Obamacare

Health Law Produces Hospital Savings, But Startup Costs Run Far Higher

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Whitehouse.gov

The Department of Health and Human Services issued a press release yesterday noting that uncompensated care costs—expenses related to treating uninsured individuals, mostly in hospital emergency rooms—for hospitals are expected to drop about $5.7 billion this year as a result of expanded health coverage under the law. The bulk of the reduction, about 74 percent, is expected to occur in states that chose to Obamacare's option to expand Medicaid. 

That's not nothing, but those supposed savings come at a significant cost. According to a Bloomberg Government report released Wednesday, the startup costs associated with the law and an associated health technology program are much higher than projected by the Congressional Budget Office (CBO) or talked about publicly. The startup tab for Obamacare and a related program to spur electronic health records is over $73 billion so far, according to the report, an amount "substantially greater than what the Congressional Budget Office (CBO) initially estimated health reform would cost by this point," the report notes. A little more than $2 billion went to fund the creation of the federal health exchange. 

Most of the spending accounted for in the Bloomberg Government report is not related to health insurance subsidies under the law. But the money that goes to fund expanded coverage, both for exhange based private plans and Medicaid, is expected to grow substantially over the next several years. Earlier this year, the CBO projected that the federal government would spend about $47 billion on private insurance subsidies, and about $41 billion on Medicaid coverage under the law, next year. That's how much it costs to fund the coverage that HHS is saying is responsible for the $5.7 billion drop in uncompensated care spending. Now, obviously there are a variety of other components of the law, including various taxes and hoped-for Medicare cuts intended to offset the spending on coverage. But the isolated comparison suggests that expanding coverage is not a very effective way to reduce uncompensated care spending. If all we'd wanted was to plug that hole, we could have done so for a lot less. 

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  1. You can play hide the pea all you want, but the pea is still there.

  2. The startup tab for Obamacare … is over $73 billion so far, according to the report

    That’s $227 from every man, woman, and child in the US — so far.

  3. Obama; “ROI? We don’t need no stinkin’ ROI – we are the government…well at least I am”

  4. “uncompensated care costs?expenses related to treating uninsured individuals, mostly in hospital emergency rooms?for hospitals are expected to drop about $5.7 billion this year as a result of expanded health coverage under the law.”

    How does this count as savings? These people still went to the hospital and still got treatment. The treatment just got paid for out of Medicaid instead of out of the Medicare differential payment program and/or by the hospital. Moving a cost from one ledger column to another isn’t a savings- it’s accounting.

    1. Ding. Ding. We have a winner. And let’s not overlook the weasel wording:

      are expected to drop about $5.7 billion

    2. To be fair, moving treatment from ERs to more planned, relaxed modes of treatment does save money. It’s not just moving stuff around in a ledger, ER treatment really does cost more than the alternative.

      1. If you were totally uninsured (to the point of getting treated only at the ER) and recently signed up for medicaid, you’re obviously going to visit the hospital more than once year. You’re now eligible to receive more free stuff for the rest of your life.

        The ACA fans uses similar logic to tout preventative treatments of ACA as a way to control healthcare cost. They’ll reasons that you can detect cancer early you could get free testing. But if every single American got cancer test once or twice a year, the cost will skyrocket and hospitals wouldn’t be able to function. They ignore the larger cost that makes the short term saving theoretically possible.

  5. are expected to drop about $5.7 billion this year as a result of expanded health coverage under the law.

    *drums fingers on table*

    So, Bob, you say if I invest in this scheme of yours, I’m guaranteed a 900% return…

  6. That’s not nothing…

    Yes it is nothing!

    The supposed cost of treating the uninsured in emergency rooms was one of the key excuses for the disaster of Obamacare. But that cost is in the noise: that cost has always been in the noise.

    Using it as a reason to overhaul an entire health care system is beyond stupid, and the lunacy of this thinking should be called out at every opportunity.

  7. Rack it up dude, lets hit it.

    http://www.Crypt-Tools.tk

  8. Here comes Suderman to put lipstick on the Obamacare pig again.

    uncompensated care costs?expenses related to treating uninsured individuals, mostly in hospital emergency rooms?for hospitals are expected to drop about $5.7 billion this year as a result of expanded health coverage under the law. The bulk of the reduction, about 74 percent, is expected to occur in states that chose to Obamacare’s option to expand Medicaid.

    Going by the Obama administration’s past performance, we can expect that the reality is going to be much worse than they publicly “expected”.

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