisions have been in place for some time.
Eric B. Dent, a Lumberton resident, is a business professor at Fayetteville State University.