Obamacare's Newly Insured Boost Hospital Profits

Tuesday, 05 Aug 2014 07:31 AM

By Elliot Jager

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Hospitals are profiting from additional business resulting from the Affordable Care Act while employers and insurers are being hit by additional costs, The Wall Street Journal reported.

Previously uninsured patients are making more visits to emergency rooms, seeking maternity care and having long-postponed operations.

One company attributed a third to one-half of its profit gains to Obamacare, the rest to other factors including more people entering the job market, the Journal reported.

Hospital companies report patient volume up, uninsured admissions down, and overall profits rising.

HCA Holdings Inc., the largest publicly traded hospital company, said its second-quarter revenue rose 9.2 percent, the Journal reported.

Other winners include companies that supply hospitals.

Insurance companies were the big losers. They have absorbed patients whose medical needs are costlier than forecast. Previously uninsured enrollees are less healthy and are catching up on pricey cancer and surgical procedures.

Insurers say the current economic model is unsustainable and look for the mix of enrollees to shake out and become healthier over time.

The law has also resulted in higher health costs for employers in the form of new taxes on insurance premiums.

Hospitals that treat poorer populations are not seeing an uptick in new business and have not profited from the new law. In fact, with the implementation of Obamacare, New York City's Maimonides Medical Center lost the $13.5 million it had been getting to treat the uninsured.

No one is saying that hospitals will continue to do well, or that insurers will not find ways to profit from the law. With more changes in the pipeline, it is too early to tell what will happen when government payments are cut.

Glenn Steele of Geisinger Health System in Pennsylvania said, "I have a feeling we're going to go through an incredible amount of tumult for the next probably five to 10 years," the Journal reported.

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