Why Charity Medical Care Isn’t Going Away – And Why You Should Care

Shortly after the initial open enrollment period for the Affordable Care Act (also known as Obamacare) ended, President Barack Obama triumphantly announced that 7.1 million Americans had signed up for private health insurance polices through the federal and state exchanges last year. A last-minute surge pushed enrollment figures past the original goal of 7 million signups. This surge helped to erase a deep deficit resulting from the disastrous October 2013 roll-out of Healthcare.gov, when a total of six people were able to sign up for a healthcare plan through the website.

The Good News About the Affordable Care Act

obamacareThe current open-enrollment period (which began in November of 2014 and lasts through February 15, 2015) has also seen a good turn-out, with most recent figures showing a total of 9.9 million Americans enrolled in a health care plan through the Affordable Care Act. These people have signed up for their healthcare plans through federal and state exchanges. This figure includes more than 3 million new Medicaid signups, thanks to the Medicaid expansion program.

There is more good news about the Affordable Care Act.   According to Media Matters, those so-called “Young Invincibles” – young, healthy adults under the age of 35 whose participation in the exchanges is nearly universally viewed as being critical to the viability of the ACA – make up approximately 27 percent of signups. While this figure is short of the Obama administration goal of 35 to 40 percent, it’s sufficient to prevent the dreaded “death spiral” predicted by the right-wing media.

So, no more poor people using the emergency room as a substitute for primary care. No more need for hospitals to offer charity care. Everyone in America now has access to affordable health care coverage. The problem of the uninsured is one for the books, right?

Not so fast.

The Persistent Uninsured

sign upWhile Obamacare has made a significant dent in the number of uninsured Americans, an inescapable and inconvenient truth remains – Obamacare does not provide insurance coverage to everyone in the United States, and as things stand, it never will. Why? Two major factors are the “Medicaid gap” and willful noncompliance with the law by individuals who elect to skip out on signing up for healthcare through the exchanges.

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A third factor presents a potentially ominous challenge to the ACA. It’s possible that the Supreme Court could rule that tax subsidies in states that do not run their own health care exchanges are unconstitutional. If so, more than 5 million Americans who presently receive subsidies through federally administered exchanges could lose their newly obtained coverage because they could no longer afford it.

The ER and the Uninsured

uninsured

During the 1970s and early 1980s, cases of so-called “patient dumping” of uninsured patients were the subject of national headlines and public outrage. As a result, Congress passed the Emergency Medical Treatment and Active Labor Act (EMTALA), which prohibits hospitals from refusing to provide medical treatment for critically ill and injured patients or to women in labor. In addition, the Hill-Burton program, first enacted in 1946, requires approximately 170 hospitals across the country that have received federal funding for expansion or modernization to provide low-cost or no-cost care to low-income, uninsured patients. The IRS also requires nonprofit hospitals to offer charity care to low-income uninsured patients as a condition of maintaining their tax-exempt status.

Yet a little-publicized aspect of the ACA cuts funds for hospitals to cover costs associated with treating uninsured patients from the present level of $20 million to half that amount by 2019. These cuts were instituted on the presumption that fewer Americans would lack health insurance. This presumption was based in large part on an expectation that all 50 states plus the District of Columbia would accept Medicaid expansion and the accompanying federal dollars –an assumption that has so far fallen far short of reality.\

The Medicaid Gap

obamacareAs of this writing, 22 of the 50 states have opted not to accept the expanded Medicaid aspect of the ACA. As a result, approximately 5.7 million Americans – 53 percent nonwhite and 47 percent white – fall into the so-called “Medicaid gap,” with incomes too high to qualify for their states’ conventional Medicaid coverage, but too low to qualify for subsidies in the private health care insurance exchanges, according to results published by the Kaiser Foundation. A whopping 79 percent of these unfortunate Americans live in the South, where the majority of Republican governors have formed an impermeable red line of refusal to accept funds from the federal government for Medicaid expansion, regardless of the consequences to the citizens of their states.

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Supreme Court Challenge to Insurance Premium Subsidies

In early November 2014, the Supreme Court announced that it would consider whether the Affordable Care Act authorizes subsidies for individuals in states that do not operate their own healthcare exchanges. Presently, only 14 jurisdictions, including the District of Columbia operate state-based exchanges, while there are approximately 5.4 million people enrolled in healthcare plans through federally administered exchanges. More than 87 percent of those individuals received subsidies to pay part or all of their insurance premiums.

The Court will review the Fourth Circuit case of King v Burwell, where judges unanimously ruled that subsides were authorized in states that had not established their own exchanges. However, challengers claim that the language “Exchange established by the State” applies only to those states which had established their own exchanges.  If the Supreme Court overturns King, individuals in those states could lose their subsidies.

The Individual Mandate

federalThe ACA contains a lot of “carrots” designed to inspire uninsured Americans to seek and obtain coverage, but also one important “stick” – the individual mandate. The individual mandate requires individuals who can afford health care coverage to obtain insurance, either through their employers, through the healthcare exchanges or by other authorized means, or face a financial penalty. By designating the individual mandate as a “tax” and asserting that the federal government has the authority to impose taxation on its citizens, the Supreme Court upheld the constitutionality of the individual mandate. Yet a large proportion of Americans have willfully opted to pay the penalty, rolling the dice that they will remain healthy, thereby saving money over the cost of insurance premiums.

The Potential Cost to the Public

burdenWhether you love Obamacare, hate Obamacare or just don’t care, it is almost a guarantee that at some point, many of these uninsured Americans will become ill or suffer a serious injury. It is also a certainty that the ER will continue to serve as a source of primary medical care for far too many individuals and households. If the ACA fails, that number could potentially jump by millions. And American taxpayers – that means you — will be responsible for picking up the (medical) tab.

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