June 28--Implementation of the healthcare-reform law largely upheld by the U.S. Supreme Court Thursday will be a mixed bag for Kern County, local health officials said after the landmark decision.

"There are wins and losses in it," said Jarrod McNaughton, a vice president at San Joaquin Community Hospital.

On the win side, more insured people equals more payments for the health system and expanded coverage for the county's residents, he said. But it comes at a price: dramatically reduced Disproportionate Share Hospital funding, federal money given to hospitals that take care of a large number of non-paying patients.

While more people will be covered under Medi-Cal, California's version of Medicaid, those reimbursements are often far less than the actual cost of hospital care, he said. And, hospitals will still be required to take care of uninsured residents who come through their emergency rooms -- such as illegal immigrants who won't be covered under reform. Only time will tell if the expanded volume of insured patients will compensate for the projected cuts in Medicare and DSH funds.

"We're not one of the wealthy counties," McNaughton said. "We're very much on the front line of seeing a high proportion of indigent care."

Clinica Sierra Vista CEO Stephen Schilling sounded more optimistic about the change, pointing to the tremendous effect on low-income Kern residents.

"The Affordable Care Act will have a much greater impact in the Central Valley because of the mix of our people -- we have high unemployment and low educational attainment -- and the lack of employer-based insurance here," Schilling said. "The glass is fuller than it was yesterday, and we can fill it up if we're all committed to doing so."

Clinica already is planning for seven new facilties throughout the Central Valley in anticipation of newly insured residents seeking a primary care home.

Schilling acknowledged that attracting additional primary care professionals will require some out-of-the box thinking, such as expanding graduate medical education programs or adding more medical schools.

Jacey Cooper, program director of the Kern Medical Center Health Plan, said she was relieved to hear Thursday's decision, which will allow her to keep implementing the bridge to reform program in Kern.

Cooper has been working with the Medi-Cal expansion aspect, which could provide coverage for 15,000 to 25,000 Kern County residents. As part of the bridge to reform program, the county has already expanded coverage to 6,500 people.

For a county that struggles with high numbers of uninsured individuals, the full transition will eventually mean better care and cost savings, she predicted.

Having more insured local residents is definitely a positive, said Paul Hensler, CEO of Kern Medical Center. And the move toward managed care has already resulted in cost savings, much through reduction in costly emergency department visits.

Still, like McNaughton, he is concerned that the additional Medi-Cal patients might not make up for the slash in DSH funds -- especially in a county like Kern that will continue to have many illegal immigrants who don't qualify for coverage under the changes seeking care.

"But with so many permutations, it's hard to tell now," he said, of the overall financial impact to KMC.

Doctors, too, offered mixed options about the effects of the newly upheld law.

Dr. Michelle Quiogue, president of the Kern County chapter of the California Academy of Family Physicians, said the managed care shift will not only be more cost effective but provide better quality patient care.

But another Bakersfield family medicine physician, Dr. Yakdan Al Qaisi, expressed concern about declining health provider reimbursements. He already doesn't see Medi-Cal patients because the payments don't cover his costs.

Eventually, there could be a more pronounced two-tier system: one for patients with well-paying insurance plans and the rest for government-sponsored ones, he said.

Ultimately, most Kern medical professionals acknowledged the law still requires many changes but will have a clear, positive impact on Kern County patients.

"The Affordable Care Act isn't perfect, but it does give millions of people who were uninsured insurance," said Jon Van Boening, CEO of Bakersfield Memorial Hospital. "If there are flaws, I have confidence that, at the state and federal level, they will make appropriate changes."

IMPACT ON BUSINESS

On the business side, two local employee benefits consultants -- Clay Koerner of Alliance Brokers & Consultants Inc. and Bruce Lynn of The Lynn Co. -- said it's too early to know what the cost impact will be on employers.

Koerner, a vocal opponent of the reform law, said it will increase taxes paid by business and increase their responsibilities. He predicted that some employers will opt out of providing health benefits, sending their employees to insurance exchanges instead.

The law will likely raise healthcare costs as insurance providers begin to offer government-mandated benefits and as people with pre-existing medical conditions enter the system, he said. But he said there's still considerable uncertainty.

"We have no idea how things are going to shake out," Koerner said. "A lot of it depends on the upcoming presidential election."

Lynn offered a different interpretation of the law's potential impacts. He said costs will initially rise as sick people without insurance gain coverage and require attention, but eventually premiums will fall as more people pay into the system.

Either way, Lynn said, people without benefits soon will be able to get them.

"I think that it's a good thing, I guess," he said.

The dean of Cal State Bakersfield's School of Business and Public Administration, John Emery, said the decision will impact different businesses differently but that overall, "I don't think it changes the investment climate."

Emery pointed to potential benefits for employers, saying some may choose not to offer health benefits directly and instead contribute to regional health networks. He said that would add flexibility and could save some businesses money.

In another possible benefit for business, he said, private health insurance premiums are likely to be less reflective of the extra costs hospitals now face when caring for uninsured patients.

"I guess one way to put that," he said, "is that the overcharging or overpricing to people or organizations that have health care coverage already will probably go down."

But Tim Terrio, CEO of Bakersfield'sTerrio Physical Therapy & Fitness Inc., predicted that businesses' share of the nation's healthcare costs will rise as a result of the law.

"I believe the biggest impact will be on small businesses in the form of increased rates of medical insurance, which will lead more small businesses to either hold off on hiring new employees or reduce/eliminate offering medical insurance as a benefit," he wrote in an email.

On the political side, Congressman Kevin McCarthy, R-Bakersfield, said he and his GOP House colleagues will "move forward to fully repeal Obamacare."

"The economy won't be turning around because this healthcare plan harms the economy," he said at a House leadership press conference. "The Congressional Budget Office's own studies have confirmed that this plan risks taking Americans off their current health care plan and it will raise the cost."

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