Becker's Hospital Review

16 16 CEO/STRATEGY The Repeal and Reevaluation of the ACA: 4 Key Points By Scott Becker, Publisher of Becker's Healthcare D onald Trump and Mike Pence campaigned on the concept and reiterated that they plan to repeal the ACA. e nomination of longtime ACA opponent Rep. Tom Price, R-Ga., as head of the HHS underscores their intention to do so. Whether this will be legislatively achievable is a difficult question that is beyond this quick discussion. Here are four quick points to consider as to the ACA. 1. 20 million newly insured lives. e ACA has had the benefit of adding 20 million of the uninsured to the insured ranks between the law's passage in 2010 to early 2016. e great question is how will these people access care if the ACA is repealed? One commentator notes that 16 million of these previously uninsured were added to Medicaid pro- grams. us, the real initial number one may need to immediately solve for may be closer 4 to 6 million lives; not 20 million. Note, however, in examining these numbers, the states and the federal government have had significantly added costs through Medicaid expansion. 2. Tremendous costs and taxes. e ACA costs trillions of dollars. ere is a great question as to whether 20 million people gaining health in- surance could have been done at a much lower cost. e ACA has arguably led to a redistribution of monies from one set of people who pay for insur- ance coverage and taxes to those who don't. Whether this is good or bad societally is a difficult question. It is not answered here. 3. Positives. Four of the benefits of the ACA, expected or unexpected, are as follows. First, it has led to coverage for nearly 20 million people. e rate of uninsured Americans hit historic lows under the ACA. Second, it has led to integrated systems dramatically increasing their use of telehealth. I did not see this coming. It has come on very quickly in places where integrated systems fully own (i.e., are responsible for) the costs of delivery. is has accelerated a potential game changer for costs in the long run. It has to be much cheaper to deliver a lot of care remotely by telehealth than in person in offices. In the long term, this can have a seismic shi on healthcare costs. Already, more than a third of employers or their health plans offer a financial incentive for covered employees to receive care through telemedicine instead of visiting a phy- sician's office, according to Kaiser Family Foundation. ird, the ACA is linked to a dramatic increase in high-deductible health plans, health saving accounts and similar consumer-driven efforts. Pro- ponents of HDHPs claim the benefit design induces consumers to seek high-value care and make mindful choices. If the plans are improperly struc- tured or poorly communicated, however, enrollees can sometimes forego care to avoid the deductible, which can result in greater long-term costs. e costs of HDHPs have impacted consumers greatly, but it is not clear how much the mechanism has actually led to a reduction in healthcare costs. However, we see more and more lab tests, MRI tests and other types of add- ons on a brokered basis and price is more available as a point of discussion and consideration for patients making healthcare decisions. Fourth, the ACA has improved the ability of people with lower incomes and/or pre-existing conditions to gain coverage. is may dramatically reduce a feeling of helplessness among these groups. It used to be that you couldn't get coverage unless you worked for a large company or were poor by definition and eligible for Medicaid. is le people who held a job independently or at a small company and made $30,000 to $70,000 annually at great risk. ey could not obtain affordable healthcare cover- age or, at some wages, have access to Medicaid. eir economic life and whether they could survive financially was always at risk based on one bad health situation. For this population and for those with pre-existing conditions, the ACA helped reduce these problems significantly. Of note, Republican replacement plans are reported to include similar con- cepts for coverage of pre-existing conditions. 4. Negatives. On the negative side, as we have mentioned before, the ACA costs a tremendous amount of money. CMS projected $2.757 trillion in spending from 2014 to 2022 for private insurance overhead and the adminis- tration of government health programs (mostly Medicare and Medicaid). Of that total, $273.6 billion was attributable to new administrative costs linked to the ACA. e law also has not seemingly reduced healthcare premiums or health- care costs for families in general. is year, the average premium for em- ployer-sponsored family coverage rose 3.4 percent to $18,142. (About 155 million Americans under 65 have employment-based coverage.) On av- erage, workers contribute 30 percent of the premium for family coverage. e other force is deductibles, which have risen almost six times faster than workers' wages since 2010. So workers' share of premium payments is up, deductibles are steadily increasing and wage growth has been sluggish. is is a less than desirable combination of economic forces. Finally, the ACA has contributed to more, not less, consolidation of health- care systems. e law reduced the growth of Medicare hospital reimburse- ment by about 1.5 percentage points annually — one of many other payment reductions made over the years. Further, alternative care delivery and pay- ment models like ACOs emphasized care coordination and "patient sticki- ness." Many health systems saw tightened relationships with other providers (i.e., acquisition, merger, clinical affiliation, strategic partnership, etc.) as a way to better account for their at-risk lives, clinical outcomes and, thus, re- imbursement. In the long run, this may have been the final goal — having everyone look like some variation of Kaiser Permanente. is may or may not be good for healthcare in the long-term. However, in the next 20 years, these efforts at consolidation have a tremendously disruptive impact on how things work. Further, consolidation ultimately gives reasonably dominant systems, (the new antitrust buzzphrase "market essential") much greater leverage by which to position themselves for improved reimbursement and payer contracting. At some point there may be so much leakage out of these large systems that their movement toward market essential/dominant feels like a "maginot line." At this time it stills seems to be their path toward significant margins and higher revenues. n The ACA has arguably led to a redistribution of monies from one set of people who pay for insurance coverage and taxes to those who don't. Whether this is good or bad societally is a difficult question.

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