ACA Catch-22: Indian Health Clinics Left with Uncompensated Expenses

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 October 29, 2013; WyoFile


An odd twist to the Affordable Care Act concerns payments on Indian reservations. Indian Health Service clinics are funded for 45 percent of the cost of treatment it provides for free. The IHS clinics can then bill private insurance companies or other government programs for the rest of the costs. Here’s the problem: Most reservation residents don’t have private insurance, so IHS clinics have to bill government programs that help low-income people pay for healthcare.

Two “glitches” in this formula: If the reservation residents are in a state which hasn’t raised its Medicaid eligibility levels to 138 percent of the federal poverty level—remember, many states are much below even 100 percent of poverty in their Medicaid coverage—the IHS clinics can’t bill Medicaid for uncompensated coverage. Reservation residents could try to purchase insurance policies on the health exchanges, but why would they, since for them, healthcare at the IHS clinics is completely free? Reservation residents, unlike others, are not subject to a federal penalty if they do not purchase health insurance.

On Indian reservations, therefore, the federal payments to Indian Health Service clinics only cover 45 percent of the actual cost of the health service provided and the clinics have no guaranteed way of making up the difference under the Affordable Care Act. On reservations in Wyoming, tribal authorities are convening meetings to convince residents to apply for insurance that would allow for a means of recouping the other costs.

To the tribes, it is something like a Catch-22. In return for centuries of governmental action driving Native Americans off their lands, the deal that emerged was to put the tribes on reservations and pay for the social, educational, and medical costs of reservation residents. But the payments from the government to the IHS clinics do not cover even half of the costs of healthcare delivery.

The Affordable Care Act allows for low-income people to receive healthcare coverage and hopefully the providers of healthcare services to be appropriately compensated. On the reservations, where free healthcare is provided by IHS clinics, the tribes will take the hit for the uncompensated healthcare delivery costs.—Rick Cohen