What the Affordable Care Act Means to the Nation’s Safety Net Hospitals
A prevalent myth about non-profit hospitals is that they are primarily funded through insurance companies and out-of-pocket healthcare payments. According to the Wall Street Journal, most hospitals lose an average of $60 billion a year because of uninsured patients that they are required to treat in emergency situations. The vast majority of these patients simply can’t pay their horrifically large bills. And 1,500 non-profit hospitals around the country are considered “safety net” hospitals because the number of uninsured they treat is higher than average. For these facilities, the Affordable Care Act should be a blessing. When it goes into effect in 2014, it’s expected to drastically reduce the need for uninsured care. But will it also take a chunk out of their federal funding?
1. Hospital Spending Cuts
While the new law gives non-profit hospitals a break when it comes to providing care they will probably never see payment for, it also comes along with three major cuts to their federal funding. The federal government has regularly increased its grants for hospitals along with the rising cost of healthcare and equipment, but this rate will begin to slow after 2014. Also, the funding they supply to cover the cost of uninsured patients will be slashed, although President Obama has advocated delaying these cuts for a year to see how many patients remain uninsured and how the hospitals cope with the changes. The Affordable Care Act also bases some of these hospitals’ Medicare payments on the quality of service they provide, which is sometime much lower than for-profit hospitals who have the benefit of insurance company money.
2. The Medicaid Expansion
The Supreme Court ruled that the portion of the Affordable Care Act which expands Medicaid to everyone, regardless of age or parental status, is optional on a state-by-state basis, and in some states, the debate rages on. Whether or not their state supports this expansion will directly affect the budget of safety net hospitals and how much federal spending cuts cost them. In states where the expansion has been rejected, hospitals are struggling to figure out how they will possibly handle cuts without the added benefit of Medicaid payments, which will be 100 percent funded by the government. In Indiana alone, one of the states where lawmakers have yet to come to a decision, Medicaid expansion would create more than 30,000 jobs and pay over $10 billion in federal money.
3. The Healthcare Bubble
Will the Affordable Care Act make a significant difference in healthcare prices that many deem unstable? Around 80 million people avoid the doctor in America because they cannot afford the costs – that’s 43 percent of working adults, according to CNN. The safety net hospitals in this country scramble for religious, charitable, and research grants to keep them out of bankruptcy. Not only that, they have a hard time recruiting or retaining the best doctors, nurses, and other staff due to the inability to compete financially with private hospitals and clinics. Many of these hospitals are using the implementation of the new law as a reason to expand their services and improve their facilities. They want to increase their quality ratings to retain their Medicare funding. Hopefully, this will be the first step in lessening the stranglehold the insurance companies have on this massive industry. It’s a precarious time in the healthcare industry because nobody exactly knows what will happen in 2014. But hospital administrators, just like patients, understand that something needs to be done. The future is uncertain, but even if it’s a rough road, many have not lost hope that America is taking a step in the right direction.
Brett Harris writes articles for several colleges that offer Top Online MBA in Healthcare Management Programs.
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Category: Health
