Our Changing Healthcare System

Our Changing Healthcare System

By David N. Gans, MSHA, FACMPE
After many years of stability, the United States healthcare system is undergoing a series of changes that will affect who has health insurance, how doctors are paid, and how physicians relate to hospitals and insurance companies. Some of the changes are the result of healthcare reform while others are due to market forces completely unrelated to the federal legislation.
Physicians and medical group administrators describe the impact of relatively static payment levels and constantly increasing costs. Medical Group Management Association (MGMA) data describe how multispecialty groups have seen total operating costs increased 51.1 percent in the past 10 years, an increase from $325,027 per FTE physician in 2001 to $485,138 in 2010. During this same time period, the consumer price index (CPI) has increased 23.1 percent, less than half the change in operating costs.
The increase in cost would not be a significant crisis if payment had increased at the same rate. Unfortunately, due to federal payment policy, Medicare payments have remained static and have increased only 2.9 percent over the last ten years. The situation of having to overcome higher operating costs without the ability to increase reimbursement levels has caused physicians to enhance productivity. Only with an increase in efficiency can a practice survive.
While the increase in costs and need to manage overhead is driving practice operations, healthcare reform will change the nature of who has insurance and even how practices are paid. The Patient Protection and Affordable Care Act (PPACA) was passed into law on March 23, 2010; however, only a few aspects of the law have taken effect to date. The most important aspects of the law, the mandate that all employers with more than 50 employees must offer health insurance to their full‐time workers and that all residents who do not have a qualifying health insurance plan must purchase insurance or face a tax penalty, come into effect in 2014. The mandate is combined with guaranteed insurance issuance where commercial insurance companies will be prohibited from discriminating against individuals based on pre‐existing medical conditions.
Changes in insurance will have a significant impact on physician practices. If the PPACA remains in force and is not modified either through the pending review by the Supreme Court or by congressional action, 30 million additional Americans will have health insurance in 2014. Medicaid could have as many as 20 million more enrollees, employer purchased commercial insurance should cover over three million more enrollees, and millions of more individuals will purchase individual insurance policies through insurance exchanges