Health care law's local impact

The overhaul of the nation’s health care system will have a relatively intense impact in Columbia, where there are eight hospitals, an acute care center and multiple clinics employing more than 7,200 people, about 20 percent of the city’s workforce.
Of course, the practical ramifications of the biggest expansion of the social safety net in decades will involve all of the city’s businesses, workers and Medicare recipients.
Overall, the law would expand the rolls of the insured by 32 million and leave about 22 million uninsured U.S. residents. The Congressional Budget Office estimates the bill will cost around $940 billion during the next decade and reduce the budget deficit by $138 billion. New taxes, reductions in Medicare’s growth and cuts to other programs the bill makes irrelevant, such as compensation for hospital care to the uninsured, pay for the massive coverage expansion.
With legislation this huge, no one is sure how the changes will play out as they become effective. Many of the provisions won’t start until 2014 or later, though some, such as allowing children to stay on their parents’ insurance policy until they are 26, will start this year.
Kristofer Hagglund, associate dean of health policy and academic affairs at MU’s School of Health Professions, said: “It’s not going to lead to gold-paved streets all of a sudden. There are going to be unintended consequences and legislation that needs to be passed to fix problems.”

Businesses:

One of the most important things to remember about the new law is that it is primarily building upon America’s system of employer-provided health insurance. As insurance costs have risen during the past few decades, more and more employers have dropped employee health benefits. The new law would penalize businesses with more than 50 employees that do not offer health benefits. The law fines those businesses $2,000 per employee, though it exempts the first 30 employees from the calculation.
Small businesses, which struggle most to pay for health benefits, are eligible for tax credits if they want to pay for employee insurance. Small businesses wanting to provide insurance qualify for the credits if they have 25 or fewer workers with average wages less than $50,000. Businesses with 10 or fewer employees and average wages less than $25,000 can get up to 35 percent of premium costs covered until 2013, when up to 50 percent can be covered. These changes take effect this year.

Workers:

Employees covered by their company’s plan who make up to four times the federal poverty level ($88,200 for a family of four) and spend between 8 and 9.8 percent of their wages on premiums would be eligible for vouchers from their employers. Those would be equal to the company’s contribution to the health plan, and the workers could use those in addition to federal subsidies to purchase insurance on one of the “insurance exchanges” once they’re established.
Workers whose employers don’t offer health insurance will be able to purchase insurance despite pre-existing conditions. People making up to 400 percent of the poverty level would be eligible for federal subsidies to help purchase their own insurance.

Medicare:

Reductions to the growth in spending for Medicare is one of the primary ways Congress will pay for the health overhaul. CBO estimates put the spending curbs at about $500 billion during the next decade, including big cuts to Medicare Advantage, which pays insurance companies to provide Medicare and is much more expensive to the government.
That’s the biggest shake-up that Richard Royer, CEO of the nonprofit health care consulting firm Primaris, expects. The majority of the calls received by the senior health insurance counseling service operated by Primaris have been about the changes to Medicare Advantage, he said.
Royer said the reduction in government funding for the program will likely cause insurers to drop many of the fringe benefits they offered to attract seniors to the plans. And some insurers will just drop out altogether if it’s no longer profitable for them, as they did after the Centers for Medicare and Medicaid reduced payments in the early 2000s, he said.
But the law still requires certain benefits to be covered by Medicare. The question is whether providers may limit the Medicare beneficiaries they accept, as they have already done in some parts of the country.
Primary care and preventive health care access will likely improve, as those reimbursements are increased under the new law. In addition, the law increases Medicaid reimbursements to primary care doctors. Relative to their peers, primary care doctors are underpaid, Hagglund said, and the increases called for could help to close the gap and attract students to primary and geriatric care. That would be a huge benefit for older Americans on Medicare, he said.
“I’m out there making friends with as many geriatricians as possible because they’re hard to find,” Hagglund said.
But other specialty care providers might see reductions in reimbursements. Some practices, such as Missouri Heart Center, are already reeling from changes to Medicare’s rates for certain procedures. CEO Allen Goree said some cardiovascular imaging services were cut by more than 30 percent at the beginning of the year. Further reductions in Medicare payments won’t help the Heart Center, which relies on Medicare for 60 percent of its business.
“We haven’t put any restrictions on Medicare patients as of now, but as these changes take effect, we’ll have to take a serious look at whether we can continue that,” Goree said.
Nursing homes will also see major changes. The law creates a new insurance program for long-term care, which could offset the Medicare cuts to nursing homes. Because nursing homes are so reliant on Medicare and Medicaid, the changes there will have a large impact. Royer said he thinks the Centers for Medicare and Medicaid will see the risk to nursing homes and work to minimize the impact. Even so, “It’s going to be a little precarious for nursing homes.”

Hospitals:

Most analysts think hospitals will benefit from the law despite the big reductions in Medicare Part A reimbursements, which apply to them. Because hospitals are required to provide care to everyone, the expansion of insurance will likely make up for any decreased payments from Medicare.
Despite relying on Medicare for 37 percent of its payments, University Health Care also provides about $40 million in uncompensated care each year, University of Missouri Health Care CFO Kevin Necas said.
The question is whether the decrease in care provided to the uninsured mitigates reductions to Medicare and increases in medical equipment costs, he said, but “it’s difficult to see what the offsets are going to be.”
“I’m sure that something this size for the nation is going to have some bumps in the road, and I’m confident with the attention it’s gotten, the bumps will be addressed,” Necas said.
Medicare Part D, which pays for elderly Americans’ prescription drugs, would start closing the coverage gap this year. Right now, Medicare only provides drug assistance for those paying less than $2,830 or more than $6,300 a year in drug costs. Seniors would get discounts on drugs that fall in the so-called “donut hole.”

States:

One of the big ways coverage is expanded is by increasing eligibility for Medicaid, the government insurance program for the poor. Right now, states pay about 40 percent of the cost of Medicaid, so as they struggle to balance their budgets, the program often gets hit. The law expands the program to everyone below 133 percent of the poverty level in 2014. The federal government will pick up the tab for the newly covered until 2016 and slowly reduce its share in the years after that.

New taxes and fees:

Individuals making more than $200,000 and families making more than $250,000 would have to pay a higher Medicare payroll tax — 2.35 percent and a 3.8 percent Medicare tax on capital gains.
Starting in the next few years, drug companies, medical device manufacturers and insurance companies will each pay more than $2.5 billion a year in additional fees and taxes. High-cost health plans ($10,200 for individuals and $27,500 for families) are subject to a 40 percent excise tax, exempting high-risk occupations such as firefighters and police officers.