DAVID PATE: Delay doesn't mean Affordable Care Act is doomed


July 14, 2013 

The Obama administration's decision to delay the provision of the Patient Protection and Affordable Care Act requiring employers with 51 or more full-time employees to offer insurance to their employees or pay a per-employee penalty was a surprise.

Is it a big deal for health care providers?

Yes, and no.

When the decision was announced, stocks of publicly traded, for-profit hospitals declined 3 percent to 5.5 percent. It is less clear whether it will have a significant impact for smaller non-profit systems like St. Luke's.

The concern is that the delay will mean fewer insured workers, less access to health care, and increased bad debt for those who require significant health services for the additional year.

This is on top of the concern that perhaps half of the states will not expand their Medicaid programs.

The combination could mean that far fewer people will be insured than touted by lawmakers when the law was enacted.

It's worth noting that payment cuts offered up by hospitals when the law was negotiated, in exchange for a promise that 23 million more Americans would be ensured, are already beginning, though only 7 million newly insured are realistically expected now.

The American Hospital Association has estimated that only about 10,000 businesses around the country would be subject to the provision and currently do not offer their employees insurance. Primarily these businesses are in the retail, entertainment, restaurant, agriculture and farming, and hospitality industries.

Is Obamacare on the ropes?

I wouldn't make that bet, although the Affordable Care Act has suffered a number of setbacks.

- The government did not expect that so many states would decline to run their own health insurance exchanges, leaving more for the federal government to run.

- The Government Accountability Office has reported that the U.S. Health & Human Services Department is behind schedule on key milestones relating to the establishment of the exchanges.

- The Supreme Court ruled that the federal government could not require states to expand their Medicaid programs, resulting in far fewer uninsured Americans having health care coverage than the law intended.

- Recent studies suggest that healthy young adults may not purchase insurance even if it is more affordable and will choose to incur the penalty, which will mean higher premiums on the exchanges due to the skewed risk pool.

- Some large national insurance carriers have announced that they will not offer products on all state exchanges.

- There remains significant concern that insurance premiums will significantly increase on the exchanges, even though the intended outcome of the health care reform law was to make insurance more affordable.

- A recent Congressional Budget Office report indicated that demonstration projects under the PPACA have failed to reduce health care costs.

- Pioneer Accountable Care Organizations have threatened to drop out of the three-year program after just one year of participation. (St. Luke's is participating in a different program.)

- Polls show that many people do not understand the law, and many believe that it was repealed by Congress or overturned by the Supreme Court.

That said, this is the most sweeping health care reform ever enacted.

Most provisions are scheduled for January and health care providers, legislatures, and individuals would be shortsighted to believe that the requirements of this law are going away any time in the next three years.

By then, it will be fully implemented.

David C. Pate, M.D., J.D., is president and CEO of St. Luke's Health System. St. Luke's did not support the Patient Protection and Affordable Care Act because we did not believe adding 23 million people to a broken health care delivery system was the answer.

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