Kentucky Hospitals Say They Will Lose $1 Billion Due to State’s Obamacare Exchange

Please disregard the coding error in that first link...there is no space between the 'u' and 'r,' so I have no idea what's going on. This happened to me earlier today, too. I tried copying and pasting the proper syntax from within and it's still messed up. Go figure.

First off, I get it--Breitbart is NOT an unbiased news source by any stretch, but if you flat out disregard the information because of the source, then you're already committing a logical fallacy. Please just read the comments and links and see the information for what it is and disregard the source.

From the Breitbart[/u rl] link (bold emphasis theirs):

Hospitals in Kentucky are hemorrhaging money and laying off staff, all thanks to the KYNECT Affordable Care Act state health care exchange, according to a report from the Kentucky Hospital Association.

Those losses will only get worse over the coming years, the hospitals say.

Democratic Governor Steve Beshear established KYNECT as a state-run Obamacare health exchange [url=http://kyhealthnews.blogspot.com/2014/07/beshear-issues-executive-order-funding.html]via executive order in 2013, over the vigorous objections of Republicans in the state legislature.

Last month the Kentucky Hospital Association released a stinging indictment of the financial calamity KYNECT has imposed on them in a report titled “Code Blue,” which concluded in bold print: “The bottom line: Kentucky hospitals will have higher losses and lower operating margins due to the ACA [and KYNECT], with a projected net loss of $1 billion from 2014 to 2020.” That finding was based on “an independent analysis of the ACA’s impact on Kentucky hospitals” conducted by the Dobson/DaVanzo consulting firm.
..........
The implementation of Obamacare and KYNECT in Kentucky is a case study in the unintended consequences of “well intentioned” governmental programs.

“The intent of the ACA was that the cuts would be offset, for the most part, by health care payments from people who had previously been uninsured. The original estimates by the Congressional Budget Office projected that half of the newly insured would be covered by private insurance and the other half by expanded Medicaid,” the report states.

“That has not been the case in Kentucky, however..."

And now from the actual report released by the Kentucky Hospital Association entitled "Code Blue: Many Kentucky Hospitals Struggling Financially Due to Health System Changes:"

Kentucky has emerged as a national leader in expanding health coverage through the implementation of the Affordable Care Act. The creation of Kynect, the online marketplace where consumers can buy health insurance, and the expansion of Medicaid eligibility permitted by the health reform law have resulted in more than 400,000 Kentuckians being enrolled in new health coverage. Under the strong leadership of Governor Steve Beshear, Kentucky became the only state in the southeastern United States to expand Medicaid and create a state-based health exchange. And while the rollout of the federal health exchange was plagued by technical problems and frustrating delays, the smooth operation of Kynect, overseen by Cabinet for Health and Family Services Secretary Audrey Haynes, is viewed as a national model.

An August 2014 Gallup report found the state had reduced the number of uninsured Kentuckians from 20.4% of the population in 2013 to 11.9% by mid-2014. That reduction is larger than any other state except Arkansas. This is good news for those Kentuckians who previously had no health coverage and an important step toward creating a healthier state.

While Kentuckians should be proud of this achievement, it is also important to understand another part of the story: The government’s success in expanding health coverage has come at a significant cost to Kentucky hospitals.

Many hospitals in the Commonwealth are now operating under severe financial stress due to major changes in the health system. These financial pressures, which include payment cuts to Kentucky hospitals projected to reach nearly $7 billion through 2024, have resulted in hospital staff layoffs and threaten to reduce the availability of hospital care, especially in rural areas. As a result, the value of expanded health coverage could be seriously compromised if some hospitals are forced to reduce services due to these financial pressures—jeopardizing the quality of care and requiring patients to travel outside of their home communities to obtain needed services.

Now, while I have my own philosophical reasons for disliking what the Affordable Care Act does to our healthcare and health-insurance industries, what this is doing to my commonwealth is not a good thing. Sure, there appears to be a dramatic decrease in those covered by health insurance (wait, wasn't this going to magically make that number 0%?), but at what cost? If we continue to drain our healthcare industry dry of their fiscal resources, you get what you apparently have here--reductions in work forces and access to care.

Now, it's forecasted in this "white paper" (I hate that term...sounds stupid) that this trend is going to continue. So I ask you all, what is the real goal here? We have a system that obviously isn't supporting itself (which was a major concern when it was a bill), and in doing so, is reducing jobs, types of healthcare available, and fiscally crippling hospitals.

Where is the healthcare utopia that Obama promised? And where is my dad's doctor he was told that he could keep? Where are my decreasing premiums? And soon, it appears that I will be asking where is the access to hospital care for our rural Kentuckians? Aren't they the types of people who this law was supposed to help the most?

Let's discuss.

a reply to: SlapMonkey

The reason should be obvious by now.

Obamacare wants to drive low income earners into private healthcare-which would raise tax revenue at the expense of those on lower wages.

Welcome to the Medicinal-Industrial complex people.

a reply to: SlapMonkey

www.kentucky.com...

Yes lets look at it from a less biased source.

Slowing down spending on hospital care is one of the best things we can do for the economy and our health. The United States spends the highest percentage of its GDP on health care of any country but gets worse outcomes. Even by U.S. standards, Kentuckians overutilize hospital care.

Read more here: www.kentucky.com...=cpy

There is more to this story then they are just losing money because Obamacare.
Seems they are they have a history of doing unnecessary procedures as well.

Getting too much or the wrong kind of care can be hazardous. Just ask the patients who underwent thousands of unnecessary heart procedures until the feds blew the whistle on St. Joseph-London last year.

Read more here: www.kentucky.com...=cpy

And the best part about this is all is the money they are complaining about losing is going to be from the gov...

So they are made they have to get off big gubments tit.
Pretty ironic if you ask me

The projected $1 billion loss by 2020 is predicated on reductions in federal payments for uncompensated care as more people gain insurance and become paying patients. The payment reductions have twice been delayed and may be delayed again, though, as we said, slowing down hospital spending would be a good thing.

Read more here: www.kentucky.com...=cpy

a reply to: SlapMonkey

Its all a means to an end.

Hegelian Dialectic

Cloward-Piven strategy

a reply to: SlapMonkey

This stupid mess will never be fixed until we stop catering to the insurance companies like they are NECESSARY for the health care industry to thrive. Once we stop doing that, watch health care costs plummet back to respectable levels overnight.

a reply to: SlapMonkey I am wondering if it is because hispitals must charge reasonable prices for things now. Like they can't charge $74 for a tiny plastic cup and 2 aspiran. Medicaid would already pay out on a set rate schedule..now all insurances do. Maybe the hospitals have to get better materials vendors and cut costs to operate. Not necessarlly lay off staff, but buy suplies at a reasonable rate rather from, say, a board member's brothers company that is turning massive profits.

a reply to: Krazysh0t

I agree with this 100%.

Our society went from paying cash for medical procedures, to buying their own insurance, to employers offering insurance as a benefit to working for them, to employers and individuals having to provide/buy insurance or they get penalized...err, sorry...taxed.

We need to get back to paying cash, and if people can't do that, then local municipalities need to hold some sort of voluntary donation drive in order to help in the costs. I know it's not that simple, but it sure as hell could be pretty close to being that simple.

originally posted by: reldra
a reply to: SlapMonkey I am wondering if it is because hispitals must charge reasonable prices for things now. Like they can't charge $74 for a tiny plastic cup and 2 aspiran. Medicaid would already pay out on a set rate schedule..now all insurances do. Maybe the hospitals have to get better materials vendors and cut costs to operate. Not necessarlly lay off staff, but buy suplies at a reasonable rate rather from, say, a board member's brothers company that is turning massive profits.

I think you don't have your hand on the "why" behind those costs.

Take a movie theater, for instance. Yes, to the lay person who has zero knowledge about how movie theaters run, it would seem like the movie theaters hold people hostage with their snack/drink prices. I mean, $5 for a bottle of water? Come on!

But the reality is, at least when I worked at one, the movie theaters make nothing (or next to nothing) on the ticket sales for movies--all of that revenue goes back to the movie studios. So, in order to be able to afford to keep operating and provide a service (movies projected on a large screen with great sound and seating), they must price the things from which they do make revenue at a price that keeps the business afloat. Therefore, you get $5 waters and popcorn.

Hospitals are often in the same boat--it truly can be described as an epidemic how many people are incapable of or refusing to pay their medical bills. With that being a reality, you must consider that hospitals still have to afford to stay in business, so they have to raise the cost of things in order to compensate for the loss of revenue--I call it 'theft of medical services'--in order to make ends meet. A better analogy may have been how a store increases the cost of something if there is perpetual theft happening--I'm too lazy to re-type all of that, though.

While I agree that the average doctor could possibly take a pay cut, I'd prefer my money paid to hospitals goes more toward good compensation to the people whose hands my life could possibly be placed that to pay for those who can't afford the services that they seek.

But our current system doesn't allow for a much different way to deal with it, and couple in there that insurance companies (to include the government) don't pay the actual costs of service, these lost dollars in revenue must be recouped somehow, somewhere. And the ACA isn't making this predicament any better, at least from what I can tell.

Just another way to look at it.

a reply to: SlapMonkey

To get a reality look at how bad things have gotten, look at the price of medication in the US then compare it to the price in Canada.

a reply to: Sremmos80

I must ask...did you read the actual report from the Kentucky Hospital Board, or did you just knee-jerk react to seeing the word "Breitbart" and immediately search for a counter article?

This is why I posted the original white paper, so that we could all read it and come to our own conclusions, not just cite an Obamacare- or Republican-bashing article and take it as fact.

We all know that hospitals do unnecessary procedures and do some shady things, but citing one hospital does not indicate all hospitals do that in KY. Same goes for the few noting record bottom lines (which still don't mean that they were good bottom lines). Sure, slowing down on spending for hospital care would be a good thing for individuals, but you do that by bettering your own health, not by refusing to pay for care or firing people to lower hospital costs.

I'll give you this...your source was less biased, but certainly not unbiased in the other direction. And you're side-stepping one of the main points: This legislation was claimed to be some miraculous thing for healthcare and individuals alike. Reality is reflecting a different image.

originally posted by: Krazysh0t
a reply to: SlapMonkey

To get a reality look at how bad things have gotten, look at the price of medication in the US then compare it to the price in Canada.

In general, Americans are subsidizing other countries because they have price limits on what the drugs can cost.

That's another reason that their nationalized healthcare systems work relatively well.

If America did that, the drug companies would go out of business, and since we create and produce most of the new drugs on the market, that would be disastrous.

It's not about "how bad things have gotten," it's about why it is what it is. This scenario is by no means the only reason, but it's a really, really big reason behind it.

a reply to: SlapMonkey

There is DEFINITELY a cost being factored in there because of insurance though. Medication may be more expensive than in Canada without insurance, but it certainly wouldn't be nearly as high as it is now.

a reply to: SlapMonkey

Yes I read it, and it says the same thing.

It is all about how things are not being covered the same and that they are receiving less from the gov.

Care to use the report to counter what the link I showed said?

The ACA is cutting into profits, that is the basis of the report.

originally posted by: Krazysh0t
a reply to: SlapMonkey

There is DEFINITELY a cost being factored in there because of insurance though. Medication may be more expensive than in Canada without insurance, but it certainly wouldn't be nearly as high as it is now.

I agree--everything that goes through an insurance company has additional costs tacked on to pay for all of the administrative BS that comes with using insurance companies. But I would argue that the cost of using insurance is not the main driver.

a reply to: SlapMonkey

Unfortunately, you are wrong.

The Reason Health Care Is So Expensive: Insurance Companies

But the thing that few people talk about, and that no serious policy proposal attempts to fix—the arrangement that accounts for much of the difference between health spending in the U.S. and other places—is the enormous administrative overhead costs that come from lodging health-care reimbursement in the hands of insurance companies that have no incentive to perform their role efficiently as payment intermediaries.

More than 20 years ago, two Harvard professors published an article in the prestigious New England Journal of Medicine showing that health-care administration cost somewhere between 19 percent and 24 percent of total spending on health care and that this administrative burden helped explain why health care costs so much in the U.S. compared, for instance, with Canada or the United Kingdom. An update of that analysis more than a decade later, after the diffusion of managed care and the widespread adoption of computerization, found that administration constituted some 30 percent of U.S. health-care costs and that the share of the health-care labor force comprising administrative (as opposed to care delivery) workers had grown 50 percent to constitute more than one of every four health-sector employees.

This article was written in 2013, do you think things have changed in the last two years?

a reply to: Sremmos80

So as often happens, the same data gets used to arrive at differing interpretations--it gets very frustrating.

The ACA mandated that insurance companies cover more people at (supposedly) lower costs, not taking into account pre-existing conditions or letting the cost of the insurance coverage be determined by the health history of the individual (that right there tells you that the math will not work). Also, it basically forced an expansion of Medicaid--coverage that *gasp* is supposed to be paid by the government.

So, with 75% of KY's newest insured individuals latching on to the Medicaid teat, that is nearly 310,000 individuals now going to hospitals, and the hospitals must await payment by the federal government to compensate for the upfront care given to these people.

In the small town I used to live, a new eye center opened up by some local eye doctors. They took in Medicare patients (I know it's not the same as Medicaid, but same single-payer source of funds), and it took them over a year to receive their first compensation from the government for these patients. That was a struggle for them, but luckily they were able to persevere until those payments came in. They still have issues getting compensation from the government, and they're 4 years into being in business now.

I can't imagine that it's any smoother for hospitals to get compensation that they earned through their services, and the fact that (A) the government doesn't pay full cost of services and (B) often takes what seems like an eternity to compensate for the services, is it no wonder that government compensation is what's causing these types of issues.

Couple that with the fact that they pushed out a bunch of lump-sum money to make expanding Medicaid enticing, but when that money is gone, the states will be left wondering how to replace that funding--it's not like they can just yank the coverage away from these 310,000, as that would be a PR (and, frankly, a humanitarian) disaster. So now they're stuck, because the governor decided to run with this expansion. It's not the hospitals' fault, but they're the ones getting fiscally blasted by the results of these decisions.

And this is just one of the many issues brought up in this white paper about how the government is causing problems. I'll let their list speak for itself:

The Affordable Care Act (ACA), the federal health reform law enacted in March 2010, was intended to slow the growth in health care spending and expand health coverage to the uninsured with a variety of reforms. These reforms include:

- Important changes in rules relating to private health insurance, such as eliminating limits on preexisting conditions and lifetime coverage caps and prohibiting health premiums from being based on a patient’s health condition

- Allowing individuals to buy health insurance from online health insurance exchanges (Kentucky’s is known as Kynect) and providing financial subsidies to help buy coverage for those whose incomes are below 400% of the poverty level ($79,160 for a family of three)

- Expanding Medicaid coverage (the federal/state health coverage program for low-income citizens) to people with income up to 138% of the poverty level ($27,310 for a family of three)

As noted earlier, the implementation of these reforms in Kentucky has resulted in 413,000 additional Kentuckians being signed up for health coverage as of April 21, 2014, with approximately 75% (330,615) enrolled in Medicaid and 25% (82,795) buying private coverage through Kynect.

While the ACA has reduced the number of uninsured Kentuckians by approximately 50%, it also imposes significant cuts in Medicare and Medicaid payments to hospitals to help pay for expanded coverage. The fifteen year (2010-2024) reduction in payments to Kentucky hospitals due to the ACA is estimated at $4.6 billion. These payment cuts take many forms.

Medicare Rates Below Inflation: Both Medicaid and Medicare pay hospitals less than the actual cost of delivering care. (Medicare pays 86% and Medicaid pays 82% of the actual cost of treating patients covered under these programs.) Medicare’s annual rate updates had not kept up with inflation prior to passage of the ACA, and beginning in 2010, the ACA further reduced annual rate updates.

Readmission Penalties: Beginning in 2012, hospitals that readmit patients within 30 days of discharge at higher-than-expected rates for any reason (even if the readmission was not preventable or did not relate to the patient’s original hospital stay) have had all of their Medicare payments reduced. This penalty increased each year, reaching a 3% level in 2014 where it will remain. Studies have shown that hospitals in states with high rates of poverty and chronic disease—factors that are beyond the control of hospitals—have higher rates of readmissions and are therefore unfairly penalized.

Hospital-Acquired Conditions: Beginning this year, one-fourth of all hospitals in the United States will have all Medicare payments cut if their rates of hospital-acquired conditions increase—even if the rate of occurrence is small.

Cuts in Payments for Uncompensated Care: Both the Medicare and Medicaid programs provide special payments to hospitals to help offset the cost of treating patients who are uninsured or are covered by Medicaid (since Medicaid payments only cover about 82% of a hospital’s cost). These payments, known as disproportionate share hospital (DSH) payments, will be significantly reduced under the ACA, despite the fact that the payment shortfall from Medicaid will rise due to the Medicaid expansion, approximately 12% of Kentuckians remain uninsured, and hospitals will continue to incur costs for uncompensated care expenses. Medicare DSH payment reductions started in 2013 with a 16% reduction, and these cuts are expected to increase. The start of Medicaid DSH cuts has been delayed until 2017, when total payments will be reduced by 26%, followed by further reductions until payments are cut by 50% in 2019.

So, yes, I totally get that the government is the problem in this equation. But it's not just about receiving less, it's about being forced to do more with less. It's the "forced" aspect of this that stinks to high heaven, and it's the government doing the forcing. How you, or anyone else, can sit there with this information in front of you and pretend like what is happening is a good thing is beyond me. I don't know if it's an issue with reading comprehension, constructive thinking, willful ignorance, adherence to ideology, two or three of the four, or a bit of all combined, but it just amazes me that simple economic math doesn't tell you that the ACA spells disaster for everyone at some point--it just seems to be hitting Kentucky a bit sooner than others, I suppose.

This is what happens when you embrace Big Government, IMO--its face value never reflects the true return on investment.

a reply to: Krazysh0t

That quote from the link discusses the whole of healthcare costs...my comment was specifically about prescription costs: The cost of the drugs.

But we can just be happy to agree that health insurance is a scam for healthy people.

a reply to: SlapMonkey

Yea, I'm happy to settle on that agreement. It's pretty clear we both are getting to similar conclusions anyways.

BTW, I work in the pharmaceutical industry. While I am an IT specialist, I still have to be familiar with FDA regulations (and EMA regulations since my company sells pharmaceuticals in Europe as well). So I am aware of the costs of development and why the FDA lets patent holders keep the price on drugs high while the patent hasn't expired. So I wasn't necessarily trying to suggest that insurance is the only driver of high medication costs either.

originally posted by: SlapMonkey
It's not the hospitals' fault, but they're the ones getting fiscally blasted by the results of these decisions.

I'm in this industry and can give a short explanation, that anyone here can research to confirm.

Kentucky is filled to the brim with Disproportionate Share Hospitals (DSH) that serve low income people without health insurance coverage and had structured their long-term "business plans", services offered and profit margins, solely on guaranteed medicare and Medicaid reimbursements. Under Obamacare those reimbursed amounts were significantly reduced, so these hospitals can no longer "Profit" off of government subsidy. They need to restructure their business based on "insured patients" now, but are staffed by administrators, boards and executive management that have little experience in catering to those kinds of customers. These hospitals have no one to blame but themselves and will end up selling to foreign Indian, Chinese or Korean investors that know how to restructure these hospitals business plans based on servicing insured customers.

These hospitals assumed Obamacare would be repealed and lost that bet, so now they do not have the time or the funds needed to create a real business plan that does not rely on government subsidy and low income patients. PREPARED health systems with sustainable business plans and good credit, are buying this DSH hospitals for pennies on the dollar right now because the acute care license is valuable and difficult to get started from scratch when building a new hospital.

Oh poor hospital only making 10 billion instead of 11 billion. Not much to give up so a child can get healthcare and people with existing conditions can get covered. It's a good thing, you can spin it anyway you want, the people see and know. Let me know when that hospital closes its doors because of ACA cause it ain't gonna happen.