Seeking protection from double digit annual premium increases, employers have increasingly shifted premium costs to employees and increased deductibles and copays. That’s been largely responsible for the flattening out of rate increases, but there’s been a downstream effect that was entirely predictable.
Hospitals’ write-offs for bad debt were surprisingly stable during and immediately after the recession – since then, they’ve increased dramatically.
In Q4, 2011,“uncollectibles” hit 7.38 percent of gross revenue, up from an average of about 5 percent over the previous eleven quarters.
There’s likely a direct connection between increased employee deductibles and copays and hospital bad debt. And that trend will continue. According to a piece in Health Plan Week [subscription required], employees will pay “34.4% for health coverage (a combination of premiums and out-of-pocket costs) — up from 33.2% in 2011.”
In real money, that’s about eight thousand dollars, and headed higher.
While the higher deductible amounts are undoubtedly making consumers more price sensitive, they also require consumers to pre-fund those accounts so that if and when they need care, the dollars are there. What appears to be happening is many of the health savings accounts aren’t adequately funded so hospitals aren’t getting paid for the patient’s part of the treatment cost.
Simultaneously, Medicaid (about nine percent of the average hospital’s revenue) reimbursement is under enormous pressure as legislators look to reduce costs and Medicare is tightening up as well.
The result? Hospitals’ revenues are shrinking while they’re pressured to improve patient safety, streamline administrative processes, better document care, and invest in IT.
The money’s got to come from somewhere.
What does this mean for you?
Workers comp, auto, and general liability insurers, hold on to those wallets. You’re a very soft target.
Jun
19
The idea of getting as many people as possible into the risk pool is the basis for any successful mutual insurance model. It’s as old as insurance itself. The more people paying, the less risk there will be. It’s not rocket science. The individual mandate was a Republican idea since the late 1980s. As much as the (ultra-conservative) Heritage Foundation is denying it today, it was their idea. It was a very good idea. This idea was introduced on the Senate floor by then GOP Senator John Chafee (R-RI) and he had 19 GOP co-sponsors with him. Speaker Newt Gingrich as a very vocal supporter of the individual mandate and wrote about it extensively. Former Massachusetts Governor Mitt Romney loved the individual mandate so much, he got a health care reform bill passed and enacted in Massachusetts with the individual mandate as the centerpiece of the bill. Today, Mitt Romney denies he ever liked the individual mandate. Of the more than 1500 independent private health insurers in America, virtually all of them say that without the individual mandate, every health care reform idea will fail because they need a very large risk pool for it to be successful. The real problem is, for all of the support that the individual mandate has gotten over the years by Republicans, for all of the strong proponents of the individual mandate before President Obama got sworn in as President, the individual will be forever banned as a tool to make health care reform successful if it gets struck down by the Supreme Court. Republicans, for some strange reason, are willing to throw the baby out with the bath water just to defeat President Obama in the November 2012 election. Republicans are willing to use a scorched earth tactic and ruin any chance of using the individual mandate ever again just to win at partisan politics.