The Great Law of Unintended Consequences: No Good Deed Goes Unpunished.

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February 17, 2016 by Mark Hammerstrom

I have a very good friend of mine, generous and kind to a fault. The kind of person who is the first to call to offer help when it is needed, and who continues to keep up efforts to assist even when help is no longer necessary. In short, a great person and friend. Yet, even a friend like this, being human after all, sometimes can lapse into cynicism. I guess who doesn’t.  Sometimes when a good deed goes awry, he will mutter a line that goes something like: “Well, I guess no good deed goes unpunished.”

I don’t hear that very often, but I do think it is a nod to that great law of unintended consequences. Sometimes, even our best efforts to do the right thing, or to do something that we think can have enormous potential benefits, are sidetracked by consequences which were unforeseen or conveniently overlooked at the time.

An example of this, I think, is the Affordable Care Act (ACA). All the debate aside, it is now law and a fact we all have to live with. Perhaps its scope and benefits will be further refined in the future, but for now it seems as though much is simply uncharted territory.  The law of unintended consequences is in full force and effect.

A case in point is in Minnesota where hospitals are reporting increasing bad debts which are the result of the part of the ACA requiring all of us to have health insurance. Consumers are now being caught off guard by the increased cost of deductibles and co-insurance and simply were not prepared to handle this.  In many cases, these were people who before the ACA received so-called uncompensated charity care.

Writing in the Minneapolis StarTribune, reporter Jeremy Olson documents some of these unintended consequences in an article entitled “Minnesota hospitals report more bad debts, community benefits. And uncompensated care expenses are still going up.”

Although improved enrollment numbers have been touted as proof of the increasing benefit of the ACA, Olson reports: “An increase in Minnesotans with health insurance hasn’t decreased the uncompensated care provided by the state’s hospitals, but it has caused a shift from outright charity care to bad debt from insured patients who couldn’t afford their medical bills.”

Minnesota’s uncompensated care increased from 2013 to 2014 from $573 million to $589 million even though outright ‘charity’ care dropped by 26%. This increase comes as a result of bad debt accumulated from patients who formerly received charity care written off by the healthcare provider.

Olson quotes Lawrence Massa, president and chief executive of the Minnesota Hospital Association (MHA): “As we change the dynamic of who pays for health care, it’s taken a while for regular Minnesotans to build a surplus into their budgets to take care of those kinds of things.”

Further, Olson points out: “That surge in patients with bad debt added to a 4.6 percent increase in what the hospital association reports as its “community benefit” — the total amount of unreimbursed support they provide to the state.”

Quoting again: “Massa said he is concerned about the rise in bad debt. Writing off the cost of a needy patient as upfront charity is more efficient and less stressful than trying to collect from someone who’s broke and can’t pay insurance deductibles.”

Although many of us saw the cost of increasing deductibles and co-insurance as a way to keep a lid on premium costs, for many it has become an onerous financial hardship. Medical providers now have to do their utmost to spend more time on collection activities which will take more staff time and resources—often resulting in no greater ability to collect the debt than if the cost was written off as ‘charity care’ in the first place.

Unintended consequences indeed.

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