Hospitals would face higher charity costs without Obamacare
WASHINGTON — Eric Stimson says that if his cancer had struck when he was uninsured, it would have destroyed more than his voice box — it would have taken his dignity.
The Des Moines, Iowa resident had gone more than two years without health insurance before regaining coverage with help from the Affordable Care Act in 2014. A few months later, he became desperately sick with throat cancer. Without his new coverage, he would have had to ask Iowa hospitals to shoulder most of the cost of his care, which has included 10 operations. Instead, his hundreds of thousands of dollars in medical bills were covered by an insurance policy, for which he had paid more than half the $600 monthly premiums.
“I felt like I wasn’t a charity case,” he said.
Stimson is one of nearly 15 million Americans — including nearly 200,000 Iowans — who gained insurance coverage under the law, also known as Obamacare. The law has eased burdens on community hospitals across the country, which are required to give free “charity care” to patients who have no means to pay their bills.
Since passage of the ACA, uncompensated care has steadily declined as a percentage of hospitals’ overall costs — hitting a record low in 2015, according to the most recent data from the American Hospital Association.
In 2009, hospitals were forced to write off nearly $40 billion in charity care, about 6 percent of their overall costs. In 2015, that figure had dropped to $35.7 billion, about 4.2 percent of overall costs.
Hospital leaders say the improved finances helped them stabilize and improve their organizations. They worry that if the law is completely rescinded, they would be worse off than they were before it passed. They note that in return for backing passage of the Affordable Care Act, national leaders of their industry agreed to forego billions of dollars in scheduled increases under Medicare, the giant federal insurance program for elderly Americans.
Under the Affordable Care Act, about 150,000 poor Iowa adults have gained public coverage from Medicaid, the federal-state program for the poor, which was expanded to include many Americans who previously were excluded. More than 40,000 moderate-income Iowans, including Stimson, obtained federal subsidies to help pay premiums on private insurance policies.
It’s not clear what would happen to those people, or how health-care providers would shoulder the burden of caring for them, under Republican plans that are still taking shape.
Without a replacement, “hospitals’ financials would be harmed significantly,” said David Dillon, a spokesman for the Missouri Hospital Association. And so far, the replacement proposals being floated by Republicans are not very reassuring, he said.
“The details that are out there don’t necessarily suffice as a plan to replace” the ACA, he said.
“There’s a lot of anxiety, a lot of angst,” said Kirk Norris, president of the Iowa Hospital Association.
The shift back to the old way of covering Americans wouldn’t just affect people who gained coverage under the Affordable Care Act, Norris said. It could also affect those who have longstanding private insurance coverage, often through an employer. In the past, hospitals and other health-care providers routinely sought to raise the prices they charged to insured patients in order to help make up for their losses on uninsured patients. Now, Norris said, “they’re not looking to transfer the costs like they were before.”
Republicans who campaigned to repeal Obamacare vow they won’t suddenly pull coverage from Americans who gained insurance under the law.
U.S. Sen. Chuck Grassley said he understands the concerns of hospitals in his home state of Iowa. The veteran Republican senator said he would work with hospital leaders to ensure a smooth transition.
One of those leaders, Sabra Rosener, a vice president for Iowa’s UnityPoint hospital system, is advising people not to panic about the Affordable Care Act’s looming repeal.
“I think it would be an overstatement to say it’s going to completely go away,” she said.
Many of UnityPoint's hospitals have seen their financial burdens eased substantially since the law took full effect in 2014. For example, the system's flagship hospital, Iowa Methodist Medical Center in Des Moines, saw charity care costs plummet from $22.4 million in 2013 to $8.4 million in 2015. Methodist's "bad debt," or unpaid medical bills, fell from $21.7 million to $16.9 million.
Rosener, who closely monitors government actions, doubts Congress and President Donald Trump would rip the Affordable Care Act away without replacing it with significant alternatives. Hospital leaders have repeatedly shown they can adjust to new ways of doing business, she said. “More than anything, uncertainty is hard,” she said. “We would just like to know.”
Stimson, who works part time as a courier for Mercy Medical Center, speaks through an electronic voicebox he holds against a hole in his throat. He jokes that he once was a baritone and now is a monotone.
Stimson, who now qualifies for Medicare, tries to remain upbeat. He survived the cancer that attacked his throat, then another tumor that invaded his prostate gland. Besides 10 surgeries, he’s endured radiation treatment, and he could still need chemotherapy. If he’d been uninsured when the cancer struck, hospitals would have had to write off his costs as charity care. Instead, the bills were covered by insurance that was subsidized by federal tax credits. Now, his coverage is mainly financed by taxpayers contributing to Medicare. “In the long run,” he said, “everybody pays.”
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