Trump's health care rule will be a boon to black entrepreneurs

BY PARIS DENNARD, OPINION CONTRIBUTOR — 02/26/18 11:30 AM EST 34

THE VIEWS EXPRESSED BY CONTRIBUTORS ARE THEIR OWN AND NOT THE VIEW OF THE HILL

In a 2014 interview with NBA Star Charles Barkley, President Obama said he liked the term “ObamaCare” and that “five years from now, when everybody’s saying, ‘Man, I’m sure glad we got health care,’ there are going to be a whole bunch of people who don’t call it ObamaCare anymore because they don’t want me to get the credit.”

That bold prediction has yet to ring true for many Americans who are small business owners and sole proprietors. The U. S. Department of Labor estimates there are nearly 11 million of those entrepreneurial Americans without healthcare because, even after all the promises of access and affordability from President Obama, Rep. Nancy Pelosi (D-Calif.) and other Democrat leaders, they still can’t afford to buy health insurance.

Despite the efforts of President Trump and the Republican-led House to repeal and replace this deeply flawed and costly legislation with something much better for the American people, we are still stuck with this broken system of healthcare known as ObamaCare. For the three million uninsured working small business owners (or their dependents) and the eight million uninsured employees of small businesses (or their dependents), help is on the way.

The help is not coming from President Obama, Nancy Pelosi, Chuck Schumer or the Democrats. President Trump signed an Executive Order Promoting Healthcare Choice and Competition Across the United States last October. The Presidential Executive Order expands access to Associated Health Plans (AHP) to small business owners so they can compete in the marketplace just like larger companies can to obtain more affordable healthcare options for themselves and their employees.  

Currently, under the direction of Secretary Acosta, the U.S. Department of Labor is near the end of a 60 day comment period for this proposed rulemaking change. Members of the public have been sending in their feedback on the proposed rule so that a final decision can be made on the parameters of the change and how it would be implemented this year.

Yes, that means in 2018, there would be more opportunities for access to healthcare for the backbone of America’s economic system, those 11 million small business owners and sole proprietors.  

For example, under this proposed rule change requested by President Trump, a group of beauty salon owners in Phoenix, Ariz., could come together and form their own Small Business Health Plan and access the same healthcare options as one large company can under the current system.  Additionally, sole proprietors could create a Small Business Health Plan by industry.  Graphic designers nationwide could for their own group and really be able to have the peace of mind of having health insurance while still being their own boss.  

Let’s unpack exactly who could benefit from this important option. We all know this month, February, is set aside to honor the achievements of African Americans. According to the Small Business Administration's Office of Advocacy, in 2012 African-Americans owned 2.6 million small businesses and employed 975,000 people contributing more than $150 billion to the American economy.  In 2017, the percentage of black-owned business owners increased by 34 percent so this rule would have direct impact on the black community for those millions that are small business owners or sole proprietors currently living, working and trying to have their version of the American dream without being able to afford ObamaCare.

2018 is proving to be the year of opportunity for the American people under the Trump administration. Whether it is the Computer Science Initiative giving opportunities to local school districts and students, the Investing in Opportunity Act-giving companies unique opportunities to invest in fragile communities serving significant minority populations, or the Tax Cut and Jobs Act-giving more middle-class Americans the opportunity to save more of their income while creating more opportunities for companies to invest in America workers, or this important Labor Department rule making change on the horizon giving 11 million people an opportunity to access affordable healthcare options.

It is evident President Trump is doing exactly what he said he was going to do and that is something worth celebrating. Smart policy changes like this will help Make America Great Again and the credit will go to President Donald J. Trump.

Paris Dennard (@PARISDENNARD) is a communications strategist and GOP political commentator who has worked in the George W. Bush White House, the Republican National Committee (RNC), and most recently works on behalf of the nation’s public Historically Black Colleges and Universities (HBCUs).

http://thehill.com/opinion/white-house/375561-trumps-health-care-rule-will-be-a-boon-to-black-entrepreneurs?itx[idio]=8812325&ito=792&itq=6a7d85a3-ce2c-419b-a965-7122e5a4ceaa

How American Citizens Finance $18.5 Billion In Health Care For Undocumented Immigrants

FEB 26, 2018

The Apothecary Insights into health care and entitlement reform.  

Opinions expressed by Forbes Contributors are their own.

Chris Conover , Contributor

TWEET THIS

• All told, Americans cross-subsidize health care for illegal immigrants to the tune of $18.5 billion a year
• federal taxpayers provided $11.2 billion in subsidized care to undocumented immigrants in 2016

I recently did an interesting interview with Dan Gorenstein, a health care reporter with station WHYY and NPR's radio business show Marketplace on the issue of tax-financed health care for undocumented immigrants [1]. The piece that aired did not include any of my remarks, but I thought it would be useful to give readers my perspective on this knotty policy question based on both background research I did to prepare for the interview and follow-on research I did in light of the questions posed in the interview.

Current federal policy is to prohibit federal tax funding of health care to undocumented immigrants through either Medicaid or Obamacare. Nevertheless, rough estimates suggest that the nation's 3.9 million uninsured immigrants who are undocumented likely receive about $4.6 billion in health services paid for by federal taxes, $2.8 billion in health services financed by state and local taxpayers, another $3.0 bankrolled through "cost-shifting" i.e., higher payments by insured patients to cover hospital uncompensated care losses, and roughly $1.5 billion in physician charity care. In addition to these amounts, illegal immigrants likely benefit from at least $0.9 billion in implicit federal subsidies due to the tax exemption for nonprofit hospitals and another $5.7 billion in tax expenditures from the employer tax exclusion.

All told, Americans cross-subsidize health care for illegal immigrants to the tune of $18.5 billion a year . Of this total, federal taxpayers provided $11.2 billion in subsidized care to undocumented immigrants in 2016 .

In this post, I describe in more detail current policy, current sources of funding for health care of unauthorized immigrants. In a follow-on post, I will offer four independent reasons federal tax funding for such care is a bad idea (that is, a reader need only accept one, not all, in order to conclude we should dispense with such funding).

A map of Mexico as it was in 1794 is displayed as young immigrants and their supporters rally in support of Deferred Action for Childhood Arrivals (DACA) in Los Angeles, California on September 1, 2017. A decision is expected in coming days on whether US President Trump will end the program by his predecessor, former President Obama, on DACA which has protected some 800,000 undocumented immigrants, also known as Dreamers, since 2012. / AFP PHOTO / FREDERIC J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)

Current Policy Regarding Federal Funding of Health Care for Undocumented Immigrants

The purported intent of federal policy is to prevent federal tax dollars from being used to fund health care for undocumented immigrants except in extreme circumstances. Notwithstanding express prohibitions contained in the statutes related to Medicaid and Obamacare, there also are companion federal programs that permit federal funding to be used for health care of undocumented immigrants indirectly.

Where Use of Federal Dollars to Fund Health Care for Undocumented Immigrants is Expressly Prohibited

Medicaid. Under Medicaid and CHIP (Children's Health Insurance Program), no federal funding may be used to cover undocumented immigrants, except for payment for limited emergency services. Specifically, "Medicaid payments for emergency services may be made on behalf of individuals who are otherwise eligible for Medicaid but for their immigration status. These payments cover costs for emergency care for lawfully present immigrants who remain ineligible for Medicaid as well as undocumented immigrants."

Moroever, states can and do use state-only Medicaid programs to cover such individuals. For example, California's Health for All Kids Act provides undocumented-immigrant children with access to coverage through Medi-Cal, the state Medicaid program. Its passage in 2015 made California the largest state to use state-only funding to provide coverage to all children regardless of immigration status; in doing so, it joins New York, Illinois, Massachusetts, Washington, and the District of Columbia. 

ACA. Under the ACA, immigrants must be lawfully present to purchase insurance in a Qualified Health Plan, or to be eligible for an Advance Payment for Premium Tax Credit or Cost-Sharing Reduction. Under legislation signed by Governor Jerry Brown in June 2016, California would have been the first state to allow undocumented immigrants to purchase health plans through its insurance exchange without fear that their information would be shared with other government agencies. The law directed California’s exchange, Covered California, to apply for a State Innovation Waiver to allow people who would be eligible for the exchange if not for their immigration status to purchase California Qualified Health Plans (QHPs), which provide benefits identical to those included in other ACA-compliant QHPs. This policy requires a waiver because it involves an alteration to the original terms of the ACA, which bars the participation of undocumented immigrants in state exchanges. However, this waiver request was withdrawn on January 18, 2017.

Where Use of Federal Dollars to Fund Health Care for Undocumented Immigrants is Indirectly Permitted

The "clear intent" of restrictions embedded in Medicaid and Obamacare is undercut by several end-arounds that allow health care for illegal immigrants to be indirectly funded using federal dollars.

Medicaid DSH Payments. First, there is a source of Medicaid financing that indirectly benefits undocumented immigrants: DSH payments [2]. Kaiser Family Foundation reports "DSH, or “disproportionate share” hospitals are hospitals that serve a large number of Medicaid and low-income uninsured patients...At the facility level, Medicaid DSH payments are limited to 100 percent of the costs incurred for serving Medicaid and uninsured patients that have not been compensated by Medicaid (Medicaid shortfall)." The DSH program simply provides a general subsidy against a hospital's aggregate uncompensated care losses from uninsured patients.  Nothing requires hospitals to back out their spending on uncompensated care for undocumented immigrants from their aggregate losses; consequently, federal Medicaid funds end up indirectly subsidizing their care even though it would be expressly illegal to pay for their care by making them direct Medicaid recipients. 

Medicare DSH Payments. In a similar fashion, although the formula is much more complicated, Medicare also pays hospitals a DSH payment that effectively serves as a general subsidy to offset aggregate uncompensated care losses without making any distinction between uncompensated costs generated by undocumented immigrants and those generated by American citizens or legal immigrants.

Community Health Centers. Federally qualified health centers provide primary healthcare, dental, mental health and pharmacy services. They treat all comers without concern for immigration status or ability to pay for care.

Tax Exemption. Nonprofit hospitals (and other health facilities) receive tens of billions of dollars annually in benefits from the federal tax exemption including forgone taxes, public charitable contributions, and the value of tax-exempt bond financing. Undocumented immigrants benefit from this federal largesse.

Employer Tax Exclusion. The employer tax exclusion provides an indirect federal tax subsidy to everyone with employer-sponsored health insurance. Noncitizen immigrants are admittedly less likely to have such coverage than natives, but the differential is less than 10 percentage points after adjusting for the most important demographic/socioeconomic characteristics.

From where I sit (a libertarian-leaning conservative health reformer), current policy makes a lot of sense. It allows states or localities to opt to provide health care for undocumented immigrants using local tax resources. In a country of 320 million people with deeply divided views on this issue, the federalist approach seems far preferable to trying to adopt a one-size-fits-all policy that forces tens of millions of federal taxpayers to subsidize lawbreakers against their will.

Moreover, my view is that if the intent of federal policy is to prevent taxpayer resources from being used to finance health care for undocumented immigrants, federal officials have an obligation to be vigilant this does not occur inadvertently and a parallel obligation to be transparent if it does. That was the purpose of my writing an earlier post on this issue 20 months ago.

Current Funding for Health Care of Illegal Immigrants

Uninsured Illegal Immigrants. According to Pew Research Center, there were 11.3 million unauthorized immigrants in the U.S. in 2016. Currently, 14% of the uninsured (3.9 million) are undocumented immigrants who are ineligible for both Medicaid and ACA coverage under federal law. For purposes of discussion, I am going to focus principally on financing health care for undocumented immigrants who are uninsured since we know that about 70% of care for America's uninsured is uncompensated, meaning that ultimately it is paid for by society in one way or another.

Specifically, in 2013 (the latest available such figures), America's uninsured generated $84.9 billion in uncompensated care costs [Table 2] or $1,257 per person who was ever uninsured that year [Table 1]. Of this:

·         39% was covered by various federal programs (e.g., disproportionate share payments to hospitals);

·         23% by state and local governments (e.g., via taxpayer support of state and locally owned hospitals);

·         12% came in the form of physician charity care covered;

·         25%--was covered by hospitals (arguably by "cost-shifting" i.e., higher charges to privately insured patients that effectively cross-subsidize care for patients who do not pay full freight etc.). An unknown fraction of this stems from EMTALA--the Emergency Treatment and Active Labor Act--a federal law that requires hospitals to treat emergency patients regardless of their ability to pay. EMTALA is an example of "taxation by regulation" insofar as the same outcome might have been achieved by using tax dollars to pay hospitals to treat such patients voluntarily.

Assuming undocumented immigrants received a pro rata share of such support (i.e., 14%), they account for the $11.9 billion in uncompensated care costs, financed as follows:

·         $4.6 billion--federal taxpayers

·         $2.8 billion--state and local taxpayers

·         $3.0 billion--hospital charity care/bad debts arguably cost-shifted to private patients

·         $1.5 billion--physician charity care

I recognize these back-of-the-envelope figures are crude, but they are the best estimates I could make given that the recent National Academy of Sciences report The Economic and Fiscal Consequences of Immigration only provides highly aggregated estimates of cost impacts, with no breakdown of how much of these costs can be attributed to health care etc.

Federal Taxpayers. It might puzzle some readers that the federal government is paying for any care for undocumented immigrants in light of federal policy. This can happen through fraud, to be sure, but as explained earlier, most of this occurs indirectly through various federal programs that fund institutions rather than individuals. These include hospitals (Medicaid/Medicare DSH payments) and community health centers/free clinics.

Hospital Charity Care/Bad Debts. Hospitals with 501(c)(3) status are required to establish written financial assistance policies under Affordable Care Act sections 501(r). As a consequence, there is a cleaner distinction between genuine charity care and bad debts than there was in the past when hospitals adopted very disparate practices about how to treat situations where a patient was not expected to pay (charity care) versus not able to pay (bad debt).

Let me concede that there is only limited evidence that hospitals engage in what's called "dynamic cost shifting." That is, if a hospital's uncompensated care burden rises by $1 million, only some, not all, of that amount can be expected to be recovered by the hospital's increasing charges to privately insured patients to make up the difference.

That said, hospitals can and do exercise market power, meaning they are able to charge private patients a higher rate than Medicare or Medicaid patients. This practice results in profits from private patients that then are used by the hospital in various ways, including the provision of charitable care.

The point being that if the federal government eliminated whatever payments it now makes for undocumented immigrants, hospitals hypothetically would not respond by increasing charges to recover part of their increased uncompensated care costs, but instead make adjustments in the form of either spending less on other things or taking steps to discourage undocumented immigrants from showing up at their doors. Conversely, if federal, state or local governments were to make hospitals entirely whole regarding their uncompensated care losses to undocumented immigrants, this would not necessarily benefit hospital patients in the form of lower charges. For these reasons, it is not altogether obvious that these hospital uncompensated care losses are a problem that can be solved by better public policy. Nevertheless they manifestly are a public policy issue from the standpoint of patients concerned about high health costs.

Physician Charity Care. The $1.5 billion in physician charity care represent an average of $1,750 for each of the country's 855,000 active physicians. According to Medscape's Physician Compensation Report for 2017, the average physician makes $294,000 a year. Even generously assuming a 60 hour workweek, that's roughly $100 hourly meaning the average physician devotes 17.5 hours a year to charity care for undocumented immigrants (less if we assume a higher hourly rate).

Note that physicians, receive no tax benefits for providing charity care; that is, they cannot write off the cost of charity care from their personal or business taxes. Consequently, although physician charity care is an important component of the uncompensated care landscape, in my view, these voluntary donations of time--a longstanding worthy tradition in American medicine--do not pose a public policy concern.

Other Federal Subsidies Benefiting Undocumented

Although it presumably did not arise by a deliberate intent to benefit undocumented immigrants, current tax policy likely confers an additional $6.6 billion in additional benefits financed by U.S. taxpayers.

Immigrants. The tax exemption for nonprofit hospitals (and any other nonprofit health facilities) benefits undocumented immigrants regardless of their insurance status. The employer tax exclusion benefits undocumented immigrants who happen to receive employer-provided health benefits.

Tax Exemption. The value of the nonprofit tax exemption to U.S. nonprofit hospitals in 2011 was $24.6 billion, including forgone taxes, public charitable contributions, and the value of tax-exempt bond financing. Assuming that 11.3 million undocumented immigrants receive a pro rata share of this benefit, they receive roughly $0.9 billion in additional federal subsidies for their hospital care. I could locate no parallel figures for other nonprofit health facilities.

Employer Tax Exclusion. Estimating the size of these tax benefits for undocumented immigrants is of necessity extremely rough. I could locate no reliable information on the wage distribution of such immigrants, especially among those who obtain employer-provided health benefits. According to Kaiser Family Foundation, "nonelderly lawfully present and undocumented immigrants are as likely as nonelderly citizens are to live in a family with at least one full-time worker, but they are more likely than citizens are to be low-income, since they often work in low-wage jobs." More concretely, nearly half (48%) of undocumented immigrants live in low income families below 200% of the federal poverty level.

That said, as shown earlier, we know that only 3.9 million of undocumented immigrants are uninsured, leaving 7.7 million with some sort of coverage. No good data exist on what fraction of these obtain non-group health coverage, but Kaiser Family Foundation’s Larry Levitt has said via Twitter that “some are buying non-group, but I’d agree that it’s primarily employer coverage.”  Assuming that 86% have employer-provided coverage (which is the identical percentage among all non-elderly adults having private coverage in 2016: Table HIC-2), this would equal 6.6 million undocumented workers with such coverage.

And even if we conservatively assume that such workers obtain the least expensive form of coverage (high deductible health plan with savings option) in an industry most likely to employ such workers (agriculture/mining/construction), the single premium in 2017 would be $5,666(compared to $6,690 across all plans/industries). If we further conservatively assume all undocumented workers pay no income taxes and are only liable for payroll taxes, the tax subsidy amounts to 15.3% ($866 per worker) or $5.7 billion for all undocumented immigrants with such coverage.

Conclusion

When we sum all the figures, including $11.9 billion for the uninsured and another $6.6 billion in tax subsidies, we arrive at a grand total of $18.5 billion in subsidized health care for all undocumented immigrants in 2016. This amounts to $57 per U.S. resident. The share that concerns me the most--$11.2 billion borne by federal taxpayers--amounts to $34 per U.S. resident. Admittedly, one could argue that since the amounts at stake are so small, this is not an issue worth fighting about. However, it is precisely that sort of thinking that has led us to today's dismal reality that unfunded liabilities facing Uncle Sam now are roughly $200 trillion and rising.

So even though the dollar stakes are quite small in a federal budget that will spend $4 trillion in the fiscal year that just started, I believe citizens and federal policymakers should stop pressing the Easy button and seriously ponder four important principled arguments against federal tax financing of health care for undocumented immigrants:

·         Federal funding is unnecessary

·         Federal funding is inefficient

·         Federal funding is unconstitutional

·         Federal funding is immoral

I will elaborate on these arguments in a subsequent post.

Follow @ConoverChris on Twitter, and The Apothecary on Facebook. Or, sign up to receive a weekly e-mail digest of articles from The Apothecary.

INVESTORS’ NOTE : The biggest publicly-traded players in Obamacare’s health insurance exchanges are Aetna AET -0.28% (NYSE: AET ), Humana HUM -0.78% (NYSE: HUM), Cigna CI -0.25% (NYSE: CI ), Molina (NYSE: MOH ), WellPoint (NYSE: WLP ), and Centene CNC -2.15%(NYSE: CNC ), in order of the number of uninsured exchange-eligible Americans for whom their plans are available.

---

Footnotes

[1] Mr. Gorenstein's report was filed earlier this month here.

[2] As detailed by Kaiser Family Foundation (footnote 9), "To qualify as a DSH hospital a hospital must meet two minimum qualifying criteria. The first criterion is that the hospital has at least two obstetricians who have staff privileges at the hospital and who have agreed to provide obstetric services to Medicaid patients (except when the hospital predominantly serves children under 18 years or the hospital does not offer obstetric services to the general public). The second criterion is that the hospital has a Medicaid inpatient utilization rate (MIUR) of at least 1 percent. A hospital is deemed as a DSH if the hospital’s MIUR is at least one standard deviation above the mean MIUR in the state, or if the hospital’s low-income utilization rate exceeds 25 percent."

[3] The lowest wage earners may be exempt from income taxes, but nevertheless have to pay a combined 15.3% in payroll taxes for Social Security and Medicare; hence the exclusion of these taxes is roughly equivalent to a 15% subsidy from Uncle Sam.

---

READ CHRIS’ BOOK, The American Health Economy Illustrated (AEI Press, 2012), available at Amazon and other major retailers or as a pdf at AEI. With generous support from the National Research Initiative at the American Enterprise Institute, an online version complete with downloadable Powerpoint slides and companion spreadsheets has been made available through the Medical Industry Institute’s Open Education Hub at the University of Minnesota.

https://www.forbes.com/sites/theapothecary/2018/02/26/how-american-citizens-finance-health-care-for-undocumented-immigrants/#2eed235312c4

Social Security Administration Reconsideration Appeals

Social Security Administration Reconsideration Appeals When: Wednesday, March 21st, 2018 at 11:00 a.m. PT / 2:00 p.m. ET. When the Social Security Administration (SSA) informs an older adult that it is going to reduce or terminate that person’s Supplemental Security Income (SSI) or Social Security benefit, it is important to know how to appeal the action. Filing a Request for Reconsideration is the first step in SSA’s administrative appeal process. Thousands of reconsideration requests are filed every year, on a wide variety of issues. However, beneficiaries who file these appeals are usually unrepresented. Even though SSA often errs in taking action to reduce or terminate benefits, beneficiaries have difficulty finding assistance from advocates in requesting reconsideration to challenge these incorrect determinations. Participants in this free webcast, Social Security Reconsideration Appeals, will learn about handling reconsideration appeals at SSA. We will explain the step-by-step process when requesting reconsideration, key due process protections, and how to advocate effectively for beneficiaries in commonly encountered scenarios. Closed captioning will be available on this webcast. A link with access to the captions will be shared through GoToWebinar’s chat box shortly before the webcast start time. Presenters: Kate Lang, Senior Staff Attorney, Justice in Aging Trinh Phan, Senior Staff Attorney, Justice in Aging NOTE: This training will be presented in a WEBCAST format to accommodate more participants. Due to the high volume of participants, computer audio will be the only option to listen to the presentation. No telephone call-in number will be provided. Please plan accordingly. Thank you. The webcast will take place on Wednesday, March 21st, 2018 at 11:00 a.m. PT / 2:00 p.m. ET. Register Here We are committed to keeping any personally identifiable information you have provided to us secure. Please only provide professional, not personal, email information. We will not sell, transfer, or provide this information to any other entity. You can read HHS’s full privacy policy here.

Request a Free Case Consultation Case consultation assistance is available for attorneys and professionals seeking more information to help older adults. Contact NCLER at ConsultNCLER@acl.hhs.gov. Contact Us National Center on Law & Elder Rights (NCLER) NCLER@acl.hhs.gov @NCLERlegal

Ouch: Study Reveals Financial Pain After Hospitalization

Targeted News Service (Press Releases)

February 23, 2018

SANTA CRUZ, California, Feb. 22 -- The University of California issued the following news release:

Being hospitalized is tough enough strictly as a health matter. But now a study co-authored by professors from MIT, UC Santa Cruz, and Northwestern University reveals its painful financial impact as well: On aggregate, hospitalization and the health problems that cause it lead to a 20 percent drop in earnings and an 11 percent drop in employment for adults between ages 50 and 59, among other negative effects.

Moreover, job troubles are merely one of the financial costs that follow hospital stays. As the study shows, adults who have health problems leading to hospitalization have worse subsequent access to credit -- as well as larger unpaid medical bills and more out-of-pocket medical spending.

And while medical insurance does temper some of these outcomes, the long-term financial hurt of a medical event serious enough to cause hospitalization is significant even for the insured.

"The sobering truth is that even people who have health insurance don't have anywhere close to full insurance," says Amy Finkelstein, an economist at MIT who helped lead the study. "Not [only] for the reasons that we're used to thinking about, [such as] cost-sharing and high deductibles, but because health insurance doesn't insure the economic consequences of poor health."

The paper, "The Economic Consequences of Hospital Admissions," has just been published in the latest issue of the American Economic Review. The co-authors are Finkelstein, who is the John and Jennie S. MacDonald Professor of Economics at MIT; Carlos Dobkin, a professor of economics at the University of California, Santa Cruz; Raymond Kluender, a PhD student in economics at MIT; and Matthew Notowidigdo, an associate professor of economics at Northwestern University.

This could hurt

The bulk of the data in the study comes from the state of California, including hospitalization records from the years 2003-2007 and credit reports from 2002-2011, for people ages 25 and up. The researchers examined records for roughly 780,000 people with health insurance and about 150,000 people without health insurance. The data was available under restricted conditions to preserve the anonymity of the people being studied.

Some of the data, which focused on job outcomes, also came from the Health and Retirement Study (HRS), a biannual U.S. national survey, and covered the years 1992-2012 for nearly 10,000 people.

While other studies have relied on self-reported survey data to infer the financial fallout that follows poor health, the research team in this case could more robustly establish and quantify the cause-and-effect relationship between the onset of serious medical problems and their ensuing financial implications. By examining the California medical and credit records in tandem, along with the HRS data, they established how the hospitalization episodes altered individuals' economic trajectories.

"What's really unique about the paper is the data," Notowidigdo says.

The average hospital admission in the study lasted four days. While the length and long-term effects of any one medical event can vary widely, the aggregate effects were striking. Consider the employment numbers: Having medical problems that require a hospital stay reduces employment by 8.9 percentage points in the first subsequent year, on average, and 11.1 percentage points by the third year after admission.

That corresponds with an average decrease in earnings of $6,445 in the first year after a hospital admission, and $11,071 in the third year. Over the whole three-year span, earnings drop an average of $8,753 annually, a decline of 20 percent.

Three years after their hospitalizations, employees also face a decrease in annual time worked by 228 hours, and self-reported retirement increases by 10 percentage points. All the employment numbers are striking, the researchers say.

"The magnitudes are pretty similar to what labor economists have studied when they look at people who are laid off in what's called a 'mass layoff event,' if a manufacturing plant closes down and a lot of people lose their jobs," Notowidigdo says.

Meanwhile, after people are hospitalized, their long-term access to credit declines and their debt levels worsen. Four years after a hospital admission, the average credit limit of individuals declines by $2,215 on average, or about 5.5 percent, and people's total collection balances -- the amount owed -- increase by $302, on average.

A significant part of this pocketbook crunch is generated by medical expenses. Average annual out-of-pocket medical spending increases by $1,429 in the three years after an admission, showing that serious health events lead to a variety of unreimbursed expenses.

Not surprisingly, people with health insurance fare better financially than those lacking it, and the study helps measure the difference. For instance: Four years after hospital admissions, people with insurance owe $300 more in unpaid medical bills, on average, while people without insurance have an average increase of $6,000 in unpaid medical bills.

Time to rethink insurance?

As for the precise mechanism through which hospitalization leads to dire economic outcomes, there is almost certainly a wide variety of scenarios in play. Serious health problems may impair people's ability to work, make them less desirable to employers, or reduce their likelihood of searching for new and higher-paying jobs.

Because the study focuses on a very large number of individuals who had not been previously hospitalized, and examines changes to their economic situations after these events occurred, it is clear that the serious medical events leading to the hospitalizations triggered the ensuing financial effects; it is not that people previously suffering from serious health problems were dropping out of the work force due to those prior problems. Therefore, Kluender says, the scholars can "confidently conclude it is a causal relationship and not just a correlation."

In policy terms, the researchers say, the results also show the limits of health insurance in the U.S. Insurance programs are designed to reimburse most medical costs. But since medical costs are only one part of the financial hardship resulting from hospital stays -- with the decline in income being so significant as well -- insurance as currently conceptualized may be incomplete.

As the paper notes, health shocks to households with people under the age of 60 in Denmark also produce a decline in earnings of 15 percent to 20 percent -- but about 50 percent of that income drop is insured in various forms, including sick pay and disability insurance.

"Most of the time when you're thinking about health insurance, you're only talking about the risk of accruing medical expenses," Kluender says. "But in the U.S. we lack the robust sick leave and disability policies that protect households against the risk of lost earnings while you're sick."

Finkelstein, for her part, also says that the results open up a series of policy questions about whether the U.S. needs more robust short-term disability policies to compensate for the lost earnings that occur after hospital stays.

"The glass half full is that there's a lot of coverage for medical expenditures," Finkelstein says. "The glass half empty, if you're a prime-age worker, is there's much less coverage for employment and earnings losses in the event of poor health."

https://insurancenewsnet.com/oarticle/ouch-study-reveals-financial-pain-hospitalization