Will Health Insurance Exchanges Hurt Providers Bottom Line?

By Greg Bengel, contributing writer

Hospitals prepare to chase a much larger proportion of the amount they are owed

As the deadline for implementing Health Insurance Exchanges (HIX) draws near, there is plenty of talk about how the exchanges will affect providers in the healthcare landscape. As previously reported, there is plenty of skepticism from providers as to whether or not HIXs will be ready to launch by their October 1, 2013 deadline. And according to healthleadersmedia.com, providers face an even larger concern – a likely negative financial impact after lift-off. 

At first glance, the prospect of more people able to purchase insurance appears to result in more patients, a fact which should be good for providers. Still, healthleadersmedia.com reports that some providers are preparing for negative financial consequences as a result of HIXs. The article quotes two healthcare providers on their fears about HIX implementation.

First to be quoted is Mark Bogen, senior VP and CFO at South Nassau Communities Hospital, who believes HIX’s will hurt his hospital on Long Island, NY. “As opposed to New York City, where they tend to believe most people who sign up for exchanges will be those that are currently showing up in their EDs and entering the system as uninsured, here on Long Island the concern is we may see more of a conversion from employer-sponsored plans, and we'll have to chase after a much larger proportion of the amount [we are owed]," he says.

According to Bogen, small business owners may choose to stop offering health plans and take the fines levied by the government, sending their employees to the exchanges. Those exchanges may have larger deductibles and co-pays.

Secondly, the article provides the insights of Stephen Forney, CFO at Lovelace Health System in Albuquerque, NM. Among Forney’s concerns is HIX’s high deductibles will generate more bad debt. He believes that patients who have insurance through the exchanges may not fully understand their level of liability for services, especially patients who were moved to the exchanges from other government-subsidized insurance programs. "These [government] initiatives are going to be subsumed by the exchanges, and the new products are going to have significant patient liability and premiums. That is going to be a bit of a sticker shock for those individuals who have not been used to that in the past," Forney says.

A recent analysis by The Wall Street Journal backs up Forney’s claim. As reported on theblaze.com, the WSJ concludes that healthy consumers may see their insurance rates double, or even triple, when they apply for coverage through an exchange.

An analysis by the Advisory Board Company concludes that consumers in many areas will not see the benefits of increased competition in the marketplace. Instead, says the report, the exchanges will have a lack of choices. The article quotes Linda Blumberg of the Urban Institute, who says that once the exchanges are launched, there still will be “states with virtual [insurance] monopolies.”