Hospitals Begin Subsidizing Exchange Premiums via Third Parties

Hospitals are concerned the carrot of advance premium tax credit subsidies for individual coverage offered in the state health benefit exchange marketplace and the stick of a tax penalty for being medically uninsured may not be enough incentive to ensure every patient coming through their doors is insured. Particularly for households earning between 100 and 150 percent of federal poverty, even though they pay no more than 2 to 4 percent of their incomes for an exchange qualified health plan and are eligible for cost sharing subsidies for plans with 70 percent actuarial value.

Cheryl Clark of Health Leaders Media reports hospitals in Wisconsin and Florida are teaming up with charities to supplement the exchange premium subsidies and have received approval from the federal Health and Human Services Department to do so. Click here for the story.

Apparently the hospitals’ economic calculation is it’s a better deal to get a tax write off to contribute to the charities to help cover premiums for exchange coverage than to run the risk some patients will allow their exchange coverage to lapse. That in turn increases the risk hospitals will have to retain collection agencies to dun patients for charges arising from uninsured care or write them off.

While it’s still early going with the Patient Protection and Affordable Care Act’s individual market reforms, this development shows hospitals — a primary beneficiary of expanding coverage to reduce those lacking health coverage — aren’t completely confident in the law’s ability to achieve this goal. Some observers note that while the Affordable Care Act provides low income people access to health insurance, many have never had coverage and have habitually sought care in hospital emergency rooms where federal law requires their medical condition be assessed and stabilized if necessary regardless of ability to pay for services.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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Frederick Pilot

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