Obamacare: Five Revenue Trends You Can Take to the Bank

On Jan. 1, the second wave of Obamacare beneficiaries become eligible for coverage and based on several studies of similar populations, there are trends regarding consumption of healthcare services that healthcare providers can expect in 2014. Here are five:

Patients newly covered by Medicaid will increase their use of medical services.
Patients receiving Medicaid coverage will increase their visits to the emergency room.
Patients covered by Medicaid will use emergency department services more than individuals with private insurance, private pay, or uninsured.
Newly-insured patients will increase use of healthcare services–at first.
Over time patients with private insurance will use healthcare services and emergency rooms less.

Medicaid expansion

Medicaid expansion under the Patient Protection and Affordable Care Act is a mixed bag revenue-wise for healthcare providers. Several recent studies have shown that where Medicaid is expanded, consumption of healthcare services increases.

Over the weekend researchers who have been studying Oregon’s Medicaid expansion by lottery in 2008 released findings that demonstrate that emergency room visits increase among those newly covered by the federal/state program.

(Editor’s note: The study, which can be downloaded here, is available free after registering for the site)

The Oregon study found that visits to the emergency room increased by more than 40 percent, and nearly 100 percent of those increases are for non-emergency conditions. A recent study of California emergency room visits found that Medicaid beneficiaries go to the emergency room more than any other group studied, which included those with private insurance, self-pays, and the uninsured.

An earlier study of the Oregon Medicaid lottery winners found that overall medical debt by beneficiaries was reduced and that stress and depression related to health and healthcare was also lower; however improved health outcomes, such as reduced cases of high blood pressure or diabetes, was not realized.

Health insurance expansion

In the first wave of Obamacare in 2012, young adults under 26 became eligible under their parents’ private insurance plans. As of Jan. 1, all qualified adults in the United States must now obtain health insurance. What can healthcare providers expect with regard to consumption of health services.

The aforementioned California study found that over the years studied, visits to emergency departments declined among those with private insurance.

While this trend reduces stress on overburdened emergency departments, it also means that those most able to pay for emergency services (and all health services for that matter) are not using them.

The future?

While the aforementioned trends will help healthcare providers better plan for the financial impact of Obamacare, there are still many unknowns. Here are three questions that have yet to be answered, but go directly to the bottom line:

Of those who acquire insurance under Obamacare, what will be their propensity to pay outstanding balances? Regardless of whether someone purchased insurance because it is mandatory or because they were unable to find insurance because of a pre-existing condition or because without tax credits it was unaffordable, what we don’t know is how collectable deductibles and co-insurance payments will be and at what cost.

What will be the impact of these newly insured on bad debt. What we know, by all projections, is that bad debt will not decrease, but will it stay same, increase slightly, or increase dramatically?

What impact will the dearth of primary care physicians have upon hospital emergency departments. The California study suggested that one reason Medicaid patients visit emergency rooms more often is because they may have reduced access to a primary care physician. The Oregon studies appear to refute that, indicating that even when Medicaid patients have expanded access to primary care physicians, they still flood emergency rooms for non-emergency treatment.