More Bad Debt Coming For Those With Employer Health Insurance

April 11th, 2014

As the Affordable Care Act slowly becomes implemented and some of the uncertainty around its dates and deadlines starts to clear up, the healthcare industry is gaining a better understanding of the impact it will have. Specifically, they are starting to see the effect the Act will have on their accounts receivable and their amount of bad debt.

According to the numbers run by Zywave, a software company, and ADP, a payroll company, the Affordable Care Act will increase the amount of bad debt for American workers with insurance provided by their employers. The reasons, as outlined by Evan Albright over at Inside Patient Finance, are as follows:

  • Employers Shifting Costs onto Employees: it is possible that employers see the out-of-pocket maximum mandated by ACA and set that as their targets. If this becomes common, more costs will shift to patients.
  • Young People Choosing to be Uniinsured: as projected by many, workers in the 20-29 age range, also known as the "young invincibles," are opting not to purchase coverage, choosing instead to pay the penalty.

This goes to show what we have known for a while now about ACA: even if more people are covered, the attributes of those plans stand to increase risk for healthcare providers. The combination of the uncertainty with those plans and the fact that younger adults, upon whom the philosophy of ACA largely relies in the first place, are not buying coverage means that bad debt is likely to increase for hospitals and medical centers.

Should hospitals plan ahead? Of course, but there is only so much to do while the implementation of ACA is still in its early stages. So plan ahead, yes, for an increased burden on A/R. Any proactive steps taken to seek out resources and business partners to address potential increases in bad debt will pay off in the long run. Other than that, all anybody can do is wait for additional clarity on how ACA will actually look and what it will mean for patients and healthcare providers.

Link: The Future of Bad Debt: The American Worker With Employer Health Insurance (Inside Patient Finance)