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A Critical Assessment of the Affordable Care Act

A Critical Assessment of the Affordable Care Act

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“Just a spoonful of sugar helps the medicine go down…”
— Mary Poppins

Much like Poppins’ lyrics, a mixture of fact and fiction has swirled around the Affordable Care Act (ACA). Cheerleaders for the ACA highlight the sugar and the detractors highlight strong medicine, leaving most struggling for the truth. In 2,700 pages of law and tens of thousands more in new regulations, there is plenty of grist for everyone’s mill.

As the primary stakeholders assess the impact on their sectors and react, one rarely asked and fundamental question becomes paramount: Is the ACA actually workable? An unbiased review of what we now know leaves plenty of reason for concern:

• Patient protections, which virtually everyone agrees should be implemented, shifts costs onto insurers, both public and private, as a mostly unfunded mandate. Shifting costs is not saving costs:
     • Removal of lifetime limits on coverage
     • Removal of pre-existing condition restrictions
     • Removal of co-pays for certain visits
     • Premium limitations to homogenize costs

• Material reductions in the number of uninsured may be very hard to achieve as a result of the Supreme Court upholding state’s rights, state and large employer exemptions and waivers, and assumptions of provider participation that are already on shaky ground:

     • Over 96 percent of small business, or 5.8 million of 6 million total firms, have less than 50 employees, making them exempt and not obligated to pay into the program.

     • The “tax” penalty is insufficient to discourage employers with over 50 employees to provide coverage or from broadly expanding their part-time workforce to avoid providing insurance. It will simply be less expensive to pay the fines throwing yet more people under the individual mandate.

     • So many large employers and states have been given waivers that millions of people who would otherwise be covered under the law will, instead, will be subject to the individual mandate and find that it is far less expensive to pay the penalty instead of premiums.

     • An estimated 12 million non-citizens are exempt from tax penalties and are not covered by any program.

     • Many states are likely to opt out of the Medicaid expansion program and state insurance exchanges not because of politics, but because the huge cost of processing and validating millions of new claims and meeting federal regulatory requirements falls on state taxpayers.

     •Affordability provisions may not be affordable for taxpayers; the non-partisan Congressional Budget Office has already doubled the estimated cost to about $2 trillion over the first ten years.

• The ACA shifts many of the costs over to an already stressed provider system that cannot absorb it:

     • It initially drives physicians to hospital, ACO, and large clinic employment. It later threatens their collective fiscal viability with a surge of underinsured people who are saddled with thousands in out-of-pocket payments and an explosion of publicly insured people at reimbursement levels that are well below the cost of providing services.
    
     • Primary-care providers will be required to lead teams of specialists to help their patients to achieve improved outcomes without clear definition of what that means, and without appropriate compensation. The teams of specialists will likely be unable to, or will refuse to, treat publicly insured patients because reimbursements are below the cost of providing services.
    
     • In 2015, primary-care providers will be in the same financial bind as other specialists when the Medicaid reimbursement adjustment to Medicare rates expires, and reimbursements fall 40 percent.

     • There will be intense competition for privately insured patients that reimburse sufficiently to keep providers financially viable.

     • The first government response will likely be to propose accepting Medicaid as a condition to qualifying for Medicare. The likely provider response will be to drop Medicare in order to survive and competition for privately insured and self-paying patients will intensify further.
    
     • The Federal Government will have little alternative other than to: institute real reform; throw additional trillions of dollars at the program to prop it up; or start over.

A hard look at the ACA and its trajectory paints a sobering picture. There is no choice but to reform the system.

The ACA is a first step, but it is looking more and more that this first step is onto a busy street. It doesn’t have to be that way. Our leaders need put their egos and invective rhetoric aside, and do this right.

Find out more about James Doulgeris and our other Practice Notes bloggers.

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