Get ready for inevitable chaos in the healthcare industry in January, 2014. Patients are going to show up at a doctor’s office, hospital or other healthcare provider in need of care and be asked to provide proof of insurance. People with Medicare, Medicaid or employer paid insurance cards will have no problem establishing that they have current insurance. Everyone else will have to prove that they have insurance in force and that the provider is included in the insurer’s network. Even if they can do so, they will be asked to pay the deductibles in full or at least to pay up front for the cost of the treatment or procedure.
Millions of individuals are not going to know whether they have an effective insurance policy (whether a new Obamacare approved policy or a previously existing individual policy) in force. If you have enrolled for a Obamacare policy on an exchange, the provider will be at its financial peril to determine whether your policy is in force. Proof that recently applied for Obamacare policies are in force may be difficult to obtain. Because of website deficiencies, you may believe you have enrolled, but haven’t. Only a small percentage of patients will have received a Obamacare exchange insurance card that will in most cases be issued only after the initial premium has been paid. Despite requests from President Obama, insurers may be unwilling to verify that policies are in force, even if they receive notification of a valid exchange website registration, unless they have received payment from the purchaser. Many people, faced with an illness or an injury, will scramble to register on an exchange, or to pay. Insurers will face a problem in calculating the amount of the US government subsidy and the portion of the premium payable by the purchaser of the policy. However, President Obama has offered (based on questionable authority) to advance the subsidies based on estimated amounts (calculated by the insurers) to be finally adjusted at a later date.
Unless the patient has proof of a currently in force individual insurance policy, previous policies that appear in the providers records, may or may not remain in force. The providers will have to attempt to determine the status of the patient’s insurance, on a case by case basis, at the time of service.
Even if the existence of an exchange approved or previously issued individual or employer paid policy is confirmed, deductibles and co-pays become an immediate problem on January 1, 2014. The providers will have to collect the full amount of the deductible and co-pay (if they can determine what they are) in cash or face a collection and bad debt risk. Because deductibles will represent such a large percentage of their fees, providers, except in the case of an emergency, are likely to demand an immediate cash payment for the full cost of the treatment or procedure. Patients who pay cash in an amount which is later determined to be in excess of their deductibles and co-pays may have difficulty recovering such excess amount.
Healthcare providers, who have chosen a profession of providing care to patients, will often elect to take the credit risk and treat the patient in an emergency situation. Because the fees for services are so low under Obamacare exchange issued policies, some healthcare providers will be unable to bear such credit risks and operate profitably. Many providers will elect not to participate in Obamacare networks.
Many patients will be unwilling or unable to pay and will either forego treatment or go to a hospital emergency room that cannot deny treatment. The collection problem will then be transferred to the hospital. Hospitals (or other healthcare providers) may attempt to take advantage of an opportunity resulting from the large Obamacare premium subsidies to attempt to transfer a portion of the payment for the treatments and procedures they perform to the insurance companies and the US Government. They may (if it is determined to be legal for them to do so) attempt to limit their exposure by advancing the Obamacare exchange policy premium for the patient. The US Government would then become responsible for paying the subsidy. The hospital will still remain at risk for the collection of the deductible and co-pays from the patient, but fees in excess of the deductibles and co-pays (which may be large in the event of a serious illness or injury) will become the responsibility of the insurer.