The HIE Conundrum: Individual Cost and Political Penalties (Part 4 of 4)

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HRE-thumb5Concluding our look at the impact health insurance exchanges are expected to have on a healthcare organization’s revenue cycle, it’s time to examine the political and personal aspects behind HIEs.

H. Jeffrey Brownawell, chief revenue officer at Houston-based Memorial Hermann Health System, told Rene Letourneau in the June issue of HealthLeaders magazine “he is not convinced that the health insurance exchanges…will increase the number of insured people in Memorial Hermann’s service area because the fine for not purchasing insurance may not be expensive enough to motivate people to spend the money for coverage.”

In many cases, the fines for not purchasing health insurance “are widely considered to be too small and toothless to force compliance,” Letourneau writes.

Brownawell hopes that people will react otherwise, trusting that “there will be more people who decide to be insured versus taking the penalty, but the penalty may just not be enough to cause people to jump in and add health insurance because of their out-of-pocket expense.”

The political environment surrounding HIEs in Texas is particularly volatile. Gov. Rick Perry has been one of the nation’s most vocal critics of the “Obamacare power grab,” as he calls it, and believes that expanding Medicaid will be detrimental to his state.

As a point of clarification, it’s important to note the Supreme Court ruled in June 2012 that states didn’t have to expand their Medicaid programs, in spite of majority opinion holding that healthcare reform was constitutional. Letourneau writes, “To encourage states to cover more individuals through Medicaid, the federal government is covering 100 percent of the cost for newly eligible beneficiaries for the first three years, then gradually decreasing to 90 percent in 2020 and thereafter. Even with this inducement, some states have opted out.”

Including Texas.

This has left hospitals such as Memorial Hermann coping with the uncertainty of federally operated exchanges and the expectation that none of this will help with its bad debt. The most optimistic thing Brownawell can say is his organization is not expecting this bad debt to increase under HIEs.

He explained, “Houston is a very uninsured city. Our uninsured rate is about 30 percent to 33 percent. We are not expecting to see more bad debt.”

Brownawell added, “It will be very interesting over the next five years to see how it all plays out with the ACA and that transformation—to see [what happens] with health exchanges and whether states decide to expand Medicaid with the federal government. There are still a lot of things to be determined and issues to be resolved.”

What are your thoughts on the various aspects examined in our four-part look at The HIE Conundrum? What is the political climate around HIEs like in your state? How is it affecting your organization? Do you think your uninsured patients will opt to pay the federal penalty in lieu of coverage?

-by Pete Fernbaugh

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