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Challenges and the PPACA

The PPACA has faced legal challenges, with the most important Supreme Court decision recognizing the legislation as a tax. It must be acknowledged that the success of the legislation is based upon diverse enrollment of a wide spectrum of income levels and the individual mandate. The expansion of Medicaid also carries a ripple effect. While the notion of “affordable” resonates with many, to others, it’s the antithesis of the commonly accepted definition of “affordable.”

Most states have developed a statewide uncompensated care pool. This is a direct source of money used to pay hospitals for some portion of their uncompensated care delivery. The funding stream for the pool is usually from all hospitals within the state. Some states extract a higher percentage of money from those few hospitals that are still for profit. The individual mandate combined with the expansion of Medicaid reduces the amount of uncompensated care and isolated corporate charity care income tax reporting. The effect of the individual mandate and expanded roles of Medicaid reduces the burden of uncompensated care.

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The government’s role as a third-party payer continues to expand, currently providing reimbursement for over 55 percent of healthcare services. Partly to blame for high hospital costs are government regulations regarding hospital fee structure and limits. This rule stipulates that no hospital that accepts Medicare payment is permitted to charge patients more than the Medicare rate. As a direct result of this government rule, hospitals constantly inflate their Medicare rates. While a hospital inflates the Medicare rate, it does not mean the reimbursement rate is at the inflated Medicare rate value. The expansion of Medicaid and Medicare reduces the overall profit for the hospital. The PPACA contains a provision to increase reimbursement payments, maintaining financial solvency for hospitals.

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