Healthcare finance

 

Healthcare finance

Financial Impact of Healthcare Reform on the Payer, Provider, and the Uninsured

The health care reforms introduced in the United States have brought in opportunities and challenges to the health care providers, the payers, and the uninsured. A good number of Americans do not have any form of health care insurance. The government is encouraging partnerships with the insurance companies to ensure that more people in this country are under one health insurance cover or another. This is through a series of cost sharing subsidies, through which new rules have been introduced to the health care insurance sector (Rosenbaum and Gruber 2010). The purpose of this is to create new markets for people to purchase health insurance. This will ensure that the reforms are well implemented. The reforms in the health care targets at ensuring that every person in the country is covered. The acts in place is meant to strengthen existing systems  of health care insurance coverage, and at the same time, build new and affordable insurance markets for the American people and their families who do not have employer coverage (Wilper 2011). At the same time, it is meant to cater for those without alternatives such as Medicaid or Medicare (Cleverley and Song 2011). The main aim of the act introduced in the health care sector, is to improve health care systems in the country, its value, efficiency, and quality, while at the same time, reducing the mass wastage and making the sector more diverse and accountable to the patients. This paper aims at exploring the implications of these reforms on the payers, providers, and the uninsured.

It is said that about 47 million non-elderly citizens in United States were not insured by 2012. The health care reforms main aim is to reduce the number of this uninsured Americans through the Affordable Care Act. This acts aims at providing a means through which people will get Medicaid or other subsidized overages to qualifying people with low incomes. Low income for some Americans, who make a large population, is the reason behind their lack of medical insurance cover. There are financial costs associated with being uninsured especially when one falls ill. Insurance cover is considered expensive and few people can afford to have it. Most of the people in this country obtain their insurance covers through their employers. However, not all employers give medical cover to their employees. Employers used administrative restrictions to limit the number of dependant and the ages for every employee. This leaves employees with older children with the burden for sourcing for other medical covers for these children (Gorin 2010). Some find it hard to cater for extra covers, and therefore these dependants are left with no health coverage. Children Health programs and Medicaid was designed to cover the very low-income children, but for adults and parents, their eligibility is limited. This leaves many of this people without any form of medical cover. Without cover, the uninsured face unaffordable bills when they fall ill and seek medical care. These bills can easily turn to debts since the uninsured are moderate or low-income earners and have little or no savings. These people pay their bills using the money they have (Gorin 2010). This means that the uninsured go through financial strains because of paying directly for medical attention than those under covers. They are also likely to have postponed medical bills.

Implications to the Uninsured

The health care reform, with the bill in place has many positive financial implications for the uninsured Americans. The reform aims at expanding the coverage to more and more people who are currently uninsured by way of expanding the Medicaid and health insurance eligibility. The reforms aims at helping people maintain health coverage and make insurance from the private sector more accessible and affordable. However, there is a downward side of the reform too. It is estimated that not all the uninsured will be covered. Immigrants who are not documented will be highly hit, as they will not be eligible for coverage. The illegal immigrants are banned from getting any cover (Institute of Medicine 2009).

When the act comes into effect, private insurance will be made more affordable as well as accessible to these uninsured people. It is expected that people with low incomes will be able to access subsidised policies from the private insurance providers through the health care insurance Market places. The act aims at penalizing the insurance companies that do not provide cover to eligible employees (Institute of Medicine 2009). The overall financial implication these reforms is that more and more uninsured people will be able to access covers at a lower rate, thus reducing their overall medical bills when they seek medical care. There will be a cost associated with taking the covers, but it will be minimal when compared to the cost they would incur when they or members of their family seek medical care.

Implications of the Reforms to the Providers

The provider of health care, which include the doctors, nurses, as well as the hospitals, will be hit financially on either side by the health reforms. Over the years, hospitals in this country have contended with financial pressures, partially because, the Medicare reimbursements always fail to cover the adequate cost of the care the hospitals provide. For, instance, it is estimated that Medicare pays approximately 93 cents per every one dollar worth of care (Moffiti, 2010). The private insurance companies reimburse the hospitals according to the amount they have from Medicare funds. To stay operational, the hospitals had to cut costs in all those areas they could. Many need millions to make improvements in information technology, physical plant, funds, and equipment to recruit and retain medical staff. The health care reforms will improve the conditions by shifting the focus from care model based on volumes, in which the medical officers and hospitals earn more when they provide medical attention to more people, to one in which pay is based on high quality. The reforms have been praised, as they will bring forth better remuneration for the physicians who for some time, have been underpaid and lack perverse incentives (Moffiti, 2010).

For the doctors and nurses, the Reforms will have substantial impacts, in that they will provide some limited reimbursement relief to them. For example, Medicare primary care started having impacts on those areas that receive ten percent bonus payment, with more doctors and nurses being sent to those areas (Maruthappu, Ologunde and Gunarajasingam 2013). This will be a significant consolation to the doctors and nurses, as they will be remunerated more and have better working conditions. The doctors were previous being rewarded depending on the number of patients they attend to, but with the reforms, reimbursements will be based on the quality of care given to the patients.

Implications on the Payers

The payers in the health plans will be the employees, employers, and the government on different ratios depending on the individual being covered. For the government, the financial implications are much positive. The government, both local and federal spend millions of dollars every year in providing cover to the uninsured. This cost will be reduced considerably, with the current reforms. The government also employs over nineteen million people whose total spending on health care is over and above 95 billion dollars (State Health Facts 2013).these people pay a “hidden tax” in terms of higher premiums, which the government uses to cater for the uninsured people. This burden will greatly reduce due to expansion in the insurance coverage. The government has been spending billions of dollars on uncompensated care. It will result in reforms in health insurance and generate vital savings for the local governments and the federal government. The government will have improved budgets, as deficits will be reduced, as less money will be used on the uninsured people. The base line is that the reforms will improve the budget of the states as well as those of the local governments (State Health Facts 2013).

With the new reforms in place, employers will have to make changes to their health plans, which will have some major financial implications. The cost effect will depend on a substantial number of factors, which includes employee demographic as well as health status, the employer’s size, administrators in place and insurance carriers, and stop loss deductibles (Maruthappu, Ologunde and Gunarajasingam, 2013). In general, the overall effect of this plan is an increase in the total cost for insurance cover. Employers will be affect differently by these reforms. For instance, those employers with more middle-aged workers get more exposure to the risks of cover than those who employ younger people. This is because of the requirement in the act, which states that coverage is up to 26 years, for the dependants of the employees (Evaluating the Governance Implications of Health Care Reform 2010). It is said that the employers who vary their premium deductions on family vs. single basis face more risks compared to those who vary their premiums based on, number of persons covered. This is because, employees under the coverage can at no extra cost, add the number of dependants (Chernew, Cutler, and Keenan 2010). It is also suggested that employers who do deductions that change based on the number of dependants manage the risks better. The employers will be longer be able to place limits on amounts of preventive services. It is suggested that removal of this limits need to be carefully evaluated if employers have them, because, some preventive services can be expensive (Maruthappu, Ologunde and Gunarajasingam, 2013).

To the insurance companies, the health plans are being challenged with determining how their membership will shift. The surrounding predictions on retention as well as new membership acquisition are unclear with experts expecting a shift in the midsized and small group to individual markets. This is a market exacerbated by over 30 million additional people who are expected to purchase policies. It is estimated that initially, majority of the shift will occur in the smallest of groups. With time, it is expected that large and medium groups will shift to this market as a result, of the cost savings, which are associated with offloading the benefits administration in the health sector (Wilper 2011). The larger groups will derive financial gains due to assess to the value of offering benefits to employees as opposed to drawbacks  of not giving health benefits to these employees such as increased absenteeism, decrease in performance and tardiness among others.

The employers cannot afford to have their employees who qualify coverage not to be covered. This is due to the penalties that the act instils on those who violate it. The penalties are stiff, for instance for non-coverage, an employer is liable to a fine of 2000 dollar per employee (Health Reform GPS 2011). This means that every employer should ensure that employees are enrolled in the minimum essential coverage under the employer-sponsorship plan.

Conclusion

Health care reforms have brought with them changes, which have financial implications to all the parties involved. This more so with the recent Affordable Care Act, whose main aim is to ensure that as many of the American people as possible get health coverage of one form or another. This is also meant to reduce the coverage burden of the government as a lot of money is used to cover the uninsured Americans. To be successful in the post reform insurance environment, the provider’s health plans have seen a need to manage their core drivers. The government is seen to be a beneficially of the reforms as it will save billions of dollars that it used to use in covering the uninsured. Measures are put in place to ensure that employers adhere to the requirement of the coverage; otherwise, penalties are levied against them. Millions of uninsured Americans will get financial reprieve when they get coverage as there medical bills will reduced drastically when they seek medical care. Doctors and nurses will benefit from the reforms in that they will get better remunerations based on the quality of care they provide as opposed to the number of patients they attend to daily. The affordable care act, which is the basis of the reforms, is highly transformational, and many implementations financial challenges are expected on the way. However, the opportunities that it will bring are unparalleled.

 

References

Cleverley, W. O & Song, P. H. (2011). Essentials of health care finance. Sudbury, Mass: Jones & Bartlett Learning.

Chernew, M, Cutler, D, and Keenan, P. (2010). Increasing Health Insurance Costs and the Decline in Insurance Coverage. Health Services Research, 40(4), 1021-1039.

Evaluating the Governance Implications of Health Care Reform. (2010, January 5). Mondaq Business Briefing, p. I2.

Gorin, S. H. (2010). The Patient Protection and Affordable Care Act, Cost Control, and the Battle for Health Care Reform. Health & Social Work, 35(3), 163-166.

Health Reform GPS. (2011, April). Health Reform GPS: Navigating the Implementation Process. Retrieved March 14, 2014, from http://www.healthreformgps.org

Institute of Medicine. (2009). America’s Uninsured Crisis: Consequences for Health and Health Care.. Institute of Medicine 1(1), 60-63.

Maruthappu, M., Ologunde, R., & Gunarajasingam, A. (2013). Is Health Care a Right? Health Reforms in the USA and their Impact upon the Concept of Care. Annals of Medicine and Surgery, 2(1), 15-17.

Moffiti, R. (2010, June 11). Obamacare: Impact on Doctors of Health Care Reform. The Heritage Foundation. Retrieved March 16, 2014, from http://www.heritage.org/research/reports/2010/05/obamacare-impact-on-doctors

Rosenbaum S, and Gruber J. (2010). Buying health care, the individual mandate, and the Constitution. N Eng J Medical, 363(1), 401–3.

State Health Facts. (2013, January 14). State Activity around Expanding Medicaid under the Affordable Care Act. Retrieved March 14, 2014 from http://www.kff.org/medicaid/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/

Wilper, E. 2011. Health Insurance and Mortality in US Adults. American Journal of Public Health, 99(12) 2289-2295.

 

 

 

 

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