The Affordable Care Act: A Considered Evaluation.
Part I. The legislative act (ACA) and the model for implementation (Insurance Gateways).
Part I. The legislative act (ACA) and the model for implementation (Insurance Gateways).
Part II. The Implementation of the ACA, Impact on Physicians and Patients, and the Dis-Ease of the Accountable Care Organizations.
Part I
The legislative act (ACA) and the model for implementation (Insurance Gateways)
A. Access and Coverage of Healthcare Reform Mandate
Changes in Health Insurance Coverage in the Great Recession, 2007-2010
This issue brief examines changes in health insurance coverage over the last decade, with a focus on how changes in the economy, particularly during the “Great Recession” of 2007 to 2009, have affected coverage and the number of uninsured. The paper finds that the number of uninsured grew substantially during the first recession of the decade, increasing by 5 million people from 2000 to 2004; increased more slowly during the brief recovery, growing by 2.1 million people from 2004 to 2007; and then again rose significantly during the Great Recession, rising by 5.7 million people since 2007.
The paper also finds that coverage, especially for children, through the Medicaid and Children’s Health Insurance Programs helped to prevent even more people from being uninsured. While the number of uninsured children declined in recent years, the number of uninsured adults rose. The only notable drop in uninsured adults was for young adults ages 19-25 in 2010, most likely due to the provision of the health reform law that permits young adults to stay on their parents’ insurance. The paper also considers trends in coverage by work status, race and ethnicity, citizenship status and geographical region.
http://kff.org/medicaid/issue-brief/changes-in-health-insurance-coverage-in-the/
Uninsured adults with chronic conditions or disabilities: gaps in public insurance programs.
Pizer SD, Frakt AB, Iezzoni LI. US Department of Veterans Affairs in Boston, MA.
Health Aff (Millwood). 2009;28(6):w1141-50. http://dx.doi.org/10.1377/hlthaff.28.6.w1141
http://www.ncbi.nlm.nih.gov/pubmed/19843552
Among nonelderly U.S. adults (ages 25-61), uninsurance rates increased from 13.7 percent in 2000 to 16.0 percent in 2005. Despite the existence of public insurance programs, rates remained high for low-income people reporting serious health conditions (25 percent across years) or disabilities (15 percent). Previous research has established that low-income workers, those facing more stringent Medicaid eligibility requirements, and people employed by smaller firms are more likely than others to lack health insurance. Residents of southern states had even higher rates (32 percent with health conditions, 22 percent with disabilities). Those who did not belong to a federally mandated Medicaid eligibility category were about twice as likely as others to be uninsured overall, and uninsurance among this group increased more rapidly over time.
To address this growing problem, President Barack Obama and leaders in Congress passed health insurance reform legislation that is still taking shape. A common feature of the major proposals at this point is that coverage would be expanded by building on existing arrangements. This approach allows people to keep their current insurance if they wish to do so. The Medicaid program is particularly complicated because it is jointly financed and operated by the federal and state governments and because each state has implemented it differently.
See Table 1.
Ultimately, if Congress decides not to eliminate categorical eligibility restrictions, our results indicate that the preservation of eligibility expansions for people with disabilities or chronic conditions would target a population that is particularly vulnerable to uninsurance and its deleterious effects on health.
How Many Are Underinsured? Trends Among U.S. Adults, 2003 And 2007
Healthcare Costs: Another Top 1% Issue
By Chris Kaiser, Cardiology Editor, MedPage Today Sep 11, 2013 http://www.medpagetoday.com/TheGuptaGuide/PublicHealth/41539
In the U.S., the top 1% of patients ranked by their healthcare expenses accounted for 21% of total healthcare expenditures in 2010, with an annual mean expenditure of $87,570, according to 2010 Medical Expenditure Panel Survey from the Agency for Healthcare Research and Quality in Rockville, Md. In addition, the top 5% of the U.S. population ranked by healthcare expenses accounted for half of the total of healthcare expenditures, with an annual mean expenditure of $40,876, wrote Steven B. Cohen, PhD, and Namrata Uberoi, MPH, in the Statistical Brief No. 421. Both of these figures are down from 1996, when the top 1% accounted for 28% of the total healthcare expenditures and the top 5% accounted for slightly more than half. The total healthcare expenditures for 2010 were $1.26 trillion.
It is important that policy makers are aware of the the “concentration of healthcare expenditures … to help discern the factors most likely to drive healthcare spending and the characteristics of the individuals who incur them,” the authors noted.
Overall, there was a huge divide between the top and bottom 50% of the population in terms of total healthcare expenses. The top 50% accounted for 97% of total healthcare costs, while the lower 50% accounted for only 3% of the total healthcare expenditures. In terms of income status,
- the top 5% of those designated as poor accounted for 57% of the total healthcare expenditures, with an annual mean expenditure of $46,600, while
- the top 5% of those in the highest income group accounted for 45% of the total healthcare expenditures, with an annual mean expenditure of $40,800.
The report also broke down healthcare spending by the number of chronic conditions, age, race/ethnicity, sex, and insurance. The survey found that chronic diseases take a big chunk of healthcare dollars.
The top 5% of those with four or more chronic conditions accounted for 30% of all healthcare expenditures, with an annual mean of $82,000 — a figure that is
- seven times higher than those in the top 5% with no chronic diseases and nearly
- three times higher than the top 5% with one chronic condition.
A report from 2012 found that Medicare could cut up to 10% of its spending if it focused on chronic disease prevention and coordinated care for those with chronic conditions. Conditioned on insurance coverage status, the uninsured had the most concentrated levels of healthcare expenditures and the lowest annual mean expenses. Regarding public insurance, the top 5% accounted for 56% of the total healthcare expenditures.
Virtually every state experienced deteriorating access to care for adults over the past decade
GM Kenney, S Zuckerman, D Goin, S McMorrow, Urban Institute May 2012
We use the Behavioral Risk Factor Surveillance System (BRFSS) to examine state-level changes in three key access indicators over the past decade. Specifically, we explore changes in the likelihood of having unmet medical needs due to cost, receiving a routine checkup, and receiving a dental visit for all nonelderly adults and for the subgroup of uninsured adults. We also consider differentials in access between uninsured and insured adults within each state in 2010, and how these differences are reflected in the relationship between access to care and state-level uninsurance rates.
We find that the deterioration in access to care observed in national trends during the past decade was evident in virtually every state in the country. Similarly, consistent with the national trends, the situation deteriorated more for the uninsured than for other adults in most states, which exacerbated the differentials in access and use between the insured and uninsured that had prevailed at the beginning of the previous decade. At the end of the decade, the uninsured in every state were at a dramatic disadvantage relative to the insured across the three access measures we examined. This analysis suggests that the potential benefits of the coverage expansion in the Affordable Care Act (ACA) are large and exist in every state.
We also found that states with higher uninsurance rates have worse access to care for all three measures, which implies that these states have the most to gain from the ACA. In particular, the ACA coverage expansion has the potential to reduce unmet needs due to costs and other cost-related barriers, problems that are more severe in states with high uninsurance rates.
DOCUMENTATION ON THE URBAN INSTITUTE’S AMERICAN COMMUNITY SURVEY-HEALTH INSURANCE POLICY SIMULATION MODEL (ACS-HIPSM)
Matthew Buettgens, Dean Resnick, Victoria Lynch, and Caitlin Carroll May 21, 2013
We use the Urban Institute’s American Community Survey – Health Insurance Policy Simulation Model (ACS-HIPSM) to estimate the effects of the Affordable Care Act on the non-elderly at the state and local level. This model builds off of the Urban Institute’s base HIPSM, which uses the Current Population Survey (CPS) as its core data set, matched to several other data sets including the Medical Expenditure Panel Survey-Household Component (MEPS-HC), to simulate changes under ACA. To create HIPSM-ACS, we apply the core behavioral components of the base HIPSM to ACS records to exploit the much larger sample size for more precise estimates at the state and sub-state level. The modeling on the ACS-HIPSM produces projections of coverage changes related to state Medicaid expansions, new health insurance options, subsidies for the purchase of health insurance, and insurance market reforms (see Appendix 1 for more detail on HIPSM).
We simulate eligibility for Medicaid/CHIP and subsidies using the Urban Institute Health Policy Center’s ACS Medicaid/CHIP Eligibility Simulation Model, which builds on the model developed for the CPS ASEC by Dubay and Cook. (Dubay, L. and A. Cook. 2009. “How Will the Uninsured be Affected by Health Reform?” Washington, DC: Kaiser Commission on Medicaid and the Uninsured.)
We simulate both pre-ACA eligibility and the MAGI-based eligibility introduced by the ACA. This allows us to simulate different scenarios for Medicaid maintenance-of-eligibility under the ACA. The distinction between pre-ACA eligible and newly eligible is also important in determining the share of a beneficiary’s costs paid by the federal government.
Using the three-year pooled sample, the model simulates eligibility for comprehensive Medicaid and CHIP coverage or subsidy using available information on the regulations for implementing the ACA, including the amount and extent of income disregards for eligibility pathways that do not change under the ACA and for maintenance-of-eligibility for each program and state in place as of approximately June 2010.
Under the ACA income eligibility is based on the IRS tax definition of modified adjusted gross income (MAGI), which includes the following types of income for everyone who is not a tax-dependent child: wages, business income, retirement income, investment income, Social Security, alimony, unemployment compensation, and financial and educational assistance (see Modeling Unemployment Compensation in the appendix). MAGI also includes the income of any dependent children9 required to file taxes, which for 2009 is wage income greater than $5,700 and investment income greater than $950. To compute family income as a ratio of the poverty level, we sum the person-level MAGI across the tax unit.
Current eligibility is determined based on state rules for 2010. State rules include income thresholds for the appropriate family7 size, asset tests, parent/family status, and the amount and extent of disregards8, for each program and state in place as of the middle of 2010 .
we estimate two separate probit models, each with the following covariates:
- Age Category: 0 – 5, 6 – 18, 19 – 44, 45 – 64.
- Health Status
- Worker Status (Household Level)
- Wage (Logarithmic Transformation)
- HIU Income to Poverty Threshold Ratio
- Number of Children
- Presence of a child in Public Coverage
- Citizenship Status
- Number of Adults in the Family
The dependent variable is an indicator of non-group non-exchange policy holder status. Again we compare each respondent’s predicted probability to a standard uniform random number and assign enrollment in the non-group non-exchange to those observations with probabilities that exceed the random number. Appendix Table 5 shows the overall new enrollment in the non-group non-exchange coming out of our model. It shows that the large majority of non-group enrollees outside the exchange are expected to come from single-person policyholders.
We develop a model, again based on HIPSM output, to predict which single ESI policy holders in the ACS are likely to switch to a family plan. We restrict our model to HIUs in which there is at least one single policy holder and at least one other member of the HIU that could potentially be covered by an ESI family plan. The eligible dependents include those with baseline non-group or uninsurance that had not already taken up coverage in a previous model. Note that we only model moving from an individual plan to a family plan; we did not model adding a dependent to a current family plan. Within the eligible group of single ESI policy holders, we use the following covariates to estimate the probability that they will switch to a family ESI policy:
- HIU Type: Individual, Unmarried with child, Married without Child, or married with children
- Age Category: 0 – 5, 6 – 18, 19 – 44, 45 – 64.
- Health Status
- Worker Status (Individual Level)
- •Wage (Logarithmic Transformation)
- •HIU Income to Poverty Threshold Ratio
- •HIU Income to Poverty Threshold Categories (<138% FPL, 138% – 200% FPL, 200% – 300% FPL, 300% – 400% FPL, 400%+ FPL)
- •Number of Children
- Presence of a child in Public Coverage
- Citizenship Status
- Firm Size
- Education Status
These estimates assume that the ACA is fully implemented with the Medicaid expansion in all states and that the same basic implementation decisions are made across the states. At the time of writing, even states such as Massachusetts which have been on the forefront of ACA implementation had not finalized their plans, so any modeling of variation in state decisions would necessarily involve a lot of guesswork. Also, it will take several years for enrollment in new programs such as the exchanges and Medicaid expansion to ramp up so the full effects that are estimated under the simulation model would not be felt until 2016 or later. Enrollment in the initial years would also be affected by state and federal decisions. For example, in the proposed rules released by HHS in January 2012, the deadline for establishing unified eligibility and enrollment between Medicaid and the exchange was pushed back to 2015.
Health insurance status change and emergency department use among US adults.
Ginde AA, Lowe RA, Wiler JL.
Department of Emergency Medicine, University of Colorado School of Medicine, Aurora, CO. http://www.ncbi.nlm.nih.gov/pubmed/22450213
Arch Intern Med. 2012 Apr 23;172(8):642-7. http://dx.doi.org/10.1001/archinternmed
Recent events have increased the instability of health insurance coverage. We compared emergency department (ED) use by newly insured vs continuously insured adults and by newly uninsured vs continuously uninsured adults. Overall, 20.7% of insured adults and 20.0% of uninsured adults had at least 1 ED visit. However, 29.5% of newly insured adults compared with 20.2% of continuously insured adults had at least 1 ED visit. Similarly, 25.7% of newly uninsured adults compared with 18.6% of continuously uninsured adults had at least 1 ED visit. After adjusting for demographics, socioeconomic status, and health status, recent health insurance status change was independently associated with greater ED use for newly insured adults (incidence rate ratio [IRR], 1.32; 95% CI, 1.22-1.42 vs continuously insured adults) and for newly uninsured adults (IRR, 1.39; 95% CI, 1.26-1.54 vs continuously uninsured adults). Among newly insured adults, this association was strongest for Medicaid beneficiaries (IRR, 1.45) but was attenuated for those with private insurance (IRR, 1.24) (P < .001 for interaction). Recent changes in health insurance status for newly insured adults and for newly uninsured adults were associated with greater ED use.
Health Insurance and Access to Health Care in the United States
Catherine Hoffman, Julia Paradise
Annals of the New York Academy of Sciences 2008; 1136. http://dx.doi.org/10.1196/annals.1425.007
Reducing the Impact of Poverty on Health and Human Development: Scientific Approaches pages 149–160, June 2008
In the United States, where per capita health care costs are the highest in the world and continue to escalate, health insurance has become nearly essential. Having reasonable access to health care rests on many factors: the availability of health services in a community and personal care-seeking behavior, for example. However, these and other factors are often trumped by whether a person can afford the costs of needed care. Health insurance enables access to care by protecting individuals and families against the high and often unexpected costs of medical care, as well as by connecting them to networks and systems of health care providers.
Health insurance, poverty, and health are all interconnected in the United States. This article synthesizes a large and compelling body of health services research, finding a strong association between health insurance coverage and access to primary and preventive care, the treatment of acute and traumatic conditions, and the medical management of chronic illness. Moreover, by improving access to care, health insurance coverage is also fundamentally important to better health care and health outcomes. Research connects being uninsured with adverse health outcomes, including declines in health and function, preventable health problems, severe disease at the time of diagnosis, and premature mortality.
Most working-age adults obtain health coverage for themselves and their dependents as a benefit of employment. However, this benefit has been gradually eroding as health premiums, in tandem with higher health care costs, grow at a rate far outpacing rates of general inflation and wages. In 2005, 61% of the nonelderly had insurance through an employer, down from 66% in 2000.1 Low-wage workers are far less likely than higher-wage workers to have access to job-based coverage. In 2005, more than half of workers in poor families and more than a third of those in near-poor families had no offer of job-based coverage in the family.2 When it is available, health insurance is often unaffordable for low-income people, whose household budgets are strained to meet food, housing, and other basic needs.
Figure 1. Health insurance coverage of the nonelderly population, 2006.
http://onlinelibrary.wiley.com/store/10.1196/annals.1425.007/asset/image_n/NYAS_1136007_f1.gif Source: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of Current Population Survey, March 2007.
Those with Medicaid coverage are the most likely to be in fair or poor health because the program’s eligibility requirements include being severely disabled and/or low-income (fig. 2).
Figure 2. Percentage of U.S. nonelderly population reporting fair or poor health, by income and insurance status, 2006.
http://onlinelibrary.wiley.com/store/10.1196/annals.1425.007/asset/image_t/NYAS_1136007_f2_thumb.gif Source: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of Current Population Survey, March 2007.
The model for healthcare reform was selected from that enacted in Massachusetts. Important statements from the Massachusetts Act are as follows:
to promote patient-centeredness by, including, but not limited to, establishing
- 1137 mechanisms to conduct patient outreach and education on the necessity and benefits of care
- 1138 coordination, including group visits and chronic disease self-management programs;
- 1139 demonstrating an ability to effectively involve patients in care transitions to improve the
- 1140 continuity and quality of care across settings,
- 1146 establishing mechanisms to protect patient provider choice,
Individual Mandate
A provision called the individual mandate, requires all Americans to buy some form of health insurance. Whether it is constitutional was in question before the Supreme Court. While the mandate is separate from the provision allowing young adults up to the age of 26 to be covered under their parents’ policies, the court could have decided to scrap the entire law — instead of just the mandate — leaving millions of young adults in the lurch. The mandate was upheld.
For many young adults, affording health insurance on their own will be particularly difficult. The unemployment rate for young adults age 16 to 24 was 16.4% in March, twice the national average for the population as a whole. And many of those who do find jobs, often aren’t being offered health benefits. Less than a quarter, or 24%, of workers between the ages of 19 and 25 were offered health insurance by their employers in 2010, down from 34% in 2000, according to the Employee Benefit Research Institute, an independent public policy organization. Meanwhile, nearly 57% of the rest of the working population between the ages of 26 and 64 were covered.
B. Economics of Universal Delivery of Care – Stakeholders’ Trade offs
- Medicare Part A deductibles and copayments would increase.
- Part B premiums would go up.
- Savings from closing the Part D donut hole would be eliminated, and the gap in prescription drug coverage would be reopened; under the Affordable Care Act, an estimated 3.6 million Medicare Part D beneficiaries saved an average of $600 each in 2011 once they hit the donut hole, and the donut hole will be closed by 2020.
- Free preventive services would be eliminated; under the Affordable Care Act, seniors can now get many preventive services for free, including an annual wellness visit, mammograms and other cancer screenings, and other important health services.
U.S. Faces Crisis in Cancer Care
Wed, 09/11/2013
Delivery of cancer care in the U.S. is facing a crisis stemming from a combination of factors—a growing demand for such care, a shrinking oncology work force, rising costs of cancer care, and the complexity of the disease and its treatment, says a new report from the Institute of Medicine. The report recommends ways to respond to these challenges and improve cancer care delivery, including by strengthening clinicians’ core competencies in caring for patients with cancer, shifting to team-based models of care, and communicating more effectively with patients.
Adding to stresses on the system is the complexity of cancer and its treatment, which has grown in recent years with the development of new therapies targeting specific abnormalities often present only in subsets of patients. Incorporating this new information into clinical care is challenging, the report says. Given the disease’s complexity, clinicians, patients, and patients’ families can find it difficult to formulate care plans with the necessary speed, precision, and quality; as a result, decisions about cancer care are often not sufficiently evidence-based.
Another challenge is the cost of cancer care, which is rising faster than other sectors of medicine, having increased from $72 billion in 2004 to $125 billion in 2010, says the report. The single largest insurer for those over 65, the Centers for Medicare and Medicaid Services (CMS), is struggling financially.
The report recommends strategies for improving the care of cancer patients, grounded in six components of high-quality cancer care. The components are ordered based on the priority level with which they should be addressed.
- Engaged patients. The cancer care system should support patients in making informed medical decisions that are consistent with their needs, values, and preferences. Cancer care teams should provide patients and their families with understandable information about the cancer prognosis and the benefits, harms, and costs of treatments. The National Cancer Institute, the Centers for Medicare and Medicaid Services, and other stakeholders should improve the development and dissemination of this critical information, using decision aids when possible. Patients with advanced cancer face specific communication and decision-making needs, and cancer care teams need to discuss their options, such as revisiting and implementing advance care plans. However, these difficult conversations do not occur as often as they should; recent studies found that 65 percent to 80 percent of cancer patients with poor prognoses incorrectly believed their treatment could result in a cure.
- An adequately staffed, trained, and coordinated work force. New models of team-based care are an effective way to promote coordinated cancer care and to respond to existing work-force shortages and demographic changes. And to achieve high-quality cancer care, the work force must include enough clinicians with essential core competencies for treating patients with cancer. Professional organizations that represent those who care for patients with cancer should define these core competencies, and organizations that deliver cancer care should ensure their clinicians have those skills.
- Evidence-based cancer care. A high-quality cancer care delivery system uses results from scientific research to inform medical decisions, but currently many medical decisions are not supported by sufficient evidence, the report says. Clinical research should gather evidence of the benefits and harms of various treatment options so that patients and their cancer care teams can make more informed treatment decisions. Research should also capture the impacts of treatment regimens on quality of life, symptoms, and patients’ overall experience with the disease. Additional research is needed on cancer interventions for older adults and those with multiple chronic diseases. The current system is poorly prepared to address the complex care needs of these patients.
- A learning health care information technology system for cancer care. A system is needed that can “learn” by enabling real-time analysis of data from cancer patients in a variety of care settings to improve knowledge and inform medical decisions. Professional organizations and the U.S. Department of Health and Human Services should develop and implement the learning health care system, and payers should create incentives for clinicians to participate as it develops.
- Translation of evidence into practice, quality measurement, and performance improvement. Tools and initiatives should be delivered to help clinicians quickly incorporate new medical knowledge into routine care. And quality measures are needed to provide a standardized way to assess the quality of cancer care delivered. These measures have the potential to drive improvements in care, inform patients, and influence clinician behavior and reimbursement.
- Accessible and affordable cancer care. Currently there are major disparities in access to cancer care among individuals who are of lower socio-economic status, are racial or ethnic minorities, lack health insurance coverage, and are older. HHS should develop a national strategy that leverages existing community interventions to provide accessible and affordable cancer care, the report says. To improve the affordability of care, professional societies should publicly disseminate evidence-based information about cancer care practices that are unnecessary or where the harm may outweigh the benefits. CMS and other payers should design and evaluate new payment models that incentivize cancer care teams to provide care based on the best available evidence and that aligns with their patients’ needs. The current fee-for-service reimbursement system encourages a high volume of care, but fails to reward the provision of high-quality care.
Institute of Medicine Calls for Immediate Reforms in Health Care (2012)
- unnecessary services,
- excessive administrative costs,
- fraud, and other problems, the report said.
Graphical Excursion into National Healthcare Expenditures
Dan Munro, Forbes
According to the Deloitte Center for Health Solutions, this number has been historically underreported – by a significant amount. In their report (The Hidden Costs of U.S. Health Care), they cite two important components that have not been included in tradtional calculations. The first is out-of-pocket spending by consumers on professional services and the second is the “imputed value of supervisory care provided to a friend or family member.” Using a conservative annual growth rate of 4% (from Deloitte’s baseline year of 2010), here’s what Deloitte suggests is our real NHE.
http://blogs-images.forbes.com/danmunro/files/2012/12/NHEbyDCforHS1.png
The Kaiser Family Foundation also provided a comparison of cumulative increases in health insurance premiums – relative to Workers’ Contributions, Inflation and Workers’ Earnings (from 2000 to 2012).
http://blogs-images.forbes.com/danmunro/files/2012/12/percentageincreasekff.png
Another annual chart is Medscape’s Physician Compensation Report: 2012 Results (slide #2 – 2011 data).
C. Political Divisions – Destiny of Healthcare Reform
An Oncology Perspective on the Supreme Courts Pending Decision Regarding the Affordable Care Act
Issues Before the Court
Convergence is Coming: A Brave New World
- the business of healthcare is changing to an ‘outcomes-based’ system
- that compensates organizations based on the effectiveness of a product or service, not as a consumable.
Transforming Healthcare: From Volume to Value
- contracting for healthcare value and
- improving the productivity of the healthcare workforce.
Bundle with Care — Rethinking Medicare Incentives for Post–Acute Care Services
Judith Feder, Ph.D.
- is not sufficiently precise to eliminate variation in expected costs among the patients within a category.
- provide fewer visits, despite serving patients with greater measured care needs.
Study: Bigger hospitals drive cost increases
State Laws Hinder Obamacare Effort To Enroll Uninsured
Modern Healthcare: Reform Update: Employers Take Closer Look At Private Insurance Exchanges
- the Kaiser Family Foundation found that 29% of employers with 5,000 or more employees are considering private exchanges as an option for buying healthcare coverage for their employees.
- A day later, consulting firm Towers Watson released its Health Care Changes Ahead survey, which found that 37% of employers think private exchanges are a reasonable alternative to traditional employer coverage in 2014 (Block, 8/22).
D. Looking in on the ACOs
ObamaCare’s Health-Insurance Sticker Shock
By Merrill Matthews and Mark E Litow, Forbes
Thanks to mandates that take effect in 2014, premiums in individual markets will shoot up.
Central to ObamaCare are requirements that
- (1) health insurers accept everyone who applies (guaranteed issue),
- (2) cannot charge more based on serious medical conditions (modified community rating), and
-
(3) include numerous coverage mandates that force insurance to pay for many often uncovered medical conditions.
Guaranteed issue incentivizes people to forgo buying a policy until they get sick and need coverage (and then drop the policy after they get well). While ObamaCare imposes a financial penalty—
- —to discourage people from gaming the system,
- it is too low to be a real disincentive.
The result will be insurance pools that are smaller and sicker, and therefore more expensive.
How do we know these requirements will have such a negative impact on premiums? Eight states—New Jersey, New York, Maine, New Hampshire, Washington, Kentucky, Vermont and Massachusetts—enacted guaranteed issue and community rating in the mid-1990s and wrecked their individual (i.e., non-group) health-insurance markets.
States won’t experience equal increases in their premiums under ObamaCare. Ironically, citizens in states that have acted responsibly over the years by adhering to standard actuarial principles and limiting the (often politically motivated) mandates will see the biggest increases, because their premiums have typically been the lowest.
While ObamaCare won’t take full effect until 2014, health-insurance premiums in the individual market are already rising, and not just because of routine increases in medical costs. Insurers are adjusting premiums now in anticipation of the guaranteed-issue and community-rating mandates starting next year. There are newly imposed mandates, such as the coverage for children up to age 26, and what qualifies as coverage is much more comprehensive and expensive. Consolidation in the hospital system has been accelerated by ObamaCare and its push for Accountable Care Organizations.
Unlike the federal government, health insurers can’t run perpetual deficits. Something will have to give, which will likely open the door to making health insurance a public utility completely regulated by the government.
Health Insurance Premiums Will Rise
Merrill Matthews, Resident Scholar at Institute for Policy Innovation, Forbes
Subsidies cover a portion of the cost of health insurance, up to a maximum out of pocket for the family. The amount of the subsidy is based both on the cost of coverage and income. There has been a lot of head scratching over how to deal with the fact
- that a family’s income can vary significantly within a year, up or down, in ways no one predicted at the beginning of the year.
So how does the government determine the correct level of subsidy? The PPACA has so many unknowns in the mix that actuaries don’t know how much to charge. This is a problem for setting annual rates.
Traditionally in the individual market, where people buy their own (i.e., non-group) health coverage, applicants sign a contract and the insurance company guarantees that premium for a year. No more. Health insurers started sending out notices in January informing insurance brokers and agents that
- the companies will no longer guarantee that premium rate.
After carefully evaluating its individual market and rates, Aetna decided to discontinue its offer of an initial 12-month rate guarantee. This change applies to policies with a January 15, 2013 or later effective date, in all states where plans are sold. Existing members who are currently in a rate guarantee period will not be affected. Aetna published a notice saying in part, “While the policies will not have a 12-month rate guarantee, we fully expect the rates to stay the same until December 31, 2013.” While that announcement may alleviate the concerns of some, Aetna is not the only company ending the rate guarantee.
While the individual market has been relatively small (about 19 million people, according to the Employee Benefit Research Institute) compared to those with employer-based coverage (about 156 million), most honest analysts expect millions of employers to drop coverage and dump their employees into the individual market.
ACOs Can Save Medicare $$$, Study Finds
By David Pittman, Washington Correspondent, MedPage Today. Aug 27, 2013
An accountable care organization (ACO) established by a private insurer reduced costs of care for Medicare enrollees, a study in Massachusetts found. Providers participating in the Alternative Quality Contract (AQC) — an early commercial ACO backed by Blue Cross Blue Shield of Massachusetts — reduced spending on Medicare beneficiaries by 3.4% after 2 years compared with enrollee costs at nonparticipating providers, ( Journal of the American Medical Association).
Medicare enrollees served by 11 provider groups in the AQC from 2007-2010 were compared with Medicare patients served by non-AQC providers. The study looked at quarterly medical spending and five quality measures, such as avoidable hospitalizations and 30-day readmissions. The AQC started in 2009 with providers bearing a financial risk for spending in excess of a global budget, gaining from spending below the budget, and receiving rewards for meeting performance targets.
Per-enrollee spending was $150 higher for patients of AQC providers than for those of non-AQC providers before the ACO took effect in 2009. Year-1 savings weren’t significant (P=0.18), but
- by year 2, the AQC lowered Medicare beneficiary spending by 3.4% and the difference in spending between the AQC and non-AQC providers had dropped to $51 (P=0.02)
Savings came from reductions in outpatient services, including
- office visits,
- emergency department visits,
- minor procedures,
- imaging, and lab tests.
Also, savings were greater in patients with five or more conditions (P=0.002). Previous research showed the AQC reduced quarterly spending on Blue Cross patients by $27 per enrollee in year two.
ACOs have received sour press of late as nine of 32 pioneer ACOs — Medicare’s first and most advanced ACO provider groups — told the agency last month they want to leave the program. Despite that outlook and ACOs’ struggles to achieve consistent cost savings, Medicare-led ACOs (253) now outnumber commercial ACOs (235), according to a recent report from the consulting group Leavitt Partners.
New Care Models Look at Social Factors in Health
By David Pittman, Washington Correspondent, MedPage Today. Aug 22, 2013
Models such as PCMHs, ambulatory intensive care units, and medical neighborhoods should thrive on connecting patients’ clinical care with broader social services that can help provide better housing and other benefits. (ReportingOnHealth.org)
“The medical neighborhood coordinates care for patients at a community level, working with organizations in the community that can help expand the impact of healthcare and, more specifically, focus on the social determinants,” Manchanda (founder and president of HealthBegins) said. “And this fits more into the model of community-centered health home.” (Medicaid Medical Home)
- Lack of access to good housing, places to exercise, safe neighborhoods, and health food sources make people more vulnerable to heart disease, diabetes, obesity, and other diseases.
Evidence is growing linking people’s physical environments and social conditions to their health. Three in four doctors wished the healthcare system would pay for the cost associated with connecting patients with needed social services. That aspect of the situation is improving with advent of PCMHs and other delivery models which pay for the care coordination of the most at-risk patients. This will be addressed by electronic medical records (EMRs) will help collect social history if EMR vendors provide an avenue for it to be requested and stored. The facilitation of internet communications will allow clinicians to share data with social services about their patients, and connect with patients themselves.
What Do Employers Want From Hospitals? The Rules of the Road
Aegis Health Group. 2013; 5(7).
Corporate America has long viewed the healthcare system as one of the biggest drains on the economy—and on the profitability of businesses nationwide. With the advent of Accountable Care Organizations as the model of the future for managing overall population health, hospitals are ideally positioned to harness this opportunity
- to build profitable partnerships with employers.
In this paper hospital executives will learn about new approaches to this challenge along with some simple, tried-and-true rules of the road for attaining mutually beneficial partnerships with employers.
Why does Corporate America think the current state of healthcare is a quagmire – and that they are in the middle of it?
COST OF POOR HEALTH IN BILLIONS
They are ready to take control of the issues and turn them from business detractors to business advantages. Consider this:
- »» According to the 17th annual Towers Watson Employer survey on “Purchasing Value in Healthcare,” employee healthcare costs have increased 42 percent since 2007.
- »» Total costs average more than $11,600 per employee each year, with employers paying out 34 percent more compared to just five years ago.
- »» Healthcare now costs employers $576 billion annually.
- »» These dollars relate not only to insurance premiums and the actual cost of care provided, but absenteeism and lost productivity when workers either do not show up or perform marginally on the job due to illness.
On the flip side workers have felt the sting as well. With more employers scaling back benefits or selecting higher-deductible plans, employee out-of-pocket expenses and payroll deductions for premiums increased 82 percent, averaging $5,000 per year according to the same Towers Watson survey. The escalation of healthcare costs almost mirrors the increasingly poor health of U.S. adults. Only one in seven workers are of a normal weight and free from any chronic health conditions, such as diabetes, hypertension or heart disease.
A full 62 percent of employers want to increase employee wellness and preventive health programs. Hospitals are well positioned to provide
- the medical talent, best practices and expertise required for a comprehensive workforce health initiative (WHI).
As the country moves toward an accountable care model of healthcare delivery, the timing has never been better for hospitals to take a leadership role in developing population health programs in the workplace and beyond.
Employee View: Who provides the greatest value in healthcare?
Plans 39%
What are the Six Sigma Elements of an Effective Workforce Health Initiative?
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