Legislating Healthcare Funding and its Effects on ARM

We’ve seen a lot of news and references lately to healthcare accounts receivable management, not only on this site but in all corners of the industry.  ACA International even recently chimed in on the subject.

So if healthcare collections is going to be the next big thing, what do we need to know?  A lot of this information is covered in a great research study – the Healthcare ARM Report, 2006 – published by Kaulkin Ginsberg, parent company of insideARM.com.  But one variable in the equation requires a fairly steady stream of updates: legislative movement, on both the federal and state level.

Recently, an insideARM.com reader emailed a question that initially had us stumped: if the U.S. were to adopt a single-payer healthcare system, wouldn’t healthcare accounts receivable management be effectively nullified?

As with most things, the answer is pretty complicated.  First, it helps to understand what single-payer healthcare is and why it’s even being discussed as a possibility. 

When lawmakers refer to single-payer healthcare, most opponents claim publicly they are talking about socialized medicine.  But single-payer healthcare and socialized medicine actually refer to two totally different things.  Socialized medicine is a system in which hospitals are run by the government and medical professionals are employed by the government.  Single-payer healthcare exists when a single government entity pays for all health care costs; it refers to the financing mechanism of the system rather than the delivery system as with socialized medicine.  Of course, the end result is effectively the same: the government is paying all medical costs.

So in a short answer to the reader’s question: single-payer healthcare would not nullify medical ARM, but it would certainly marginalize it.  There would still be a handful of private medical practices that cater to the upper class and those seeking elective procedures like cosmetic surgery.  And it can be assumed that some of those patients would default on their bills, thus necessitating some ARM action.  But by and large, if a single-payer healthcare system was ever introduced in the U.S., we would no longer be hyping up healthcare collections as the next big thing.

But is single-payer healthcare even a possibility on the national level?  The name most commonly associated with single-payer healthcare is Senator Hillary Clinton (D-NY), the ostensible leading candidate for the 2008 Democratic Presidential nomination.  But most opponents to the left of Clinton argue that she has abandoned her mid-‘90s push for single-payer healthcare in favor of the more pragmatic universal healthcare plan.

Universal healthcare refers to a legislative mandate that states every person in the country, or a state, have access to some type of healthcare coverage.  The most common type of coverage in the U.S. is private medical insurance, usually provided through employers.  In the absence of private coverage, the U.S. government has set up programs like Medicaid and Medicare to cover those who can’t afford private coverage.  And generally, health plans are honored at private as well as public hospitals.  So on the federal level, the U.S. has a true hybrid healthcare system.

Many who make their living in healthcare and healthcare ARM say that single-payer healthcare is a political impossibility.  In an interview with insideARM.com, Michael DiMarco, CEO of medical collection agency The Outsource Group, said flatly, “I do not see a single payer system...as a likely evolution in the US. I do not propose to be an expert in this area, but it seems to me that the amount of cultural and political change needed to create an environment that is conducive to this type of change would be so great that it is hard for me to get my mind around it.”

On the state level, single-payer plans are also being trumped by universal healthcare mandates.  Recently, Massachusetts made national headlines when it pushed through a universal healthcare bill.  But the bill relied on private insurance and state government subsidies for those that couldn’t afford it, rather than on a single-payer system.

In fact, there are only a handful of single-payer bills currently being considered in state legislatures, according to Zackeria Bailey, a legislative analyst at StateScape, a legislative and regulatory research firm in Arlington, VA.  Bailey’s focus is healthcare legislation on the state level.  Universal healthcare is winning the day.  He says, “On the universal healthcare front, the Massachusetts bill is what we call an individual mandate bill.  It states that all citizens of the state must have health insurance, much like mandatory car insurance.”  If a citizen cannot pay for health insurance, then the state will help to pay for it, Bailey noted.  But that’s a far-cry from a single-payer system since the payer can be any one of hundreds of insurance companies; and, of course, the patient’s portion of bill.

 

The Massachusetts bill also highlights the massive differences in mandate bills being pushed in state legislatures across the country.  Bills come in several different flavors: the aforementioned individual mandates; employer mandates, which dictate that all employers, regardless of size, provide medical plans to their staffs; and, the most common type of mandate, Pay or Play.  Pay or Play legislation is a type of employer mandate, but since there are options available to employers, the bills are given a separate classification.  These laws attempt to use the state government’s power to compel employers to provide coverage for their employees.  The most straightforward of these bills are the ones that stipulate only companies that provide health insurance to their workers can be eligible for state government contract work.  Some create a tax penalty for those that do not comply.  And some target companies of a certain size, like the so-called “Wal-Mart bill” recently passed in Maryland that was struck down by a federal judge.

Regardless of the mandate, though, nearly all the current bills in state legislatures focus on providing access to private health insurance.  A few states are looking into public funding of healthcare.  According to the National Conference of State Legislatures, New Hampshire currently has a bill that would establish a committee to study single-payer healthcare.  California seems determined to expand on the universal healthcare initiatives of Massachusetts, Vermont, and Maine by providing more government involvement and taxpayer money in its universal healthcare plan.

But ultimately, all of the state programs rely heavily on the private health insurance-fueled hybrid system that Americans have grown used to in the past 50 years.  That means more of the same for the ARM industry: healthcare expenses not fully covered by insurance will fall on the consumer, who at a predictable rate will default.  The uninsured will continue to be billed for health expenses they cannot afford, leaving collectors with accounts they cannot collect.  And as the U.S. population grows, healthcare accounts receivable management will grow with it.