ObamaCare May Be Growing The Number of Unpaid Medical Bills
By: Scott Gottlieb (Forbes) February 2016
A big hospital chain’s surprise decision to write off a slug of bad debt may be a signal of much deeper consumer healthcare strains being caused by ObamaCare.
Community Health Systems surprised analysts this week, announcing that among other things, the company would take a $169 million provision for bad debt. The write off was a big part of Community’s dismal fourth quarter earnings report, leading to a 22% drop in the company’s stock on Tuesday.
In the lexicon of hospital finance, bad debt is another word for unpaid bills. In this case, Community Health said that the charge was largely a result of lower-than-expected collections on deductibles and co-pays that consumers owed. The hospital chain was recording a higher amount of cash from these co-pays than it now expects to collect, so it needed to take a write off to account for its lowered expectations.
The rising amount of uncollected co-pays and deductibles may be an early sign of consumer stress as the economy weakens. But more likely, it also reflects changes in the healthcare market that are saddling consumers with a much bigger share of their medical costs. For this, ObamaCare is playing a big role.
The structure of the insurance products offered under ObamaCare was deliberately skewed toward hollowed-out health plans. These plans sport large out-of-pocket limits and often skimpy or no co-insurance on drugs and doctors purchased outside a health plan’s increasingly narrow drug formularies and provider networks.
As consumers face a higher proportion of their medical bills, more are finding it hard to pay the tab. Some analysts are starting to bake in expectations for rising bad debt across the hospital sector. The issue isn’t just the ObamaCare plans. By adopting these structures in ObamaCare, the feds effectively popularized these constructs, or at least made them politically suitable. So health plans are starting to incorporate the same insurance designs across their products, even among the employer-sponsored plans that they offer in their commercial segments.
ObamaCare didn’t invent the idea of a high-deductible health plans. There was a growing prevalence of these arrangements long before the Affordable Care Act. Conservatives made a big push in the 2000s for “consumer directed health plans” that coupled health savings accounts with plans that insured against catastrophic medical costs. The idea was to empower consumers to pay for routine care out of their own tax-free savings. But ObamaCare created something entirely different.
In the case of ObamaCare plans, a lot of routine medical expenses are covered in full as part of the scheme’s “essential health benefits” — a politically crafted list of favored medical services that Washington mandates. To accommodate full coverage of these routine costs, the plans skimp on access to doctors and drugs, and saddle consumers with high out of pocket costs on mostly catastrophic medical bills.
Categories
- Benefits Resources
- Bonding
- BOP
- Business Insurance
- Commercial Auto
- Commercial Property
- Company News
- Construction
- Crime Insurance
- Cyber Insurance
- Directors & Officers
- Employee Benefits
- Employment Practice Liability Insurance
- Entertainment
- General Liability
- Health Insurance
- Healthcare
- Healthcare Reform
- Homeowners Insurance
- Hospitality
- Manufacturing
- Medical Malpractice
- Mining & Energy
- Nightclubs
- Personal Auto
- Personal Insurance
- Professional
- Restaurants
- Retail & Wholesale
- Risk Management Resources
- Safety Topics
- SBA Bonds
- Security
- Seminars
- Technology
- Tourism
- Transportation
- Uncategorized
- Workers Compensation
Archives
- May 2021
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- November 2018
- September 2018
- August 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- February 2013
- November 2011
- October 2011
- September 2011
- July 2011
- June 2011
- March 2011
- November 2010
- October 2010
- September 2010
- April 2010
- February 2010
- November 2009
- October 2009
- November 2008
- August 2008