An easy way to reduce health care costs?

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December 30, 2014 by Tony Novak

ACA has been criticized for its lack of cost control measures. We’ve seen many examples of how the new law is contributing to increased utilization and mounting consumer medical debt for unplanned medical spending.

Yet nobody can argue that the payment reductions to doctors and hospitals scheduled to take effect January 1, 2015 will save the government money. A study by Urban Institute reported by New York Times say the average reimbursement to doctors and hospitals will be reduced by 43% for 2015. In some areas the reduction will be more than 50%. But is this really a cost savings or simply a cost-shifting from Medicaid to private sector payers?

Due to massive expansion of Medicaid programs triggered by ACA, we now have almost 10 million more people enrolled in these programs for low-income people. 1 in 5 Americans are now covered by Medicaid. No doubt this reduction in reimbursements will have huge impact, but I fear that the unknown long-term implications. We can presume that this puts added operating pressure on doctors and hospitals. Some may cut back on services to Medicaid patients. It would be naive to think that some of the fixed operating costs are not reallocated to private payers as we saw to pay for the cost of uncompensated care in the pre-ACA environment.

In separate but seemingly related ACA news last week (on a topic I do not follow) the federal government has reportedly stepped up enforcement action against some firms and health plans who clearly did discriminate against Medicaid eligible individuals in their enrollment or recruitment practices.

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