Most people think of the Patient Protection and Affordable Care Act (ACA) as a law that provides health insurance for people. 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% of the entire U.S. economy.
Last month I wrote about the impact primarily on individuals. In this column I’ll discuss the local impact on health care providers and employers. Our largest local health care provider, of course, is Southeastern Health (including Southeastern Regional Medical Center (SRMC)). As I mentioned last month, the ACA is voluminous and consequently includes many interdependencies, both intended and unintended. One of the largest interdependencies is that the ACA 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 healthcare 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, SRMC 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. SRMC 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 ACA (such as reduced use of the Emergency Room) are being achieved.
SRMC has also fallen victim to a one-size-fits-all aspect of the ACA. In 2012 it received a Medicare penalty of $400,000 and in 2013 an additional $800,000 for having a hospital readmittance rate that is higher than average. In my judgment, it is unfair to apply the same standard to a county with the illiteracy and socioeconomic levels we have and unless these levels change, we will always be below average. Again, SRMC 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 ACA affect physicians themselves. Although, perhaps, not an intention of the law, a result is that it is more expensive for a small practice (1-5 physicians, plus staff) to operate independently. Consequently, you may have already noticed that some local independent practices are now owned and operated by SRMC. 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 ACA. The biggest impact 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 under $25,000/year 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 then to offer a benefit providing 50% of the cost of a Blue Cross Blue Shield policy that is typically $500-$600/month.
These are some of the immediate impacts. We also know that most counties in North Carolina are served by only one insurance company on the exchange, BCBS. 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. Still, 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 impact of the ACA 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.