Peeling back the layers of the Affordable Care Act onion once again reveals another surprise, this time a delay in the individual mandate. This is the same individual mandate that the Washington Post editorial board claimed, “Holds the key to health-care reform.” And the fourth time President Obama has delayed his signature piece of legislation in the same manner he chastised Republicans for trying to do.
Add this recent delay to the long list of previous delays and it’s apparent that the current iteration of Obamacare is nothing like the law passed four years ago, the one then House Speaker Nancy Pelosi told us, “We have to pass … so that you can find out what’s in it.” How right she was.
Beneath one of the Obamacare onion layers is an obscure provision, called the 90-day grace period. Specifically patients that purchase exchange insurance plans federal subsidies have a 90-day grace period for payment of their insurance premiums. During the first 30 days of coverage, the insurance company must pay all insurance claims, but in the next 60 days, the insurance can deny all claims if the patient ends up dropping their insurance after 90 days or has their plan cancelled due to not paying their premium.
How does this play out? Suppose Pajama Boy, after finishing his hot chocolate and getting dressed, signs up for a subsidized exchange insurance plan but does not yet pay his premium. He would be among the 6 million sign ups that the administration is crowing about this week, but, “The latest figures reflect those picking plans, not paying their premiums,” according to CNN. If PJ Boy defies his President by paying for cable TV and a cell phone instead of his insurance premiums, he will still seemingly have insurance coverage for 90 days. He can visit many physicians, have lots of surgery, fill a bunch of prescriptions, and his doctor, hospital, and pharmacy will gladly provide what he needs based on the belief that his insurance card is valid with an assurance of eventual payment.
But if PJ Boy hasn’t paid his premiums, his insurance company is only obligated to bill for the first month of PJ Boy’s medical adventures, stiffing his healthcare providers for any goods and services provided in the second and third months. Sure the providers can try to collect from PJ Boy, but if he couldn’t even sign up for insurance without a government subsidy, he certainly won’t have the money to pay his medical bills. So the doctors, hospitals, and pharmacies have no choice but to absorb the cost. Unless payment of a cup of hot chocolate would suffice.
Imagine Visa providing a credit card on a three-month trial basis, allowing the cardholder to spend to their heart’s delight, but Visa only paying the merchants for the first month of charges but not the second two months. How many merchants would be willing to accept such a card? How many would accept Monopoly money as payment? Kaiser Health News notes that, “Doctors who know they may not get paid have a strong incentive to withhold treatment.” Alternatively, “They may also insist on being paid upfront in full, which could be a breach of their contracts with insurers.” Or more simply, exchange insurance plans could be as attractive to providers as Monopoly money. Having health insurance doesn’t guarantee receiving healthcare.
Rather than Pajama Boy, a better spokesperson for Obamacare could be Popeye’s pal Wimpy. He has an insatiable appetite for hamburgers but never the money to pay for them. After finding a sucker, he would promise them, “I’ll gladly repay you Tuesday for a hamburger today.” Yet when Tuesday arrived, Wimpy was gone and his debt was never paid. The 90-day grace period will leave healthcare providers wondering if they will get paid on Tuesday after their patients have eaten their fill of hamburgers.
Brian C Joondeph, MD, MPS, a Denver based physician, is an advocate of smaller, more efficient government. Twitter @retinaldoctor.