Doctor Supply Side Problems With the ACA

Those hoping for the Supreme Court to instruct the federal government to step back amidst increasing involvement in health care were sorely disappointed on June 25 when the SCOTUS delivered its fateful King vs. Burwell decision. In it, the Justices upheld the IRS interpretation of the Affordable Care Act’s taxpayer-funded subsidies. In the short term, this means that millions of people will keep their health care, but it could cause major free market problems in the long term.

According to Medicaid.gov, there are nearly 70 million Medicaid enrollees as of 2015. However, only 45 percent of doctors in large metropolitan areas are accepting new Medicaid patients, based on a 2014 Merritt Hawkins survey. More and more, Medicaid participants are having issues finding doctors to accept their insurance as the market demand for Medicaid-accepting doctors far exceeds the supply.

At the same time, private insurance premiums are expected to climb sharply in 2016 by as much as 30 percent. As employees are being forced off private insurance, the number of private insurers decreases, thus increasing costs. This results in more people being dropped unwillingly from private insurance.

Doctors are reluctant to fill that supply gap. According to a 2013 Health Affairs study, Medicaid has far lower reimbursements (about 61 percent of Medicare reimbursements), and it takes much longer to pay out with increasingly complex paperwork. The free market is tied up and unable to function properly bound in this red tape.

Our medical system has, and will continue to have, gaping holes in service as doctors react sensibly to the incentives included in the Affordable Care Act. Meanwhile, in the wake of King vs. Burwell, free market champions await the next election cycle and another opportunity to bring some free market sensibilities back into the healthcare marketplace.