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The Latent Doctor Shortage: What Do We Do?

November 27th, 2013

Credit: Joe Shlabotnik via Flickr under Creative Commons

Credit: Joe Shlabotnik via Flickr under Creative Commons

This week’s post comes to us from Tony Catalano. Tony  is a contributing writer to the ForHealthInsurance.com blog. He has a BA in Creative Writing and a BS in Contemporary Music Studies from SUNY New Paltz. Tony is a  New York native, and works as a freelance writer and musician.

Not only will our population continue to increase over the coming years, but baby boomers, a huge generation, are getting older. Getting older means they are going to need more healthcare. Additionally, as the Affordable Care Act (ACA) mandates everyone to have insurance, that means about 30 million uninsured will be (presumably) entering the insurance market. The problem is a projected shortage of doctors, to the tune of 45,000 less primary care physicians and 46,000 less surgeons than will be needed in the next decade. This is a fundamental problem of supply and demand.

The problem is further compounded by the fact that many doctors are not accepting new Medicaid or Medicare patients. For states that have chosen to accept the Medicaid expansion of the ACA, this could be problematic. More people than ever will be eligible for Medicaid, but this does not make doctors any more likely to accept those patients. Furthermore, due to lower reimbursement from plans sold on the exchanges, many doctors are not accepting patients with exchange plans. For people who have gotten coverage because of the ACA, there is still the issue of actually finding a physician.

So, is the ACA doomed? We will take a brief look at what might happen in the case of a doctor shortage, as well as some proposed solutions.

What Could A Shortage Entail?

The picture of a physician shortage isn’t hard to imagine. We are all used to waiting two weeks for an appointment, but naturally a shortage would entail even longer waits. It is likely that more physicians will simply decide to stop accepting new patients. Another side-effect of the shortage is that as doctors accept less new patients, people may opt for the emergency room, taxing ER doctors with more work.

Potential Solution: Lift Federal Caps On Residencies

The main cause of the shortage is that there is simply a heck of a lot of people entering the insurance markets. However, there is more to it. In 1997, Congress froze the number of residency spots that were federally funded. While medical schools are doing what they can to enroll more people, the case is being made that caps on federally funded residency programs need to be lifted. Quite simply, there are not enough residencies for the amount of prospective doctors out there.

Potential Solution: New Delivery Models

So, the bad news is that there is a shortage of doctors. However, there is projected to be a surplus of both nurses and physicians assistants. The suggestion has been floated that alternative delivery models could provide a massive amount of relief by emphasizing this surplus of medical professionals. Some ideas include health centers managed by nurses or placing a bigger focus on retail clinics. Nurse managed health centers would naturally enough require fewer physicians and make use of the projected surplus of nurses.

A simple idea is to slightly change the division of labor in the doctor’s office. Clerical tasks usually assumed by doctors can be relegated to non-physicians, freeing them up to see more patients.

So, What Will Happen?

Out of all the problems people are finding with the ACA, many are saying that this projected shortage could be the ultimate downfall of the law. There is no denying that this is a pressing issue and it needs to be addressed, or the results won’t be pretty. That being said, it is possible that the aforementioned solutions could collectively assist in alleviating the problem. While there is no way to be sure if they are the answer, what is more pressing is whether or not we will actually look to these potential solutions for relief. Whatever the case, we have to make sure we are actually doing something about it before it is too late.

Risk Corridors: What Are They For?

November 22nd, 2013

Senator Marco Rubio speaking at the 2012 CPAC in Washington, D.C. Credit: Gage Skidmore via Flickr under Creative Commons.

Senator Marco Rubio speaking at the 2012 CPAC in Washington, D.C. Credit: Gage Skidmore via Flickr under Creative Commons.

This week’s post comes to us from Tony Catalano. Tony  is a contributing writer to the ForHealthInsurance.com blog. He has a BA in Creative Writing and a BS in Contemporary Music Studies from SUNY New Paltz. A New York native, Tony currently lives in Milwaukee, working as a freelance writer and musician.

Given the huge restructuring of the American health care system being caused the Affordable Care Act (ACA), many insurance companies have felt uneasy about how they’ll continue to make a profit. More specifically, will their premiums be enough to make up the costs of covering their customers? This concern is why the ACA has a number of taxes and features in place to help eliminate risk and keep insurance companies happy, in turn allowing them to charge consumers a reasonable premium.

One of the biggest risk reducing aspects of the ACA is the provision calling for ‘risk corridors’. One of the recent ACA controversies revolves around Sen. Marco Rubio’s (R-FL) proposal of a bill to eliminate them. What exactly are these risk corridors? Are they a good or bad thing? What would happen if we got rid of them as Rubio thinks we should?

 

How Risk Corridors Work

Price controls and other regulations put in place by the ACA are going to result in many insurance companies covering sick consumers at lower premiums than they would otherwise. This means that insurance companies that end up covering a disproportionately large amount of sick people are going to be hit pretty hard in the wallet. The risk corridors are intended to take care of this issue for plans that are sold on the marketplace.

Basically, just as some companies will be covering many sick people at a loss, some will be covering few sick people at all. Whether or not the company will be operating at a loss depends on how well they can anticipate the amount of unhealthy people they will be covering, which is reflected in the premiums they charge. Those companies who ended up getting notably more money in premiums than they paid out to consumers will have to pay into an HHS fund, and that money will be redistributed to the companies who set their premiums too low. It is important to note that this policy will only be in place until 2016.

 

The Good And The Bad Of Risk Corridors

If the risk corridors work out as intended, the benefit is clear. Those companies who are hurting will be reimbursed, while those who ended up profiting much more won’t have to suffer too much (although they likely aren’t too thrilled about paying into that HHS fund). Without the risk corridors, companies who lost money for charging lower premiums would be forced to make their premiums higher in the future. Furthermore, this reallocation of funds is not projected to cost taxpayers anything.

So, what is the problem with risk corridors? These risk corridors can cost taxpayers. They are not required to be budget neutral. There is a cap on the amount of money that can be taken from companies who are operating better than expected. So, if a given company is operating beyond a certain point of loss, profits are redistributed from a more profitable company up until a point, and the federal government steps in and reimburses the rest to the company losing money.

 

Rubio’s Proposal

That last part is what Rubio fears: The government will end up spending more money than anticipated, in turn operating at a deficit. His expectation is that the cost will be moved on to the taxpayers. However, the reason many are taking issue with Rubio’s proposal is that he intends to repeal the entire risk corridor component of the ACA. To alleviate the problems Rubio finds with the risk corridors, it would simply have to be reworked to be budget neutral.

If the risk corridors were to be repealed, it could create some problems for insurers. Many insurance companies went into the marketplace with the agreement that there would be measures, such as this one, to control risk. Without the risk corridors, it is plausible that companies will lose their motivation to continue offering plans on the exchange.

 

The Future Of Risk Corridors

Given the breadth of Rubio’s proposal, to eliminate the entirety of the risk corridor provision, it seems unlikely that it will pass. The nature of the ACA makes it a practical necessity for the government to alleviate some of the risk faced by insurance companies. However, Rubio brings up a good point. What would happen in a worst case scenario? What if there are far more over budget insurance companies than initially anticipated?