An Overview of Healthcare Reform

The topic of healthcare reform is one of the most complex and controversial subjects in recent memory. With the primary bill, a reconciliation bill and passionate opinions on both sides of the Congressional aisle to understand, you may be wondering how this historic legislation will affect you in the coming years. I would like to help you understand some of the major issues surrounding the law, and how it might impact every person and business in the Saint Francis Medical Center service area.

Change was inevitable

Those of us in the healthcare industry assumed the day would come where government-mandated change would become a reality. While I am encouraged by the efforts put forth to improve a system increasingly out of financial reach for many businesses and families, the pros and cons of the new legislation create a mixed bag of potential results.

The U.S. Census Bureau tells us only 64.4 percent of Missourians have employer-provided health coverage, down markedly from the 72.5 percent who enjoyed that benefit in 2001. Almost three-quarters of uninsured Missourians are in a family with at least one full-time worker. It’s no wonder this figure is so high, considering family insurance premiums have almost doubled in the last 10 years.

Accessing affordable healthcare is a major hurdle for businesses and individuals alike. In fact, Missouri’s small business owners identify controlling costs as their primary concern, according to a survey conducted by Small Business Majority, a leading national small business advocacy organization. Almost 90 percent of small businesses that did not offer health insurance coverage point to affordability as the primary reason, and 72 percent of those who offer coverage say it is a financial struggle to do so. Small businesses make up almost three-quarters of Missouri’s businesses, but only 43 percent of them offered health coverage benefits in 2008.

The law’s impact on business and families

The new law provides a tax credit designed to make health insurance premiums more affordable for many of the approximately 80,000 small businesses in Missouri. The law provides assistance for businesses with fewer than 25 employees whose average annual wage is $50,000 or less, and who contribute at least half of their employees’ premium costs. The tax credit operates on a sliding scale, with a full credit being 35 percent of employees’ premiums for businesses with 10 or fewer employees and average annual wages of $25,000.

States will establish insurance exchanges called Small Business Health Options Programs (SHOP Exchanges) by 2014. These exchanges will enable small businesses to pool together and buy insurance at more affordable rates. The government will offer further tax credits over the first two years of that program on up to 50 percent of their employees’ premiums. The insurance coverage available through the state exchanges will be unable to deny coverage based on pre-existing conditions and may vary premiums based only on geographic location, age, and tobacco use.

Employers are not required to offer health insurance coverage under the new law, but companies with more than 50 employees could be subject to hefty fines if just one of their employees receives government-subsidized coverage, such as Medicare or Medicaid.

The government also will begin providing tax credits to individuals and families to help pay for their health insurance premiums in 2014. The aid will be available on a sliding scale to households making up to four times the federal poverty level, or about $88,000 for a family of four.

The impact on providers

The primary concern for providers like Saint Francis is the role Medicare cuts might play in the effort to finance healthcare reform. Medicare is the federal program that insures seniors ages 65 and older and certain categories of disabled people. Half of our revenue came from Medicare in fiscal year 2009. That’s an important statistic as you consider the aging Baby Boomer generation and the increasing number of patients that will fall under Medicare going forward. Medicare’s reimbursements cover only 80 percent of the cost to provide care, and further cuts to that discount certainly will have a negative impact on providers throughout the country.

Medicaid, a program of shared responsibility by the federal and state governments that insures people living in poverty, accounts for 13 percent of our revenue and mandates an even deeper discount than Medicare. In the short term, Missouri’s budget challenges and cutbacks in the funding of Medicaid continue to demand our attention. Medicaid requires states to put up matching funds before the federal government contributes its share.

Private insurance company payments represent 27 percent of our revenue, and we accept varying levels of discounted payments to be included in those networks. In addition to revenue lost to discounted reimbursements, Saint Francis provides more than $9 million in charity care every year.

Since we assumed any measure of healthcare reform likely would have a substantial impact on organizations such as ours, we have been proactive in providing a considerable amount of education to our board, administration and employees leading up to this point. Cape Girardeau is a regional hub for medical care, and Saint Francis is the city’s largest employer.

What you can do to curb healthcare costs

Many business consultants suggest implementing a variety of strategies to reduce healthcare expenses:

Reduce the amount of low-end insurance coverage and move to a higher-deductible plan
Create a tax-exempt Health Spending Account (HSA) to help offset the higher deductible
Help employees improve their health through wellness programs and better access to preventative care
Hospitals generally do a good job providing high-quality care while striving to become more efficient and containing costs. Saint Francis’ integrated system provides patients with the right care at the right time and in the right setting and remains committed to our community.