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2014 Economic Forecast
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Salt Lake Area
Northern Utah Area
HURST: We definitely will see an increased demand on our hospitals and physicians in the marketplace. But let’s take a second and frame what an individual policy is going to cost an individual and what they get for that. In preparation for this meeting I got a quote for a 27-year-old female without maternity benefits. That individual for $1,200 a year can get a $3,500 deductible. Will young people actually buy insurance for that, and will that increase demand on our hospital and physician providers? Or are they going to go back and say, “Well, $3,500 deductible plus I’m paying a $1,200 premium plus copays and coinsurance, I may be up to $5,000 to finance my healthcare. I don’t know if I want to buy insurance. I’ll pay the $200 penalty not to do that.”
For the exchanges to truly work across the country, all the studies are showing the younger population has to engage in that.
KEN JOHNSON: But with the Affordable Care Act, as I understand it, if that individual makes less than $11,000, they don’t get any kind of subsidy. In fact, they’re out on their own. If they can earn something between $11,000 and whatever the number is, $20,000 or something, then they get some kind of subsidy, some help. It’s kind of silly. The people who are not going to have the income, who are these young adults we want to sign up, are not going to get help.
BARLOW: I’m skeptical that the young are going to adopt it initially. I’ve got four kids in college now. None of them understand it at all. And I talk about it probably to their dismay. But they just simply are evading embracing it, because it’s confusing.
KLUGE: We do not believe the tax penalties this year are significant enough to have any impact on the population. This is going to be a three- or four-year deal before people really start engaging.
CONNER: This is a difficult population to convince that they need to have health insurance. They don’t see the value of it. They have not been utilizers of it in the past; and all of a sudden everybody’s telling them it’s important that they get health insurance. And they’re saying, “Why? I would rather have a new iPhone or I’d rather go take a trip and have a better life experience than purchase health insurance that I don’t think I’ll ever utilize.”
And the cost of it, even with subsidies for some of that population, is not something that a lot of them want to budget for right now. So we’ve got to do a lot more to educate them on why. For them, politically, they don’t think this is going to be an ongoing program, so they would rather let this go by for a year or two. Let’s see if it really is something that they have to do.
The $100 or $200 penalty over the course of a year is going to be less than the overall insurance cost to the family. I don’t have the exact numbers, but the average Utah family roughly makes about $56,000 a year. The subsidies that are in the ACA go up to $94,000. So 80-plus percent of people in Utah could get some kind of a subsidy. But is that subsidy going to be enough that they feel like they are willing to put in the money?
KLUGE: This is pretty confusing for even industry experts. What we’re finding is that there is a major misconception, that if I make this amount of money, this is the maximum I’m going to pay—not realizing if my employer has a minimum value plan, I don’t get that subsidy.
CONNER: As much as we’re seeing that population is going to hold back and wait to see how things settle out, we need them to purchase insurance. Because they are the ones that go to the emergency room. Not the only ones, but that’s where they’ll go for their care. And if we don’t get that healthier population in the risk pool, our rates are going to continue to go up and up and we will never be able to get them stabilized again.
Any thoughts on things we can do to bend the cost curve for healthcare? Because we probably can’t sustain the trajectory we’re on.
LANGELL: The Affordable Care Act has created that burning platform that has told hospitals—and I can tell you at the University of Utah we’ve seen it—that we have to reduce costs. That’s the one thing that we can start controlling. We can’t control how many people sign up, whether the young are involved in the Affordable Care Act exchange plans. But we can start to control the value that we’re creating in our programs.
We’ve traditionally been a very physician-centric organization. So when a patient comes into the hospital and it’s not an emergency, we park them overnight, and when the physician comes in, then care is started to be provided. The problem with that is it ties up a bed and it’s a cost to the hospital system, and those costs are then transferred on to patients. So we’re working really hard at implementing lean process improvements. How can we take what industry has done very, very well to maintain their successes and put it into a hospital setting?