We need to go further in our thinking about the macroeconomic implications of current legislative proposals that include reductions to the safety net, increased uninsured, and payer options that forego minimum health benefits (defeating the purpose of health insurance and exacerbating premium increases on anyone with pre-existing conditions, including age). Our conversations need to be more inclusive of a broader impact due to EMTALA and the payer market.
Two recent articles worth reviewing: 1) January Health Affairs blog post that discusses the potential effects of a repeal and replace strategy on people that receive their health insurance through their employers by JoAnn Volk, and 2) July 14, 2017 article from Kaiser Health Network's Julie Rovner that highlights a thorough NAP/IOM study on the Community Effects of the Uninsured based on data prior to the ACA.
In simple terms, increased uninsured leads to more people not being able to prevent and/or manage chronic and mental health illness. The CDC notes that 86% of the $2.7T healthcare costs are due to chronic and mental health illness. EMTALA obligates health systems to treat and stabilize any patient that makes it to that health system's property before they can be released. This law guarantees access to care. The kind of access, however, is expensive and, while life-saving, not the highest impact in terms of long-term costs and quality of life. If policies reduce coverage for the safety net (through reductions in Medicaid, reductions in access to affordable health insurance plans, and other mechanisms), we will see healthcare costs go up for several reasons:
- Health systems are obligated to treat all patients that arrive on their property. There is a lot of data on the US' experience with this trend. When people don't have access to primary care, they use the ED as primary care.
- Health systems that provide uncompensated care will incur a loss. Uncompensated care is typically 'bad debt'. This compromises the financial viability of health systems, especially for those that provide more uncompensated care than others.
- Health systems will negotiate with payers to help address their higher costs of care. This happens during every contract negotiation with all payers.
- Payers may agree to increase reimbursement for care if a good case is made. Those increases in reimbursement are passed on to their customers as higher premiums.
The CBO's estimates provide a portion of a macroeconomic impact on proposed legislation. Taking CBO's scope of analysis a step further, we should be expanding the analysis to look at more comprehensive impacts to the entire economy. This work might include the impact of reduced access to care in terms of economic mobility and innovation. One of the highest growth markets was the individual payer market, which also allows for more economic mobility for employees and new businesses. Policies that compromise the individual insurance market (e.g., penalties for pre-existing conditions including age; penalties for any period without health insurance; allowing payers to forego minimum health benefit plans) are likely to stifle economic growth, employee morale, among other things.
The most significant macroeconomic impact is the pace at which we can expect healthcare costs to increase - from payers and providers both. They are intimately linked with the system we have. Reduced costs of Medicaid for the government can sound like a good thing - but it is like squeezing a balloon. You can squeeze the Medicaid part of the healthcare balloon, but those costs will show up as increased costs for health systems and increased health insurance costs. Unfortunately, the increase isn't proportional to the reductions in the federal government's spending. The increase will be more - because it costs more to take care of sicker people, which is a well-documented impact, based on the US's own experience, of higher uninsured.
If there is a significant change in policy that looks anything like proposed bills to date, we will need to work locally and regionally on developing safety net strategies that improve preventive and maintenance of care in communities to mitigate increased costs. We can do this work - but it will come from health systems, communities, and willing payers to develop different delivery models, cost and reimbursement structures.