From patients to hospitals, much at stake in Obamacare debate

March 12--You might easily get lost in the numbers when lawmakers in Washington discuss replacing Obamacare subsidies with tax credits and changing the payment structures for Medicaid.

To see more clearly what's at stake in the sometimes mind-numbing debate about whether to overhaul or outright scrap the Affordable Care Act, look around San Diego County.

For example, those federal subsidies covered nearly two-thirds of the premiums that local residents enrolled in Obamacare health exchanges paid last year. That's an average of $440 per month going toward health coverage for each of the more than 106,000 people scattered across the region.

The expansion of the Medicaid program, called Medi-Cal in California, added 264,295 mostly single and low-income San Diegans to the insurance rolls in recent years, according to the state Department of Health Care Services.

These significant jumps in the number of people with insurance coverage spurred substantial investments from health-care providers.

Scripps Health and Sharp HealthCare, for example, each increased its payroll by the equivalent of more than 1,000 employees since 2013, the year before Obamacare's health insurance mandate took effect, according to the health networks' annual financial disclosures. Meanwhile, community clinics have experienced a building boom using millions in federal health grants to open new satellite facilities. They've also tapped that funding to hire hundreds more employees.

Perhaps it is no surprise, then, that the health-care industry is lobbying hard against the GOP leadership's current repeal and replace bill, which would end the Affordable Care Act's requirement to buy health insurance or pay a penalty.

The legislation gained early approvals from several House committees this week and is scheduled to continue its path toward congressional approval with more committee meetings next week. An all-important cost score from the nonpartisan Congressional Budget Office is also expected next week; some see it as a make-or-break moment for the measure, which was introduced Monday.

Mike Murphy and Chris Van Gorder, the chief executives of Sharp and Scripps, respectively, said this week that they know if anything major happens in Washington, D.C., with Obamacare, especially if it involves changes to the subsidies, will have direct impact on their organizations.

If lower federal assistance is coupled with the demise of Obamacare's requirement to buy insurance or pay a penalty, many health-industry experts have predicted the result will be a large drop in the number of insured Americans. That would likely mean cutbacks for hospitals, clinics and other medical providers as well.

"We always staff to patient volume. If volume drops, we will reduce our staffing. We always do, and our employees know that," Van Gorder said.

Murphy said likewise: "If volume changes, then staffing would change accordingly. And I think that would be true in all health-care organizations."

Both executives noted that while cutting Obamacare coverage mandates and subsidies could reduce the ranks of the currently insured, that doesn't mean hospitals would be able to remove certain services from their budgets. Because they are required to treat all comers, a reduction in demand for primary care in doctors' offices could mean an increase in other areas like hospital emergency rooms.

And while the current GOP proposal offers subsidies that are generally less generous than those offered by Obamacare, they don't roll back reductions to Medicare provider fees that are estimated to have cut annual increases to hospitals' expense reimbursement by $260 billion over 10 years.

Murphy said failing to roll back the Medicare adjustment will cost Sharp about $300 million in a decade. Van Gorder didn't specify a number, but said he considers it the biggest issue that hospitals and health networks will have to deal with in the coming months.

"Roughly 60 percent of our revenue, and this is true for most hospitals, comes from government-sponsored programs like Medicare and Medicaid. So that creates a lot of anxiety," Van Gorder said.

The executive said he has really started to feel that anxiety in his daily visits to Scripps facilities.

"This is an anxious time for people. Probably the first question I get asked anywhere I go is, 'What will the impact on Scripps be?'" Van Gorder said.

Murphy said he is urging his staff to keep calm. He stressed that there are not enough details yet to truly believe the GOP leaders' health bill will move forward as currently written. One big issue with the current wording, he noted, is that the tax increases that support Obamacare subsidies would expire at the end of this year, but the subsidies themselves would continue until 2020. That creates a big financial gap, a sign to Murphy said the entire overhaul plan needs significant fleshing out.

"There is a long way from here to regulation," Murphy said. "We're in the beginning of 2017. There is a bill that is not law yet and, just as we adjusted to the ACA, should this become law, then we'll have to make adjustments."

Anxiety is also being felt by people who currently or recently enrolled in an Obamacare plan.

Deborah Lessard of Spring Valley got her insurance from Covered California, the Obamacare health exchange in this state, for three straight years. She just left her 2017 plan this month after turning 65 and qualifying for Medicare coverage.

Lessard said she watched her as her share of premiums increased each year. But every step of the way, she said, her low income qualified her for a significant subsidy from the government. Last year, the government paid $633 of her total monthly premium of $834.

Under the GOP leadership's new proposal, she would receive a subsidy of $4,000 per year, which would break down to $333 per month. That amount would not come close to equaling what she received under Obamacare.

Yet Lessard said she can see both sides of the debate. She never felt completely comfortable with receiving so much taxpayer money for her premiums, but she also appreciated the opportunity to get insurance coverage that she could finally afford.

Also, she was forced to switch insurance carriers this year due to a large price hike from the company whose policy she had bought in previous years. That situation, she said, along with the requirement that she be covered for maternity care and, in the first year, pediatric dental coverage -- two things she clearly didn't need -- left her believing the entire system needed fixing.

"I am conflicted. I was thrilled that Obamacare was helping people, but now I see that there was a price to pay," Lessard said.

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Twitter: @paulsisson

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