Healthcare News & Insights

Latest on ACA replacement & how it’ll impact hospitals

For the past few months, hospitals have been on edge wondering about the new Republican-designed replacement for healthcare reform and how it would affect their bottom line. The new legislation’s recently been released, and if it’s passed as written, hospitals may have to deal with some changes to their budgets. 

The bill, called the American Health Care Act, has several new provisions that, according to projections from healthcare experts, could cause up to 10 million Americans to lose their healthcare coverage.

According to an article from Vox, the American Health Care Act repeals many portions of the current Affordable Care Act (ACA), including the individual mandate for purchasing health insurance, and replaces the current income-based subsidies for buying insurance with smaller, refundable tax credits based on age.

Future of Medicaid

One of the biggest ways the American Health Care Act could impact hospitals is how it changes the Medicaid program. Right now, the text of the bill leaves patients’ current Medicaid coverage intact until 2020 – which is good news for hospitals in states where Medicaid’s been expanded. New patients would be able to sign up as well.

But once 2020 begins, Medicaid enrollment will be frozen, and the government expects fewer people to keep the coverage because any income changes will render them ineligible for the same plan.

In addition, Medicaid will be funded differently. The federal government will no longer pay all of a Medicaid patient’s bills. Instead, states will be paid a lump sum for each patient, and healthcare providers will have to absorb any extra costs on their own.

So this change may make life more difficult for safety net hospitals and hospitals serving a higher proportion of disadvantaged patients on Medicaid.

Bill’s opponents

Many big hospital and provider specialty organizations currently oppose the American Health Care Act as written, including the American Hospital Association and the American Medical Association. Per an article in Bloomberg, both say more provisions must be in place to provide care for low-income patients before the bill can be passed.

If disadvantaged patients are priced out of the insurance market, it increases the burden on providers and hospitals when treating them for illnesses, straining resources and impacting the quality of care patients receive.

Current outlook

Despite how these changes will affect hospitals down the line, the situation likely won’t be bad for the time being, especially since states can still opt to expand their Medicaid programs until 2020.

According to an article from investors.com, here are three reasons why hospitals may be fine in the short term:

  1. The bill’s not likely to pass as written. Although the American Health Care Act’s changes have been scaled back in scope (with many portions keeping guidelines set by the Affordable Care Act), there are still many legislators in both the House and Senate who oppose the current bill.
  2. Changes may actually stabilize coverage on the exchange. While low-income patients may feel more of an immediate crunch, the new age-based subsidies may actually encourage healthier people in other income brackets to sign up. Prices would be lower for young adults and more expensive for older ones. This could cut insurer costs and allow them to continue to participate in exchanges, giving more options to patients.
  3. Medicaid changes are gradual. Hospitals must still look at how the changes to Medicaid will impact their daily operations after 2020. But much of their current funding will stay in place for now. Disproportionate share hospitals may even receive more government funding than they currently do under the new Republican legislation, which also acts as a cushion from any negative financial impact.

Now’s the time for hospitals to start figuring out how they’d fare under this new set of healthcare laws. We’ll keep you posted on any updates.

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