Community Health Systems, a leading operator of acute care hospitals, has taken a $169 million provision for bad debt, illustrating weaknesses in Obamacare, Forbes reported.
The hospital chain’s action is a result of not receiving the expected amount of deductibles and co-pays that patients owed.
“In the lexicon of hospital finance, bad debt is another word for unpaid bills,” says Scott Gottlieb, an expert at the American Enterprise Institute. “The hospital chain was recording a higher amount of cash from these co-pays than it now expects to collect, so it needed to take a write off to account for its lowered expectations.”
According to Gottlieb, this may be a sign of a weakening economy, but more likely it reflects Obamacare’s affect on the healthcare market, namely that consumers are paying a higher share of their medical costs.
“In the case of Obamacare plans, a lot of routine medical expenses are covered in full as part of the scheme’s ‘essential health benefits’—a politically crafted list of favored medical services that Washington mandates,” the article states. “To accommodate full coverage of these routine costs, the plans skimp on access to doctors and drugs, and saddle consumers with high out of pocket costs on mostly catastrophic medical bills.”
According to Gottlieb, Community Health Systems’ financial report is an early signal of this trend. “Collecting on these rising out of pocket costs will get more difficult for healthcare providers as the Obamacare insurance designs become the new market standard,” he says. “This will be Obamacare’s legacy—a new standard for hollow health coverage.”