On March 23, 2010, President Obama signed the Affordable Care Act - a new law that started out at 2,000 pages and ended up as an unbelievable 20,000-page document slated to put into place comprehensive health insurance reforms for all Americans. Designed to curb costs and provide health coverage for some 46 million uninsured Americans; an incredible amount of uncertainty and confusion surrounds the implications of this new era in American health care.
With these brave new changes upon the horizon, The Review is embarking upon an investigative series into impressions of the new Affordable Care Act gleaned from respected health care providers throughout the Great Lakes Bay region.
HealthSource Saginaw presently has 319 inpatient beds and under the direction of President and CEO Lester Heyboer, Jr., has served a pivotal role with programs ranging from psychiatric and chemical dependency services to medical rehabilitation and extended care for residents of various ages who are no longer able to care for themselves at home and require long-term assistance.
At a time when many hospitals throughout the region are moving away from costly long term care services and risky cost-intensive mental health & chemical substance services, HealthSource has actually expanded its involvement into these arenas; and through the stewardship of Heyboer, the facility has gone from a period prior to his involvement where it was experiencing annual losses to a point where it is presently upon stable financial ground, thanks in large part to a 4-year millage that was approved by voters back in 2008.
Review: Where do you feel the Affordable Health Care Act is going to carry the biggest impact?
Heyboer: its biggest impact will be felt upon primary care hospitals that have a significant volume of charity care. Here at HealthSource most of our services are paid for, although there are folks uninsured on Medicaid programs that we treat. But currently we have approximately 46 million people that are uninsured in this country and everybody is required to sign on to some type of health care plan or experience financial penalties, which will be enforced by the IRS.
The big question is how many of those uninsured people in fact will sign on and pay for health insurance, or continue to claim they cannot afford it and gamble by beating the odds. In Michigan we still don't know what the premiums for many of these plans are going to be. With Medicaid expansion in Michigan single people that qualify may qualify for 24 months, but after that they may have to purchase one of the government plans and may be subject to some copays, depending upon where their income level is.
For an employer like us with a diverse work force and salary levels ranging from $12 to $100 per hour, an employee earning $12.00 per hour with five kids may qualify for different plans, so the question becomes is the insurance that we offer better than other alternatives that you can buy? Employers have to pay a portion of the coverage, so there may be some migration and there are things I can see that may cause us headaches.
I think you will see many businesses with full time employees moving these people to part-time schedules under 30 hours per week, depending upon the cost structure of the insurance plans, which we won't know until October 1st. And many companies could be faced with a new $12,000 - $15,000 addition per employee to their cost structure, which would increase it significantly
Review: But on the other side, isn't this new approach designed to contain costs and create a more uniform pricing structure, since for the first time ever insurance companies in every state must publicly justify any rate increase of 10 percent or more?
Heyboer: Right now the tendency is to underpay providers and there is a lot of fluctuation. Under the present Medicare structure a person may experience a heart attack with complications and there are different values and variations in terms of cost associated with that. But if you limit compensation to a set standard I believe you will see less doctors going into the profession. Hospitals are supposed to get more efficient under Obamacare, but what does that mean? I have different thoughts on that topic. The first premise is that currently hospitals are not efficient, which I do not buy into. Are there abuses that occur? Yes there are, but if a provider is billing for services twice than you should simply bust them for it, as opposed to making it more difficult to operate. Michigan hospitals patented many innovative ICU approaches that have saved the state $530 million dollars and have become a model for other states. But frankly, if you want to contain costs in health care, why not tackle the number one cause for increased insurance and health care costs that can be specifically tracked to malpractice claims? This was not even addressed by Obamacare or Congress, although it was supposed to be initially. Why do physicians order costly procedures that might not be necessary? It's general knowledge that the reason is because they do not want someone coming back with a malpractice claim.
Review: So you don't think the goal is to standardize and quantify procedures and contain costs and give people more affordable health care options?
Heyboer: No, I believe this is all about the dollars and cents and insurance reform. Many hospitals have incredible difficulties with reimbursement and repayment in the system and many professionals in the industry believe the goal of the government is to put insurance companies out of business so they can take over the payment system.
Right now hospitals have contractual relationships with insurance providers and contract for their fee schedules. In reality you can charge whatever you want for a service, but will only get paid what you have negotiated for in good faith in your contract with the provider. If a person receives a $20,000 hospital bill and can't afford to pay it they can tell the provider they will pay what Medicare will pay and I guarantee you that the hospital will take it, because it's better than not getting paid at all. And it will be substantially less than what the charges are.
Health care is not an exact science and people have to make judgments. That's why I shy away from this notion of uniform charges because to me that's price fixing. I'm in favor of competition that sets the price, but not some government standard, because it will be the big guy who sets the price and everyone else will survive or not survive. Again, we won't know how this will shake out until the rate plans come out on October 1st.
Review: So you don't think that Obamacare will be more affordable for most people?
Heyboer: When California had health insurance reform they went out for rates and the first year the rates came in so low that people couldn't believe it. But hang onto your wallet, because in the 2nd and 3rd year some companies dropped out and the rates went up substantially. Supporters are betting on a whole new population of folks to serve and pay for the models out there that tell you what affect that will have on the bottom line.
I don't worry about that here at HealthSource too much, except for when we get into contract negotiations for affordable care organizations that pay for psychiatric services, which is already happening. Blue Cross put together a plan for this and said they were marketing it in five counties in Southeast Michigan and would be expanding the plan in the future, but we should sign up now or the plan may not be available. By the way, the payment rate is the Medicare rate and the physician portion of the plan will pay them 25% less, which is why doctors are dropping out.
I don't really feel physician charges are that far out of line because I see how much time they spend waiting for reimbursement. Plus they have 15 years in university and $50,000 school loans and are hard working individuals.
I think Obamacare is going to be very expensive. There's a whole new layer of bureaucracy being set up to handle the administrative side of the thing and wait until they start listing services that will not be covered under various plans. That's how we start rationing care. The national payment board that is set up has an express purpose to determine what a standard benefit package ought to cover; some costly things will be included and it will save some money, but somebody will die along the way. I'm not sure that's good health care.
I think it's very complicated and hope it works, but believe it will wind up being very costly. The major changes begin October 1st and going into 2014 people are going to be scratching their heads. Plus the first guy that gets charged by the IRS for not having a policy is not going to be happy.
Review: So to summarize, you feel they missed the boat by not including malpractice reform and costs are going to increase, along with rationed care. Is there anything about the Affordable Care Plan that you like?
Heyboer: Certain parts I do like about it, but I think it's too massive and too expensive. For instance with pre-existing conditions, I agree with forcing companies to cover that because there is no way that I think an insurance company should get away with not insuring a pre-existing condition, given their premium structures. As for self-insurance there were some things that needed individual reforms, but many of them were left off the table.
I attended a Legislative Policy Group down in Lansing and someone was saying how their Mother and Father had to finance medications that were costing them up to $10,000 per month, which was amazing to me. And I see people coming here to HealthSource where it's not uncommon for them to be on 10 medications. Yet what is being done with this Affordable Health Care plan to curb the cost of medications, where its still cheaper to purchase them in Canada? Again, that shows you the lobbying impact of the pharmaceutical industry.
Frankly, our millage here at HealthSource is expiring and I wanted to go back for a renewal because of the uncertainty behind all of these new changes. I cautioned the Board that this is one of the most uncertain times in Healthcare because it's all new and we don't know how things are going to play out. I do not think it will play out the way the models are predicting. I don't think that uninsured people that have never paid for insurance are going to buy insurance now. There is a lot of education to absorb in terms of what is happening; and I think this will end up taking money from the very people that need it and that we should be trying to help.
Editor's Note: This is the first in a series on the transition to national health insurance embodied in the Affordable Care Act.