Will Rising Insurance Premiums Put Your Doctor Out of Business?

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Nearly a decade after the passage of the Affordable Care Act, health care remains a controversial topic. After fading from political headlines in the midst of a chaotic and at times surreal presidential election season, health care returned to the fore with a vengeance in October, when 2017 ACA marketplace premiums went public. Those premiums increased dramatically from the previous year: an average of 22% nationwide, according to NPR.

Insurance Premiums

That’s a steep increase, though NPR notes that most people who purchase marketplace plans will see their premium subsidies increase by comparable margins, blunting the impact of the rise.

What Does the State of the ACA Mean for Health Care Providers?

Health care consumers aren’t the only parties affected by the ACA’s growing pains. Insurance companies are feeling the squeeze—some have pulled out of the marketplaces altogether, and others have sharply curtailed their offerings or raised premiums. Providers are struggling with the law’s complexity and regulatory burden too.

“Providers of all sizes, from large hospital systems to independent practitioners, face tremendous challenges in an increasingly complex healthcare environment,” says Rosemary Plorin, president of Lovell Communications, a public relations and crisis communications firm with many health care clients.

Which begs the question: If things don’t improve, will the ACA put your doctor out of business?

Consolidation and EHRs:

The short answer is maybe. The ACA has probably accelerated provider consolidation, which began in earnest back in the 1990s—meaning, in an absolute sense, there will likely be fewer independent medical practices five years from now. Smaller practices simply don’t have the resources to deal with the ACA’s electronic health record (EHR) mandates, notes Forbes contributor Scott Gottlieb.

The Effects of Medicaid Expansion:

Diving into data provided by athenahealth, Gottlieb unearths another important trend: In jurisdictions that expanded Medicaid coverage to the extent permitted by the ACA, Medicaid patients are visiting doctor’s offices in droves—up nearly 40 percent between 2013 and 2015.

Many of those patients were previously visiting the emergency room for routine services and forgoing preventive care, so this trend is certain welcome from a health outcomes perspective. However, Medicaid reimbursements are far lower than private insurance reimbursements, sometimes just half as much. That’s obviously a huge burden on providers in low-income areas, where many patients rely on Medicaid.

Fewer Uninsured Patients:

The story isn’t uniformly negative, however. The New England Journal of Medicine notes that the ACA has already contributed to a dramatic rise in the total proportion of insured patients in the United States. By some counts, more than 20 million people now have insurance as a direct result of the ACA.

On paper, that’s a huge windfall for providers and insurance companies. It also reduces nonpayment risk for larger providers that don’t require proof of insurance before providing treatment. Assuming their services are billed correctly, insured patients promise guaranteed income and reduce the expense of collecting past-due patient debts.

Coverage for Pre-Existing Conditions:

One of the ACA’s least controversial provisions is also one of its costliest: the requirement that insurance plans cover patients with pre-existing conditions, such as diabetes.

Since patients with pre-existing conditions often require expensive and ongoing treatment, they’re not always profitable to insure—in fact, before the ACA went into effect, many insurance companies refused to provide such patients with insurance. That might not have been the right thing to do from a “greater good” perspective, but it certainly protected insurance companies’—and providers’—bottom lines. It’s not clear whether the pre-existing conditions mandate is actually putting providers out of business yet, though it’s certainly straining an already stressed system.

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