“People in nongroup policies have more trouble paying their medical bills,” said Karen Pollitz, senior fellow at the Kaiser Family Foundation.
“Bad debt is directly tied to the proportion of patients bearing the costs,” said Kevin Weinstein, chief marketing officer at Valence Health, a reimbursement risk-management firm. “Any plan that doesn't cover certain things or shifts certain costs to the individual will have the same effect.”
While many of the new ACA-compliant plans still carry high deductibles, there are cost-sharing subsidies for people with incomes of up to 250% of the federal poverty level that cover most of their out-of-pocket costs. And the new plans offer more comprehensive benefits and generally lower out-of-pocket maximums than the plans being closed out. The law caps annual out-of-pocket payments at $6,350 for individuals and $12,700 for families.
Pollitz said it is unclear how many individual policies will be terminated, but she estimated that about one-third are probably grandfathered and can be renewed because they haven't changed since the healthcare reform law was passed. Since insurers are required to give 90 days notice for plan cancellations, many insurers mailed their termination letters on Sept. 30.
Richard Williams, a managing director at consultancy Protiviti, said having more patients with comprehensive coverage should theoretically improve the bottom line for hospitals. On the other hand, he said, the contribution of the previous, less-comprehensive plans to the bad-debt problem is unclear. For example, the new compliant plans must offer prescription drug coverage. But even the previous plans lacking that benefit paid for medications during a hospital stay. “That's not really a hospital bad-debt situation,” Williams said.
Other features of the new plans clearly will help patients and hospitals with the bad-debt problem, including required maternity-care and mental-health coverage; no annual or lifetime benefit caps; and no coverage exclusions for pre-existing medical conditions.
