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Sunday, January 22, 2017

The Affordable Care Act (aka Obamacare) on the chopping block

The Patient Protection and Affordable Care Act (ACA for short, or Obamacare as it has come to be known) was passed on March 23, 2010 after intense wrangling and many compromises. It is a huge and complex bill which changed health insurance costs and availability significantly, resulting in over 20 million Americans getting health insurance who were previously uninsured. Many people can now get health care without impoverishing themselves, but the bill is also not without significant and possibly fatal flaws.

What does it do?
The link here is to a blog I wrote in early 2010 after a grueling 5 hours of reading the bill that was eventually passed. The things people like about it include:
  • Health insurance can be bought through "exchanges" which make it easy to compare plans and purchase insurance. 
  • The wording of policies has to be understandable for regular people. 
  • An insurance company can't refuse to cover a patient because of a pre-existing condition and insurance rates can't be hiked due to being in poor health. 
  • Adult children can remain on their parents' insurance until age 26. 
  • Insurance companies can't stop paying medical costs after a certain ceiling amount and can't kick someone off due to medical problems. 
  • Procedures considered to be effective prevention need to be covered 100%, without a deductible owed by the patient. 
  • Private health insurance is subsidized for people with low income and free insurance is available for people at even lower income through the Medicaid program in those states that have chosen that option. Nineteen of the fifty states, however, have opted out of expanded Medicaid.
  • For most people buying health insurance through the exchanges, health insurance premiums will be affordable due to subsidies.
  • There have been innovations designed to improve both cost and quality.
What's wrong with it?
  • Although health insurance is more affordable for most people and now covers preventative services, it is also required. If the insurance companies have to agree to insure patients who are going to cost them lots of money, they also need to insure patients who won't cost lots of money or their costs will go up and they will no longer be able to make a profit. The requirement to buy health insurance is called the individual mandate and is enforced by a penalty charged on income tax of up to $695 for an individual who has not paid for insurance for a year. The amount of the fine is capped at the cost of the cheapest insurance available. The idea is that you can either pay and get insurance or pay and not get insurance. People don't like being told they have to buy health insurance, especially if they are well. Unfortunately for many of the insurance companies, healthy people did not purchase insurance despite penalties, so many of these insurance companies had to opt out of the exchanges because they lost money.
  • The ACA was supposed to reduce costs overall. Obviously it wasn't going to cost less to get healthcare for many more people, but the overall trend was supposed to go in the right direction. This document from the Center for Medicare Services is interesting. Healthcare expenses as a percentage of our gross domestic product went up, from 17.4% in 2014 to 17.8% in 2015. In 2015 we spent a staggering $9990 per person on healthcare. The congressional budget office predicted an overall reduction in costs. Perhaps it just needed more time.
  • The government assured the insurance companies that it would pay them for any losses under the new plan. The total cost of this was expected to be minimal since insurance companies that did well would pay a portion of their profits to the program. There were more losses than expected, and the Republican dominated congress refused to fund the difference, leading to what was essentially a breach of contract. The stiffed insurance companies are now suing the federal government for billions of dollars. It turned out that health care cooperatives, which were a great idea, had the biggest trouble staying afloat and so the vast majority of those have folded.
  • More patients can now receive healthcare, 20 million or more, but out of pocket expenses and the price of insurance is rising. Before subsidies, health insurance premiums will rise 25% in 2017. Premiums reached over $18,000 for an average family in 2016, though most families still were able to buy affordable policies through the exchanges because of subsidies. 
  • People receiving health insurance through their employers are spending increasing portions of their salaries for their share of health insurance premiums, now over 10%.  Employers pay the majority of these premiums, leading to lower profits and lower worker salaries. This is a continuation of a trend that was present before the ACA passed, but the situation has not improved.
  • Twenty-nine million people are still uninsured. Nineteen states have refused to expand Medicaid. This leaves patients who are too poor to afford health insurance but not poor enough to qualify for regular Medicaid with no health insurance. These people get medical care only in extreme circumstances or pay for expensive care themselves, leading to financial destitution and unpaid bills which hospitals or clinics have to absorb.
  • Some of the experiments to improve quality and reduce costs have introduced layers of complexity to doctors' already complex jobs and this leaves them with less time to spend with patients and with more job dissatisfaction. Physician burnout is increasing, now at over 50%, primarily attributed to administrative duties.
Could the ACA be better?
Yes, for sure. There were many compromises leading up to passage of the bill, despite the fact that in the end it passed without any Republican support. Progressives pushed for a single payer system which would make the federal government the major provider of healthcare coverage. (Actually, in terms of dollars spent, the federal government is the major provider of healthcare coverage.) This could have been done as an expansion of Medicare which is already an established and relatively frugal insurance plan. The government would then have been in competition with the health insurance industry which did not make their very powerful lobby happy, and some physicians balked, expecting a heavy handed approach to what they were allowed to do for their patients. A "public option" was also put forward, which could have provided an optional government funded insurance, but that, too was seen as competing with private insurers and might have become yet another very expensive and possibly budget busting entitlement program. The ACA legislated the creation of the Center for Medicare and Medicaid Innovation to help come up with creative ways to provide and pay for healthcare, but prevented them from using cost-effectiveness analysis to decide what to recommend. This was because of concerns about "rationing" healthcare. The ACA in its original form required the states to expand Medicaid, with the federal government footing all of that cost for 2 years and then gradually reducing that subsidy to 90% by 2020. The Supreme Court found that requirement to be unconstitutional, leaving 19 states to make a short sighted decision to forego a significant subsidy from the federal government and leave a proportion of their poorer citizens without healthcare coverage.

So the ACA could be better by being bigger. It could have entirely revamped how healthcare was paid for by introducing a single payer or provided a good public option. This would not have passed congress and certainly won't now. It might have been great eventually, but would have been very expensive and might have destabilized the economy. The ACA could have explicitly recommended we reduce costs by looking at value and eliminating services with low value. It could have offered expanded Medicaid without state support, leading to more nearly universal health coverage.

It could have been better by having bipartisan support, but, having watched the whole process go down, it's not clear how that could have happened. The idea of universal coverage with an individual mandate was taken straight from various Republican proposals over the last 15 years, and looked very much like the Massachusetts health plan sponsored by Mitt Romney. The ACA did not fund abortion and did not extend Medicaid to illegal immigrants. It provided a waiver for patients based on religious beliefs. There was no funding for talking about end of life wishes with patients due to concern that this might mean we had created "death panels" to decide who would live or die. Still, there was no Republican support for what was very appeasing legislation.

It could have been better by being smaller. Many of the exclusions and exciting new programs which were introduced to make it attractive to legislators also made it hard to understand. Patients to this day have very little idea what the ACA is or even that it is the same thing as what they call Obamacare. Physicians are unclear about its provisions and blame various woes on the ACA that belong to different legislation or to developments not related to law at all.

What will happen to it?
Members of the present administration have vowed to repeal it, but want to hold on to some of the most popular provisions. I have gleaned from many reliable sources that:

  • They would like to make health insurance companies continue to insure people regardless of pre-existing conditions so long as they maintain continuous healthcare coverage. They also want to allow children to stay on their parents' health plans until age 26. 
  • They do not want to continue to subsidize the expansion of Medicaid or subsidize insurance for people based on income. They would consider a refundable tax credit to help pay for insurance.
  • They would like to limit the federal government's funding of Medicaid. Presently the federal government pays a percentage of each state's costs for Medicaid and has significant control over how that money is spent. The Republicans in power favor "block grants" for Medicaid which would provide a fixed amount of money for the program to each state, to be spent as the state decides. This could lead to appropriate economies, but could also lead to states running out of money for programs and cutting funding to vulnerable people. 
  • There has been a proposal to reform malpractice at the federal level, primarily capping what a plaintiff can receive for non-economic damages. This would save money, in theory, by encouraging physicians not to order excessive tests just to avoid being sued. Thirty states have already passed such legislation and some evidence does point to a reduction in healthcare costs.
  • Health Savings Accounts (HSA) would play a part in paying for care, allowing patients to use pre-tax dollars for health expenses. Unfortunately most of the people who have bought insurance through the exchanges are not wealthy and have been subsidized, and so don't have money to put into HSA's.
  • It is unclear what the administration intends to do with regulations on the insurance industry. If they require that insurance companies insure patients with pre-existing conditions who will likely be more expensive, but repeal the individual mandate as they have promised to do, insurance companies might well fail. Patients have become used to getting preventative care without having to pay a deductible, but it is unclear that this is cost saving, so without legislation to require coverage insurance companies may do away with this provision. This is likely to make constituents very unhappy. I have not heard anything about caps on out of pocket expenses or lifetime expenditures. 
  • There is an intention to allow insurance companies to sell their products across state lines, improving competition and therefore reducing costs. This may help, but patients may find that their cheaper out of state insurance doesn't pay for their local doctor or pharmacy or that it lacks protections they had come to rely on.


Bottom line
There is a good chance that the "Obamacare" that we are just getting used to will go away. This will be "the beginning of an uncertain and tumultuous chapter in U.S. health policy" per Jonathan Oberlander, a professor at University of North Carolina and the author of The Political Life of Medicare, in an article in a recent issue of the New England Journal of Medicine. The ACA has been divisive and irksome to Republicans for years and they would have repealed it already if they had had the political muscle they do now. It will be tremendously difficult to deal with the aftermath of that, especially the 20 million people whose access to healthcare will be endangered or lost. None of the ideas that have been mentioned so far come close to managing this. In order to provide access to care that constituents demand at a price that taxpayers can tolerate, compromises will need to be made. The work of improving cost efficiency in medical care, pharmaceuticals and in payment models will need to become a non-partisan issue.

*As a person in need of healthcare, it may be wise to sign up for health insurance through the marketplace before the January 31 deadline, if you are not already insured. The future of these insurance policies is unclear, but it is unlikely that any change in the ACA will affect insurance that a person has already purchased, at least in the short term.


2 comments:

Anonymous said...

A few things in general: we have a big, leaky bucket in this country of high medical expenses and low outcomes compared with other major countries ... we need real medical reform before insurance reform before we even think about single payor, including money for prevention.

Second, we have a huge infrastructure of fee for service claims paying with lots of efforts by providers gaming the system ......is there a simple way to get funds to providers? Insurance as financial indemnity is a bit archaic anyway, isn't it?

Janice Boughton said...

Totally agree, and woke up thinking about writing something about this. Insurance makes sense for paying for unexpected bad events, but for everyday expenses...? Archaic and inefficient.