Obamacare causes economic uncertainties

Moody’s Investors Service recently issued a negative outlook for the nation’s not-for-profit hospitals for 2014, citing the likelihood of another round of new Medicare cuts being considered by Congress as part of larger entitlement reform legislation.

Wisconsin hospitals already face a $2.4 billion payment cut that’s “baked into” Obamacare to pay for subsidized low-income coverage via the Insurance Exchange. But due to well-documented snags and bungled implementation, new Insurance Exchange coverage is far less than originally projected.

The current cuts, over 10 years, may be just the tip of the iceberg as Medicare continues to be a target for major attention by Congress.

According to Moody’s analysis, “Hospitals face a challenging landscape over the next 12 to 18 months as patient volumes shrink and Medicare revenue growth slows.” I concur and would add a similar prediction for other components of Wisconsin’s health delivery system, including physician clinics, home health agencies and medical equipment vendors.

The current uncertainty has already had measurable impacts on local economies, including: lower spending on day-to-day hospital operating expenses; a slowdown of new construction and spending on medical technology; and a reduction in the overall health care workforce, especially within community hospitals.

On the positive side, Wisconsin’s health delivery system continues to be a top performer when national quality report cards are published and there has been measurable recent success in slowing down expense growth. This has meant relatively low insurance premium increases for many employers. However, Obamacare implementation threatens that recent track record on many fronts, including new regulatory mandates and taxes on health plans and employers.

My 2014 crystal ball suggests that uncertain times for Wisconsin health care providers will continue. That means historically low spending and employment growth. I also see continued problematic implementation of Obamacare for health plans, employers and providers. That dynamic may also have a widespread impact on many private sector business decisions.

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