Health care reform will add thousands to rolls

Sunday, March 28, 2010 at 11:45pm

Like anywhere in the U.S., the effect of health care reform will be mixed — extending insurance coverage to many while lightening the wallets of others.

First, the good news: Many uninsured Tennesseans can get coverage.

According to a congressional analysis of Tennessee’s 5th District (which includes most of Davidson County and parts of Cheatham and Wilson counties), roughly 54,000 uninsured Middle Tennesseans will now have access to health insurance through new rules that prohibit coverage denials for illness or pre-existing conditions, through subsidies to help them purchase insurance, and through an expansion of Medicaid eligibility.

Statewide, that analysis predicts 460,500 uninsured Tennesseans will have access to coverage. TennCare estimates it will add 250,000 Medicaid enrollees between 2014 and 2019.

These individuals should now be able to access preventive and routine care, avoiding or mitigating health problems that may escalate before they seek emergency care.

“They work for small businesses, or lost their insurance, or their policy was canceled, or they had a pre-existing condition and they couldn’t get coverage — and they end up here,” said Rob Stillwell, chief financial officer of the Metro Hospital Authority. ”

As for the 3.9 million insured Tennesseans, they will be able to keep their coverage.

Of course, there is also bad news. Though the Congressional Budget Office says the $940 billion reform package will cut the federal deficit, some will see health care cost increases.

Americans earning more than $200,000 a year and couples making more than $250,000 will see their Medicare payroll taxes increase starting in 2013. In Davidson County, roughly 4.3 percent of all households, or 10,800, had income above $200,000 in 2008, according to census data.

Taxes and excise fees imposed on the insurance, pharmaceutical, medical device and other industries may show up on individuals’ health care bills in the form of higher charges from doctors and hospitals, said Paul Keckley, executive director of the Deloitte Center for Health Solutions.

“That’s part of what people may miss,” Keckley said. “If you increase the cost in the delivery system, those costs are going to be passed on directly and indirectly.”

Individuals will also notice higher premium costs. In the long run, younger people will pay more to help subsidize insurance for older, sicker individuals, Keckley said, though a new regulating body is supposed to make sure premiums don’t rise too drastically.

In the short term, as people with pre-existing conditions join insurance pools before mandates for healthier individuals to buy coverage take effect, premiums may rise to offset those costs.

In addition, adding hundreds of thousands of enrollees to financially strapped TennCare, at a cost of $200 million per year between 2014 and 2019, raises concern over coverage limits.

“I’m worried we’ll once again end up talking about limiting services or limiting payments, or both,” Stillwell said. “It’s already just bare medical necessity coverage.”

The industry

Nashville’s $50 billion health care industry, with 300-plus companies, stands to benefit from reform.

The dominant local industry segment — hospital management companies — is among the expected winners. Though their Medicare payment rates will be reduced, any negative financial effect should be more than offset by a reduction in bad debt and an increase in use that come with more Americans having health insurance.

In Tennessee alone, hospitals and health care providers should see uncompensated care reduced by $3.8 billion annually.

That’s good news for HCA, Community Health Systems, LifePoint Hospitals, Vanguard Health Systems, Iasis Healthcare, Ardent Health Services and a brace of other local players. Stock prices of the publicly traded companies in the bunch soared last Monday after the U.S. House of Representatives passed the Senate bill, and at least one analyst speculated HCA could ride the rising tide toward an initial public offering.

“Reform, and the higher valuations … will likely bring an IPO of HCA pretty shortly after the health reform bills are signed,” said Sheryl Skolnick of CRT Capital Group.

As far as local losers, Medicare Advantage plan providers like HealthSpring appear to be the only ones in the crosshairs, according to Jefferies & Co. analyst Arthur Henderson.

“But frankly, when the dust settles on reconciliation, their stock has adequately incorporated the Medicare Advantage cuts, and they will probably do quite well from here on out,” Henderson said of HealthSpring.

Other commercial insurers are likely net losers, given new industry taxes, an increase in customers with greater health risks and constraints on their ability to raise rates, said Jon Lehman, associate dean for health care management at Vanderbilt University. Pharmaceutical companies, device makers and some other traditionally “non-Nashville” segments also face a somewhat negative effect.

But for the most part, Lehman thinks most companies will do all right.

“It’s still a huge market, and the underlying demographics are strong to drive growth,” he said. “So I don’t think that anyone is going to the poor house on this.”

According to most estimates, some 32 million uninsured people will have coverage upon full implementation of the new law. That leaves only about 5 percent of Americans uninsured.

Things you need to know about health care reform

No pre-existing conditions
Beginning this year, insurers will no longer be able to deny children coverage based on pre-existing conditions. The measure will apply to adults in 2014. During the interim, a high-risk pool will be established to cover adults with pre-existing conditions, beginning in three months. As well, an insurance company will no longer be able to cut people when they get sick, a process called “rescission.”

Health exchanges
State-run insurance exchanges would be created for citizens not covered by employers, or those who are under-covered or whose insurance costs exceed a certain percentage of their income. The exchanges would also be open to those who live at 133 percent of the federal poverty level but less than 400 percent; to that set would also be available federal health care subsidies.

Reducing the deficit
Over the next decade, the law is expected to reduce the federal deficit by $143 billion, according to the latest estimate by the Congressional Budget Office. Over the following 10 years, the deficit would fall by $1.3 trillion.

Taxing the rich
Beginning in 2013, families making over $250,000 a year will contribute a small percentage more in Medicare taxes, as well as a new 3.8 percent tax on investments and capital gains. As well, the most expensive insurance policies — so-called “Cadillac plans” — will be subject to a new 40 percent tax on the excess.

Expanded Medicaid
By increasing taxes on the wealthiest portion of Americans, the federal government will be able to expand Medicaid coverage to more of those who live in poverty. Families making up to 133 percent of the federal poverty level — just under $30,000 annually for a family of four — would be eligible for coverage.

Filling the ‘donut hole’
Medicare’s prescription drug program is flawed in that once a patient passes the initial coverage limit for medications, he must pay out-of-pocket for all medications until the cost reaches the much higher catastrophic limit. The new law closes that gap over time. Starting immediately, those affected by the gap would receive a $250 rebate.

Small business credits
Businesses with fewer than 50 employees will be exempt from the requirement to provide health care or face a tax penalty. As well, those businesses will receive credits covering as much as half of the health care premiums they pay for employees. Businesses larger than 50 employees would be required to provide health insurance for employees or face a tax penalty. This takes effect in 2014.

Youth coverage extends
Young people will be able to stay on their parents’ plans until age 26.

Sources: The White House, the Congressional Budget Office, the Patient Protection and Affordable Care Act, The New York Times

20 Comments on this post:

By: richgoose on 3/29/10 at 4:00

The new health care bill means that more and more insignificant people will be able to step up their pro-creation of more insignificant people.

With this health care deal plus all of the other welfare entitlements I would guess that one of these insignificant people could have a life span of 80 years and enjoy lower middle class living. All of this without ever having a job as we know jobs.

By: sidneyames on 3/29/10 at 6:26

Yes, richgoose, and the people who utilize this magnificant government ponzie scheme will be standing in line till they die or hell freezes over - whichever comes first.

Who is getting rich off the health care system? INSURANCE COMPANIES AND THE GOV'T. I bet Obama has insurance companies in his retirement port folio.

"love it" Lower Middle Class. That would be poor.

By: DDG on 3/29/10 at 6:32

The hospitals are making the most money. Insurance companies make 3.5% net profit...not very good compared to most industries.

By: DDG on 3/29/10 at 6:39

The problem is that we are all given a ton of test/treatments, without ever thinking of costs. People don't shop around or ask questions because it isn't coming directly out of their pocket, which drives prices up and why should we care? Our companyor the government pays for our insurance. That and the fact that we can't shop for healthcare outside of the state of Tennessee.

By: AmyLiorate on 3/29/10 at 8:07

It all sounds great because it's all based on "tax the rich"!

Of course some 10 years from now the "rich" is no longer $200K but $100K per family. Haven't we seen that with every other "tax on the rich"?

Aside from it being good for the hospitals the plan is already hitting other capital sectors: John Deere $150M, AT&T $1Billion, Caterpillar $100M... Wow, this will affect their employees, price of goods and JOBS!

Anyone being shifted from private sector coverage to Medicare part D will mean that the "savings" from Medicare will be LOST.

When government picks winners and loosers it is no longer capitalism and free markets.

By: DDG on 3/29/10 at 8:15

They don't care so much about the jobs, just as long as everyone is covered. I don't think this will kill industry, nor will it tax the middle class much. If it goes further, as in "national healthcare," it will be a huge problem.

By: Dragon on 3/29/10 at 8:19

Of course, after the Fed stop paying for the extra quarter million on TennCare, our taxes will have to rise to pick up the tab. Cutting benefits and payments is not an option since that is determined by the Feds.

By: Heloise on 3/30/10 at 8:04

It is insulting to my intelligence to have me believe a government bureaucracy can ever reduce the deficit.

The law of unintended consequences is what bothers me the most about this bill.

By: pswindle on 3/30/10 at 9:46

And you like the way the health insurance is going now? If it stays as it is, in a few years no one can affort health insurance.

By: Magnum on 3/30/10 at 11:35

It's all a crock. I recently went in for a couple of tests. I was warned that due to insurance coverage, they might have to split the test into two separate days to ensure payment. Indeed, this is what happened. Due to the cost of booking the examination room and equipment for two days vs. one, it cost me double (thanks to not yet hitting my deductible and OOP max) and it cost the insurance company double (they incurred a charge per day). Double the money, double the paperwork, double my time away from my job, etc. Good job insurance company! I've got an idea as to how to get your profits up over 3.5%.

By: on 3/30/10 at 12:37

In the first place, this garbage we're being told has nothing to do with health, healthcare, insurance or anything of the like. It's all about Power, Control, and Greed. Liberals always accuse Conservatives of Greed, but they are the ones guilty of it. They only care about themselves and what they can milk the rest of us out of. They don't care one iota about what is best for our country. Their only question is: "What is the Government going to give to me for nothing."

By: free thinker on 3/30/10 at 3:43

free thinker,
People miss the point entirely. This nation already pays 2.5 trillion on healthcare and 60% of that is via the United States government. The object is to treat before illness is major and costs more, bargain power is in numbers, the healthy do not have insurance for now; but expect it when they need it - so yes, they must get it now to spread the insurers losses.
Cut the political crap and the whining, it is a matter of pay me now or pay me later and that is a fact.

By: on 3/30/10 at 5:22

The US Government happens to be all of US. The money for all this stuff has to come from US. It's masqueraded as being "free" from the government to the recipients. They never once think of how the government obtained the money. I don't think they really care. As far as the "political crap and whining" is concerned, why should the people who produce have to pay at all for the parasites who don't. Why can't we all just pay our own way? This is just throwing good money after bad. It does not even begin to address, let alone solve, the problem.

By: slzy on 3/30/10 at 6:43

how does it compare to tenncare?

it would be nice to see a chart with columns charting the changes, comparing obamacare to tenncare,and blue cross as an example.

By: free thinker on 3/31/10 at 6:08

GREAT POINT stlgtrl55. Let's eliminate all forms of government insurance; starting with Medicare, Civil Service, VA, Champus, Tri-Care, Public Health and Employer sponsored health plans. Everyone can pay their own way for sure. As for the parasites, representative government will probably want their votes, so they will receive something (lost cause to eliminate that). Oh, the insurance companies won't be allowed to pass off the expense of catastophic illness and treatment to Washington either.

By: AmyLiorate on 4/5/10 at 8:47


If Tenncare wasn't just as big of a boondoggle as Medicaid then it would have been touted as THE proof that socialized health reform is good!

It was not. They even tried to get our Bredesen to go to D.C. and form up the Health services. After seeing the failures in Tenncare for all these years, Phil wisely chose to stay away from the concept of a national plan.

If Medicaid was fiscally stable then they would have made health "reform" just be an expansion of Medicaid. They're pulling the wool over your eyes with this "reform", it is a crutch to take over where Medicaid is falling down. But a crutch does not HEAL one, it just allows the lame to keep moving along.

By: epayroll on 3/16/11 at 5:48

That and the fact that we can't shop for healthcare outside of the state of Tennessee epayroll].

By: epayroll on 3/21/11 at 8:07

As for the 3.9 million insured Tennesseans, they will be able to keep their coverage.

By: Holder19Benita on 12/22/11 at 6:50

That's good that we can take the mortgage loans and this opens completely new opportunities.

By: Holder19Benita on 12/22/11 at 7:07

I will recommend not to hold off until you get enough money to buy all you need! You should just get the loan or student loan and feel yourself comfortable