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The "Obamacare" Fallout: The Real Problem With Medicaid Expansion And The Affordable Care Act

Updated on June 30, 2012

The Coming Storm

With the recent Supreme Court ruling on the Affordable Care Act (or "Obamacare" as is has come to be known), there is a storm brewing on the horizon of the healthcare landscape in America. In this article, we'll discuss what the real problems are, and why so many people are focused on the wrong things.

**Before We Begin**

This is a non-partisan article. The arguments put forth here are based soley on facts and logic, not on political ideology. If you are looking for partisan commentary, either for or against the Affordable Care Act, then I would suggest you check out the forums, as there are plenty of great discussions there.

Where The President Went Wrong

I will be the first to admit, there is a need for healthcare reform in this country, there can be no doubt of it. Far too many people do not have access to affordable healthcare, and of the uninsured, the majority are children and the poor, the people who arguably need it the most. With all of this being said however, the President and Congress are misguided in thinking that, dealing with the Insurance Industry is going to solve anything.

Telling people you're going to tackle healthcare reform in this country by reforming the Insurance Industry is like (to borrow one of my favorite lines from Aaron Sorkin) "running for President of the Walt Disney Corporation by saying you're going to fix the rides at EPCOT". Forcing people to buy insurance, expanding Medicade, and requiring businesses to provide coverage for their employees is all well and good in theory, but it ignores the most critical aspect of the whole issue... insurance companies don't treat people, doctors do.

President Obama

Doctors Will Stop Taking Medicaid

When I was in college, I worked part time in the business office of a local medical practice. I processed payments, did most of the non-medical paperwork for the doctors there, and also helped out answering the phones and setting appointments when the nurses were busy.

One of the biggest questions I would get from people on the phones was "do you accept Medicaid patients?", which we did not. When I asked the doctor who actually owned the practice why he didn't take Medicaid, he told me that he used to, when he first opened, but that the low payments and unreliability of the program made him decide to quit dealing with it.

With the expansion of Medicaid in the Affordable Care Act, you can expect more and more doctors to follow his lead and simply stop accepting Medicaid patients. You see, the problem is, Medicaid pays less (much less in most cases) than other insurance providers, which means that doctors don't get paid as much for treatments and procedures for these patients. Medicaid also doesn't cover things like "missed appointment" and "cancellation" fees, two things that nearly every doctor in the country uses to maximize productivity.

Healthcare Costs Will Go Up For Everyone

As a side effect of the expansion of Medicaid, we can expect insurance costs, and health care costs in general, to go up for everybody. As I explained above, Medicaid pays substantially less than other insurance providers. The national average, at the moment, is 72% of the Medicare rate (which itself is substantially lower than commercial providers). This means that a procedure that a doctor would be paid $1,000 for from Medicare, would only pay $720 from Medicaid. So who pays that extra $280 dollars? I think you already know the answer to that one.

Doctors do make a lot of money, that is a fact, but they also have a great deal of overhead. An office, staff, utilities, and let's not forget Malpractice Insurance. That is to say nothing of the initial cost of becoming a doctor in the first place. According to the Association of American Medical Colleges, the average debt at graduation for a new doctor was $160,000. So to expect doctors to simply accept the loss in revenue for dealing with Medicaid is just plain unrealistic.

In any business, when your overhead increases, you either cut costs or raise prices. Since most of a doctors costs are fixed (rent, utilities, equipment, staff, insurance, etc.), there really isn't a whole lot of room for cutting back on expenses. This means that the only option is to raise prices. This will result in doctors working with fewer Insurance companies. Since most insurance companies contract with doctors in advance to establish fixed costs, doctors will simply choose to operate with "premium" insurance providers and cash customers exclusively.

Before You Comment

Aside from the general "keep it clean, or if you cant, at least keep it clever" warning I post on all of my articles, I'm adding the following admonition: confine your comments to the topic at hand. If you want to rant on politics in general, take it to the forums; this article is about Medicaid and Insurance Coverage as it relates to the Affordable Care Act, so keep that in mind before you comment.


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    • Friendlyword profile image

      Friendlyword 5 years ago from

      Healthcare Costs Will Go Up For Everyone: I'm not sure that's the case. I too worked in a medical office and in hospitals. Doctors did not want to accept medicaid, with medicare they could at least charge a co-payment. What will change is the sheer volume of patience doctor will now get. I think the volume will make up for the low claim payments. Let's see what happens.

    • Billy Hicks profile image

      Billy Hicks 5 years ago

      @Friendlyword, the higher volume will only serve to exacerbate the problem I'm afraid. As I'm sure you know, it's already difficult to find primary care doctors that accept medicaid, and the ACA did nothing to incentivize doctors to start. If they would, at the very least, make the pay structure something more comparable to Medicare, then perhaps. That would, of course, drastically increase the costs.

    • profile image

      Ghost32 5 years ago

      If Obamacare stands through 2014, healthcare costs will go up for my wife & me--because of the individual mandate, with which we will not comply. Hence, tax penalty, i.e. increased cost.

      We do not carry insurance but do negotiate with her healthcare providers (I use none), resulting in discounted fees for most office visits and a bit of savings on prescriptions (she needs many). Those costs, cash and carry, MAY go up as the fees charged to insured patients go up; we'll see.

      Overall, there's no doubt whatsoever that you have the right of it: Obamacare in full flower, should it reach that stage, will be expensive.

      Voted Up and Useful.

    • lovemychris profile image

      Yes Dear 5 years ago from Cape Cod, USA

      Ummm, I have Romneycare, and I missed a premuim payment once....was not fined, did not go to jail, was not contacted by the FBI.

      I paid the premium when I could, and re-applied.

      Scare-mongering is so ridiculous! I'm not "forced" to go to the doctor, only the kids are...for school shots. But it's there if I need it, thank god. And thanks to gvr Patrick, Romneycare now covers 2 teeth cleanings a year, and fillings.

      Healthcare is a right we all should demand for paying taxes! Along with homes, heat, food and education for all.

      It's amazing to me that people would rather pay into a CEO's pocket!!

    • Billy Hicks profile image

      Billy Hicks 5 years ago

      @Ghost32 Thanks for stopping by, I'm glad you liked the article. It's all going to fall back to "supply and demand"; a larger number of patients seeing a smaller number of doctors. We'll have to wait and see.

    • Billy Hicks profile image

      Billy Hicks 5 years ago

      @lovemychris Thanks for stopping by.

      First, I think you may have been reading a different article and then accidentally commented on this one, as, at no point in my article did I mention anything about people "going to jail" or being "contacted by the FBI".

      I honestly have no idea what your point is with this comment, as it really doesn't pertain to anything I wrote about in this article. Perhaps you had a point, and it just simply got sacrificed for the sake of brevity. If that is case, believe me, I understand.

      If you, however, feel that I've "missed the mark" with my article, then I invite you to create a Hub of your own, sort of a "Point/Counterpoint". I would be more than happy to add a link to it on this Hub, giving readers both sides of the argument, as it were.

    • lovemychris profile image

      Yes Dear 5 years ago from Cape Cod, USA

      Sorry Billy---wrong hub!

    • Billy Hicks profile image

      Billy Hicks 5 years ago

      @lovemychris Not a problem, I've done that before. =)

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