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President Obama recently reviewed the ACA. Find out what he said are the top successes, and how policy insiders are reacting.
President Obama’s recent review of the Affordable Care Act (ACA), published in JAMA, highlights the successes of the ACA. The study’s release is perhaps a response to the Republican-issued 37-page white paper, aimed at repealing key components of the ACA, according to some experts.
“The Affordable Care Act has made significant progress toward solving long-standing challenges facing the US health care system related to access, affordability, and quality of care,” the President wrote. “Since the Affordable Care Act became law, the uninsured rate has declined by 43%, from 16.0% in 2010 to 9.1% in 2015, primarily because of the law’s reforms.”
The review also noted that “payer spending per health care enrollee has continued to decline and health care quality has improved.”
He wrote that the strengths of the ACA should be built upon and that “policy makers should . . . [continue] to implement the Health Insurance Marketplaces and delivery system reform, increasing federal financial assistance for Marketplace enrollees, introducing a public plan option in areas lacking individual market competition.”
However, as with anything-the devil is in the details and perhaps what is “not” in the paper, according to Bret Schroeder, healthcare expert at PA Consulting Group.
“It’s easy to show a decline in per enrollee spending when you expand the number of enrollees,” Schroeder says. “Under ACA, Medicaid enrollment went from 54 million in 2010 to 70.5 million in 2015-a 30% increase-due to a broadly expanded definition eligibility. Of course per enrollee spending goes down when the denominator is increased by 30%. However, real spending increased, about $100 billion. That $100 billion has to come from somewhere.”
While there is no doubt that the ACA has reduced the number of uninsured in this country and that is a very good achievement, the law still remains on shaky ground for several reasons, according to Bill Pierce, senior director, Global Health Care Practice, APCO Worldwide.
Next: Unstable marketplace?
First, according to Pierce, the marketplaces remain unstable. “The government has not been a good partner to the insurers and the providers of healthcare, which has led directly to rising premiums, out-of-pockets and copays,” he says. “The subsidies help those who qualify pay premiums, and there is some help for other costs-although three of the biggest helps, risk adjustment, reinsurance and risk corridors, have been weakened by Congress. However, because of higher-than-expected premiums and out-of-pocket expenses, most of those covered by the ACA are persons who qualify for some level of subsidy.”
Schroeder believes that higher copays and deductibles have left some people “disenfranchised with healthcare reform. In addition, ACA has had very little impact on the cost structures of the payers and providers who continue to expand administrative, IT and compliance budgets,” he says. “We are seeing significant increases in unplanned spending due to ever-changing regulations.”
This is clearly not what supporters of the law intended, according to Pierce. “It was supposed to provide coverage for everyone who did not receive coverage through work. This trend of the ACA only covering subsidy eligible individuals will continue unless sensible reforms are made to stabilize the marketplace,” he says.
Second, Pierce says, premium prices and out-of-pockets continue to rise.
“This is directly related to the instability of the marketplace,” Pierce says. “For the most part, premiums remain affordable for those who qualify for a subsidy, since they only pay some portion of the premium. But for those who do not qualify, premiums are quickly becoming unaffordable. This phenomenon is directly related to the weakening of the elements of the law designed to help counter the unpredictability created by a new marketplace, which is what the ACA is.”
Insurers had no way to accurately predict how the new entrants into the ACA would behave health-wise, as many of the persons had never had health insurance before and at best only had spotty coverage over the course of their lives, according to Pierce.
According to Schroeder, it has been reported that many people are avoiding care when sick and even skipping preventative care checkups due to rising copays and deductibles.
“Insurers and employers are passing the increasing costs highlighted above onto their members in an effort to guide consumers to be more responsible for their care, but for the majority of the population who has seen minimal wage growth in the past five years, these increased costs take up a larger portion of household budgets,” Schroeder says. “The impact is that consumers are waiting longer for care and in many instances end up requiring more care. This is more costly not only for the consumer, but also for the insurer.”
Pierce shares a similar viewpoint. “And we now know that those covered by the ACA have more illness than those in the group marketplace and in the pre-ACA individual marketplace, thus making it more expensive to provide them coverage,” he says. “This is why we are seeing the collapse of the co-ops. They have virtually no experience and were handicapped by rules that were more political than smart policy, and while many of the large insurer are losing money, they have experience and size to withstand this early period, but even they must see marketplace stability for them to remain over the long run.”
Next: How the ACA can survive
For the ACA to survive and achieve its overall goal of providing coverage for those who are without and helping to lower costs, “the government must stop trying to make markets and instead become a reliable partner to the private sector doing what it does best-regulating,” Pierce says.
Schroeder highlights some of the “unintended consequences of the ACA,” which include the demise of small-practice doctors.
“Increased reporting and compliance requirements are difficult for small practice physician groups to manage,” he says. “Combined with declining revenues imposed by changes in Medicare and insurance companies moving to ACOs and narrow networks, small practice physician groups are struggling to balance quality and business performance. Many have opted to close the practices and become hospital based employees while others have merged into larger group practices that have the staff and infrastructure to support.”
For executives running business small and large who are not in the ACA, what happens in the ACA will eventually impact employees and the health coverage they receive, according to Pierce.
“Therefore it makes sound economic sense to advocate for changes to the law that will stabilize the marketplace and make it easier for insurers to provide affordable premiums,” he says. “Otherwise, if the current instability continues, the ACA marketplace could simply become another safety net program that is both a tax cost of doing business and will create an environment where once again costs are shifted from the uninsured to the insured, which is one the problems that the law was supposed to fix.”
For executives in the health industry, Pierce has a similar message, but even more urgent since this is their business. “You must press Congress and whoever the new President is, to make change in the law that will bring stability to the marketplaces that will provide predictability,” he says.
“Overall, we really don’t know how well the law is working or may work since there has not been a sufficient period of time to assess the law because since its passage, insurers have had to constantly react to a string of new regulations often later than expected, tweaks to existing regulation or legislative changes passed and signed into law,” he says. “This has amounted to changes being made to the law well after premiums had been set that were based on regulations and law that had since been changed, thus leading to higher costs in the next cycle. In the commercial marketplace, cycles are traditionally three to five years, not six months or a year as they have been in the ACA marketplace. This unpredictability must be addressed.”