Last fiscal year, Central Peninsula Hospital saw a 17 percent uptick in uncompensated care — totaling $19 million — more than doubling the amount of annual care written off as bad debt since the beginning of the Great Recession; and a jump of $6.5 million since 2011.
The loss, the largest yet, is somewhat due to the hospital’s campaign to encourage the public to apply for the “financial assistance program,” said Shanda Hall, revenue cycle director for the hospital. There were also a couple of large and expensive medical cases that went unpaid during the year, she said.
An American Hospital Association 2013 report shows that the local spike has a direct correlation to 30 years of increased healthcare costs while at the same time the quality of coverage and costs of health insurance to pay for medical care has degraded. The increase in unpaid medical bills in Central Peninsula mirrors trends in healthcare across the nation since 2000, when the first economic dip that would later morph into the Great Recession, began.
According to the American Hospital Association (AHA), the actual practice of differentiating between “bad debt” and “charity care” is often difficult. Regardless of which spreadsheet column the unpaid expenses come from, unpaid bills have been on the rise since 1980, when $3.9 billion went unpaid in the nation’s 5828 hospitals. By 2011, the most recent calculation, $41 billion went unpaid at the remaining 4973 hospitals across the country.
At the same time that unpaid rates for healthcare have climbed at Central Peninsula Hospital, in 2013, gross and net income at the hospital has climbed, 11 percent and 56 percent respectively in that single year.
Late last month, the U.S. Census Bureau Social Economic and Housing Statistics Division released the Small Area Health Insurance Estimates (SAHIE) report that listed national uninsured rates by county, or in Alaska’s case by Borough, based on 2011 data, the most recent available.
According to the SAHIE, Alaska has the highest rate of uninsured folks in the nation. The details for Alaska show that among the residents living on the Kenai Peninsula, 25 percent of all working-age adults are without health insurance — about 14,000 people. For children younger than 19, the uninsured rate falls to between 10 and 20 percent, largely due to new healthcare laws. Residents over 65 are covered under Medicaid and or private health insurance.
Starting next month, through the Alaska health insurance exchange, brought about by the Affordable Care Act (ACA) also known as “Obamacare,” borough residents can sign up for health insurance — which becomes mandatory in 2014 — through the two plans available, Premera and Moda Health.
Along with the federal website, healthcare.gov, and a group of paid insurance guides from the United Way of Anchorage, Peninsula residents will have access to advice and help from Central Peninsula Hospital’s financial department understanding the process and deciding on which options from the two plans available through the Alaska exchange are best for them.
Brogan’s organization won a $300,000 federal grant to provide “navigators” that will help people and small businesses understand what is available through the exchanges and how to look into the specifics required to make decisions, such as which tax breaks and issues such as pre-existing conditions. With the money, United Way will hire a total of four navigators and plans to put two in Anchorage and one each in Juneau and Fairbanks.
United Way navigators will be available for face-to-face and over the phone consultations and walk people through the enrollment process. However, the navigator’s role will end before a decision is made on which qualified plan to choose. Much of the work will be to facilitate signing up for Medicaid, figuring out the tax credits available and accessing the overall system.
The general aim of the ACA is to increase the quality and make more affordable health insurance by expanding public and private insurance coverage while seeking to reduce the costs of coverage to people and the government. While offering subsidies for those who qualify, the law also calls for insurance companies to cover all applicants while adhering to minimum standards with the same rates regardless of sex or pre-existing condition.
According to the Kaiser Commission on Medicaid and the Uninsured, more than 10 million Americans joined the ranks of the uninsured between 2000 and 2010. During that period the overall number of people considered to be low-income grew as “real income” dropped by thousands annually, unemployment rose from 4 percent to a high of 9.6 percent, employer sponsored insurance declined as the employees’ portion of cost rose and fully a third of the national population — 100,000,000 — fell below the benchmark of yearly income at or less than 200 percent of the federal poverty line, about $47,000 for a family of four.
In Alaska, costs are the most cited reason for individuals and small businesses forego insurance, according to a 2007 study by the Institute of Social and Economic Research at the University of Alaska Anchorage.
The Congressional Budget Office (CBO) projected that the ACA will lower both future deficits and Medicare spending. According to a May 2013 CBO report, over the next 10 years the national count of non-elderly uninsured will drop from 55 million to 31 million.
Early last month Gov. Sean Parnell explained his choice to not build a state-run health insurance exchange ran in a column printed in the Anchorage Daily News. Parnell said he challenged the federal government to build and pay for the exchange, which are expensive and problematic. Oregon spent $200 million and Washington state spent $150 million to get theirs only partway built, he said. Parnell followed his explanation to forgo a state run exchange, with a comment in a Sept. 2 article about the last minute scramble by Alaska nonprofits trying to help people find their way to and through the federally built exchange saying Alaskans haven’t been hurt by his decision.
“I think they’re actually more hurt by losing their freedom and being compelled to pay for health insurance,” Parnell told the Associated Press.
Part of Parnell’s problem and concern with healthcare reforms is that the federal government will, after a few years, shift the cost back to the states. Parnell has expressed the same concern over Medicaid expansion, that the feds would renege on the funding that would have opened the program to a family at 133 percent of the poverty level, about $30,000 for a family of four.
“We’re already paying for it,” Kenai Peninsula Borough Mayor Mike Navarre said Thursday of the governor’s refusal of the expanded Medicaid and with it the possibility of $900 million federal dollars earmarked for low-income Alaskans over the first three years starting in 2014 and then $270 million a year after that.
Navarre, a former state legislator, prior borough mayor and a one-time Central Peninsula Hospital Board member who ran for borough mayor again on hopes of tackling local healthcare costs, said the idea that there is an open-market healthcare system in Alaska or the nation is just false. Local, federal and state governments already pick up 65 percent of all healthcare costs through Medicare, Medicaid and government employee plans, he said.
“The government has to play a role, the status quo will bankrupt us,” he said.
Both Navarre and Hall, from Central Peninsula Hospital, expect the ACA will have an impact on the losses seen by the local hospital system.
Hall said that many of those that would simply not pay for needed care and procedures will qualify for the premium subsidies that are expected to make insurance affordable to those who cannot now buy insurance. Navarre agreed, saying that in theory reductions of bad debt will happen.
Like it or not, people with insurance and their own money already pay for other’s healthcare expenses through cost shifting — including the losses from unpaid bills into the expenses of things like overpriced aspirin and procedures.
Navarre said he’s been told by local healthcare professionals to let Obamacare play out nationally. The borough’s healthcare group meet Wednesday to see if they have a role in the coming implementation of healthcare reforms. Navarre said they questioned if the borough should apply for grants similar to the United Way to pay for enrolment help.
The question goes beyond insurance coverage and the affordable care act, in Navarre’s mind. His desire is to try to figure out how to best use the borough’s hospitals’ assets, which he says are “excellent,” locally to best benefit the borough’s population. He said it’s a “utilization issue.” Some medical practices are over used and revenues drive some procedures. Navarre said that if those areas could be identified then that same money could be repurposed to broaden healthcare.
“It’s not that is not available,” he said, “It’s that it’s not affordable,” Navarre said.
Reach Greg Skinner at firstname.lastname@example.org