Understanding Important Facts Around the ACA and Potential Replacement or Revisions

The Patient Protection and Affordable Care Act (PPACA), commonly shortened to the Affordable Care Act (ACA) and nicknamed Obamacare, is a United States federal statute enacted by the 111th United States Congress and signed into law by President Barack Obama on March 23, 2010.

Why Did We Need the ACA (Obamacare)?

• In 1980, 25 million Americans were uninsured, and by 2009, it increased to 51 million (Bodenheimer/Grumbach, 2012).
• While many people obtain employer plan insurance, those whose employers were not offering insurance, or those who were self-employed, or unemployed, were left to fend for their own health care solutions.
• Additionally, small increases in family income could disqualify people for Medicaid benefits.
• Between 2007-2008, 29% of the US population (87 Million people) went without health insurance.
• Even those who did have insurance suffered risks of non-coverage for needed care, such as insurance carriers refusing care or services for certain “pre-existing conditions.”
• Because of so many people without insurance coverage, emergency rooms and other similar facilities have steadily been under heavy use and over utilization for the most minor of health problems.

Popular Portions of the ACA (Obamacare)

• Denying coverage for pre-existing conditions was made illegal under the ACA.
• The ACA allows young adults up to the age of 26 to stay covered under their parents plan.
• It requires that preventative screenings and care are made available to everyone.
• The creation of a marketplace where patients can shop among coverage choices and supplemental coverage.
• More than 20 Million Americans gained health coverage because of the ACA (Obamacare).

Unpopular Portions of the ACA (Obamacare)

• The marketplace website for coverage had technical issues due to the high volume of people trying to sign up and it took some time to get it up and running properly.
• Many opposed the “Individual Mandate” that requires everyone to have coverage. While that may be unpopular, it is necessary in order to include younger healthier people to help offset the healthcare costs of the older population.
• Many opposed using insurance carriers in the marketplace as opposed to having a single payor solution, however this was a compromise that Democrats made for Republicans who insisted on it.
• What’s in a name? Many people did not like President Obama personally and many did not like it being called Obamacare. We have also learned recently that a great number of conservative voters did not know that Obamacare and the ACA were the same thing. Numerous articles and interviews were made public of people showing dissatisfaction with “Obamacare” and wanting to get rid of it and to have the ACA instead.
• Many people believed, and some still believe today that anyone over the age of 74 would be subject to “death panels” as a part of the ACA, but this was false. This was never in the ACA (Obamacare). These claims were completely untrue.
• Patients were promised they could keep their doctor as well as their health care plan if they liked them, however this could not be fully promised as physicians and health plans both have continual adjustments on what plans they offer and participate with based on performances. Issuers drop and change health plans often, and providers change the networks that they participate with often.
• The ACA (Obamacare) could not ensure the plans would be fully patient-friendly. For example, most patients chose a metal level based on what they could afford in their monthly personal budget and this may or not may equate to the level of coverage they needed for their condition(s). Some health plan deductibles were at such a high dollar figure, that the plan was useless to the patient who could not afford to meet the deductible.

What has Happened as a Result

• Some issuers have dropped out of participating, and others have threatened to do so in the future.
• Premiums have risen to the disapproval of Americans. A combination of factors are involved, such as patients not choosing plans that covered all their needs, patients who were only enrolled in partial years (costing the health plan a great deal financially in short spurts), prescription drugs costs that were not balanced or planned for in the first year, and others. However, there were supposed to be protections for health carriers in the original ACA (Obamacare) plans to protect insurers from unexpected financial losses. Unfortunately, those insurer protections were gutted/ removed by Republicans during negotiations before the ACA was made law.

Options Presented Thus Far

While there is plenty of blame to go around on both sides of the aisle, it would seem with a Republican controlled House, Senate, and Presidency, it will be up the to Republican Party to present a replacement or revision. There have been conflicting reports on what may or may not be in the works, but here are some of the suggested items thus far, along with their real repercussions.

1. Engaging Commercial Insurers: President Trump first announced that the solution would involve insurance carriers and getting them involved in creating health plans for coverage, however this is exactly what the ACA (Obamacare) did, and there was no clarification made to any differences or comparisons. Many are not confident that all of our government officials know what the ACA does or how it works.
2. Refundable Tax Credits: This would be money credited to help consumers/ patients make their premiums, however, this currently is presented to be based on age and not income. This would mean that aged Americans (who would be more likely to be financially stable), would get a larger subsidy than a young person making minimum wage. An additional problem would include subsidies that would be too small to help. Tom Price (current HHS Secretary) has proposed $1,200 per year for people aged 18 to 35, and up to $3,000 per year for people aged 50 and over. This proposed dollar figure is only one third of the cost of the most basic and minimalistic coverage plans currently offered.
3. Health Savings Accounts: The idea and usability of HSA’s only works for those who can afford to save money- thus the “savings” account. People would be at risk for not being able to save, not saving enough, or using everything they had saved should they have a serious illness. The majority of Americans affected are people who live paycheck to paycheck in a world where the current minimum wage has not risen to match the current cost of living.
4. Block Grants for Medicaid: The idea of block grants has been proposed to fund Medicaid. This would stop paying states a percentage of their Medicaid costs (as currently done) and instead pay a “fixed block” to each state. The problem here is that we know that healthcare costs naturally rise over time, and if they rise, and the block grants do not cover the disparity, there will not be enough to cover patient care. A study by the Kaiser Family Foundation in 2012 estimated that previously proposed block grants would create a reduction in enrollments by over 20 Million people in 10 years time.
5. High Risk Pools: A high risk pool would lump the sickest people in populations together in the same plan. These will be high cost pools/plans. A study in 2014 by The Commonwealth Fund has already estimated that a National High Risk Insurance Pool is not a workable alternative to the marketplace. It showed that the net federal cost to cover high risk pools would be over $178 Billion per year. The plan offered by Tom Price (current HHS Secretary) only allowed for $3 Billion for high risk pools over a period of 3 years. This will make premiums too high for patients and leave coverage gaps for costly chronic conditions.
6. Continuous Coverage Incentive: No one knows for sure what is meant or planned as a continuous coverage incentive, but this has been proposed (in title only) as a potential fix or solution. While the word “incentive” is associated with a positive feeling, there is no way of knowing what types of penalties or strongholds may be devised to enforce coverage. This could be just another way to encourage an “individual mandate” into the face of many who already disapprove of the individual mandate portion of the current law. Some ideas that have been verbally floated by Republicans include monetary penalties in the form of increased premiums upon reentry into the market and preventing the patient from reentering the market for up to one full year.
7. Selling (or offering) Insurance Policies Across State Lines: One of the solutions commonly promoted is the idea of allowing the sale of health insurance across state lines. The very statement would imply that it is not done or available already, or that it is somehow currently illegal, however this is not true. It is legal today to do this, and is specifically allowed under the ACA. The reason it isn’t happening is because it is not a solution. Georgia, Maine, and Wyoming for example have passed laws enabling “interstate treaties” for cross border insurance sales, but no Insurer has expressed interest in participating. The misguided idea of this option would be that it would enhance consumer (patient) choice and increase competition, and thereby make insurance more affordable with such competition. Keep in mind that this is antithetical to the idea of having States regulate health insurance. The ACA sets nationwide standards for minimum benefits and consumer protections that must be followed by all Issuers, and some states have standards that are more strict than the national minimums under the ACA. If controlled by States, a State could impose more regulations on Issuers living in the State where the policy was sold. A possible end result could be that BCBS of California for example might not be issuing policies to Californians, who then could choose from BCBS of Texas, Massachusetts, Michigan, or any other State. If a law was passed that granted a national license to any Insurer in any State, the State with the weakest and most easily bought regulatory structure would gain a large portion of all insurance companies. This would create chaos, higher premiums, and allow the low regulation policies to cherry pick the healthiest patients, leaving those most ill to fend for themselves among the other in-State offerings that would be very costly, and would undermine the idea of adjusting costs across a larger population. Another key problem with this idea is that most patients obtain their care locally and contract negotiations or deals made with providers and Insurers are based on projected volumes of patient utilization. If a policy is from across State lines, it will have less leverage for price negotiations and deals. Multi-state networks tend to do better in metropolitan areas that include several states. As evidenced by a Georgetown University study team, there are no organized champions for them, consumer patients are not asking for them, Insurers are not interested in them, doctors and hospitals don’t care, and state regulators aren’t inclined to give up their oversight to Insurers from other states. Only politicians who do not understand healthcare are promoting this idea. (Reference: Article by Michael Hiltzik, LA Times, Nov 14, 2016)

Goals That Must Prevail:

• Our country must provide medical coverage or insurance for all Americans, to include pre-existing conditions.
• Insurance costs must correlate in a balance considering patient age, income, and risk based on chronic conditions.
• The government should either use a single payor system copied from the risk adjustment HCC modeling used in Medicare Advantage plans (Medicare HMO’s offered by Issuers) where standards of product lines are established, or the government should standardize the options that are allowed by various Issuers.
• Insurance companies must be protected from unexpected financial losses when providing these important healthcare services to Americans.

The Importance of Preventative Public Health

“The science and art of preventing disease, prolonging life, and promoting physical health and efficiency through organized community efforts for the sanitation of the environment, the control of community infections, the education of the individual in principles of personal hygiene, the organization of medical and nursing services for the early diagnosis and preventive treatment of disease, and the development of the social machinery which will ensure to every individual in the community a standard of living adequate for the maintenance of health.” – A definition of “public health” by Edward A. Winslow, a theoretician and leader of American public health in the first half of the 20th century, 1920.

Public Health can be Controversial

• Milk producers resisted pasteurization
• Landlords resisted building codes
• Individual freedoms vs. improving the community’s health (smoking, vapes, guns, etc.)

The government has a primary purpose to promote the general welfare of its people, and this includes health and safety. The government cannot guarantee this for every individual, but its role is to maximize the health and safety of all.