Plenty of unknown financial challenges await Carolinas HealthCare System with the rollout of health reform provisions next year. What's not uncertain is whether more of Carolinas' patients will have high-deductible insurance plans with cost-sharing provisions they often cannot afford.
Since 2008, the system has seen a steady increase in its bad debt because of patients unable to pay their deductibles and copayments, says Michael Tarwater, CEO of the Charlotte, N.C.-based system. Such payments account for a full percentage-point increase in the 11% share of Carolinas' budget attributed to uncompensated care and cash payments during the past 12 months. “We haven't seen it flatten out,” Tarwater says.
Hospital executives are watching to see whether the net financial gains from next year's coverage expansion under the Patient Protection and Affordable Care Act surpass losses from the law's looming reimbursement cuts. They have focused their fears on an expected surge in high-deductible health plans next year, worrying that any wide availability of such plans through the health insurance exchanges set to begin enrollment in October in every state will mirror what has been a surging trend among employers.
The exchanges allow a sliding scale of benefits and cost-sharing by their plans. The plans will range from the least comprehensive and cheapest “bronze plans” to the most comprehensive and costliest, categorized as “platinum plans.” Income-based subsidies will be available to help cover premiums, deductibles and copays on a sliding scale for individuals and families earning up to 400% of the federal poverty level. Premiums are generally lower for high-deductible plans, which are typically paired with health savings accounts.
According to the Kaiser Family Foundation, bronze level coverage will have much higher cost-sharing than typical employer-based coverage. With a standard 20% co-insurance requirement, a bronze plan would have an estimated deductible of $4,375 for an individual and double that for a family. By comparison, single deductibles averaged $675 in employer-sponsored PPOs in 2011.