The Billings Outpost

Health reform bill may add growth

By T.J. GILLES - For The Outpost

Analysts at the Montana Bureau of Business and Economic Research say Yellowstone County’s role as a medical trade center helped cushion the blows of a recession that began in 2009.

But given court challenges to the 2010 federal Affordable Care Act (ACA), the future is up in the air.

“Certain for the short term, however, is that healthcare spending will continue to increase,” researcher Gregg Davis said Tuesday at an economic outlook conference at the Crowne Plaza.

Paul Polzin, bureau director emeritus, said a collapse in commodity prices and other basic sectors of the county’s economy cut the county’s economic output by some 3.1 percent since 2009.

“The decline would have been much more severe had it not been for a $35 million expansion in healthcare earnings that occurred at the same time” that the county lost $80 million in overall wages and earnings, Dr. Polzin said.

Billings’ role as a health-care trade center provides 14 percent of Yellowstone County’s economy.

Dr. Davis provided two sets of projections for the state’s medical industry – one with ACA (“Obamacare”) and one without.

Growth rates for Montana health-care earnings are about even for both scenarios until 2015, after the requirement for universal health insurance kicks in. Then, Dr. Davis said, the industry would have a growth rate of 5 percent with ACA, compared to 3.5 percent without it.

He said healthcare puts about $7.2 billion annually into the state’s economy and supports 5,600 jobs paying an average of $43,000 – about $8,000 above the overall state earnings average.

Nationally, public health-insurance outlays already consume one-fifth of the federal budget, he said.

A provision of the ACA discounts Medicare prescription drugs and filled the so-called “doughnut hole” in coverage, which Dr. Davis said averaged $578 per Montana recipient. Further prescription discounts kick in this year and on down the line.

Dr. Davis said Yellowstone County alone accounts for 34 percent of the state’s Early Retiree Reinsurance Program (ERRP), an ACA program that allows those between 55-64 to keep their employer-sponsored health insurance. By May of last year, that program stopped accepting applications because it had used up 75 percent of the $5 billion authorized by Congress that was supposed to last until 2014.

ACA also allows people to continue coverage under their parents’ insurance plans until they reach the age of 26.

In Montana, Dr. Davis said, 26,000 small businesses received notices that they might qualify for the ACA’s small-business tax credit. But bungled-up forms and byzantine bureaucracy meant that only about 5 percent of U.S. small businesses applied for the credit.

The U.S. Supreme Court may rule on the constitutionality of all or part of ACA by August, Dr. Davis said. All of those in the Republican race for the presidential nomination have sworn to get rid of the program.

Dr. Davis said predictions are hard to come by because “we have absolutely no historical experience in reform of this kind.”

Whatever the Supreme Court or a different president might decide, he concluded, “spending on health care will continue to have a bull’s eye on its back for many years to come … . Health care will continue to come under the budget-cutting scalpel ... .

“An aging population, health insurance for the uninsured and technological advances which extend life but do little to contain costs will be the main drivers behind healthcare spending for years to come.” He forecast annual growth of 6 percent in healthcare costs.

 

Copyright 2012 Wild Raspberry Inc.

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