With those words, Barack Obama signed a law that would restructure 18% of the largest economy in the world over the next decade. We are now 2 years into the restructure (click here to see a timeline of the Affordable Care Act (ACA) implementation, what has happened, and what is yet to come) and apparently there is at least one governor who is practicing “resistance.” I had the opportunity to hear Department of Health and Human Services Regional Director Anton Gunn speak on Saturday regarding the law and its implementation. He started out with President Obama’s quote and his follow-up, similar to the quote from his similar talk in Mississippi:
“It’s not an idea; it’s not a policy; it’s not just a conversation piece. It is the law,” Gunn reiterated. “At the Department of Health and Human Services, our job is to implement the law, and that is what we are trying our best to do.”
One of the more interesting points he made in the way of introducing the topic of care delivery in the United States, which I had not considered, was that the delivery of care is not only fragmented within the delivery system, it is fragmented by virtue of who pays the bills as well. He identified 6 major delivery systems, which I will elaborate on and identify what the ultimate effect of the ACA will be on that system.
Medicare – Originally established to provide full payment for care delivered to the elderly. Enrollment today for the most part by virtue of age. Accounts for 13% of the population. Established in 1965. Prior to establishment, recipients typically had no way to obtain health services except through cash or charity. In the subsequent 50 years services to beneficiaries have expended with ineffective cost controls leading to increasing cost per beneficiary. ACA allows for more effective cost controls among beneficiaries and providers, some of which are being implemented this year. Mis-information regarding effects of these have led to the allegation of “death panels” and “government control.”
Medicaid – Originally established to provide partial payment for care delivered to the poor. Enrollment is based on income but is incredibly variable from state to state. Accounts for 16% of the population. Established in 1965. Prior to establishment, recipients typically had no way to obtain health services except through charity although some would pay cash. In the subsequent 50 years services have expanded to cover long-term care for the elderly and disabled in almost all states. The elderly account for about 10% of recipients but over 20% of costs, even though all of their hospital care is paid for by Medicare. ACA greatly expends eligibility and makes it consistent (133% of Federal Poverty Level) across states. Funding is a combination of federal (typically 66%) and state (the rest). Concern over the expansion of services by federal fiat is in part what led the states to file suit to block the law, but that aspect was affirmed almost immediately. The expansion of Medicaid will allow many poor people to have predictable access whereas now they may or may not have access depending on where they live and the status of their family. The ACA also contains many opportunities to improve care delivery by encouraging improved efficiency.
Employer provided health insurance – Established in the 1930s as a way to prepay for health care, it caught on in the 1950s when wages were frozen as a way to attract and keep employees. Typically regulated (or not regulated as the case may be) at the state level, the ACA is the first major effort to inject federal oversight into this market. It defines what a policy must pay for, how much of the premium must be spent on actual healthcare as opposed to administrative costs, and will offer a clearinghouse to allow folks to compare and purchase policies based on transparent differences as opposed to what the sales person says. Currently about 55% of Americans are enrolled by virtue of their job. During the failed Clinton reform efforts, the inability to transfer coverage for “pre-existing conditions” was used to encourage employers to fight reform efforts (sick employees or those with sick dependents, unable to quit without losing coverage, could be “chained to their desk”). The HIPAA act made it easier to move . Private non-group policies do exist but account for less that 6% of folks under 65, are expensive, and typically exclude people with chronic illnesses (who are likely to use them). The ACA currently will not allow children’s coverage to include a pre-exist clause, and they will be eliminated from all policies after 2014. The ACA also contains mechanisms to encourage more effective care and allow for seamless transitions for folks as they transition from insurance to public coverage (either Medicaid due to a financial setback or Medicare as they turn 65).
Active Duty Military (TriCare) – Currently serving 3% of Americans, this is not affected by the ACA…except…the changes around care delivery that are available for Medicare and Medicaid are being made available to this system as well. This is because the healthcare cost is counted against the military’s budget and it is increasing at an alarming rate. The ACA does allow members and their families to transition from this pool (a benefit, not really an insurance) into the private insurance world without worrying about preexisting conditions.
Veterans Administration – Provides care to 1,000,000 Americans who have a service connected disability, this is not affected by the ACA…except…the changes around care delivery are being made available to this system as well. This is because the healthcare cost are increasing and care delivery reform is seen as the most effective way to reduce costs
Uninsured – This is currently 14% of the population (up from 2007 as a result of the “Great Recession”). Kaiser Family Foundation does a good job of outlining the problems associated with limited access to the health care delivery system associated with a lack of insurance. These include paying 300% over what insurance companies pay because no one is negotiating for them, being asked for large amounts of money up front prior to receiving care, burdening certain providers disproportionally, and being forced into bankruptcy after having to use cash for health care. Folks that are uninsured die at an earlier age than those with insurance. Even if they do not die, they self-identify as being in much worse health. The ACA has reduced the number of young adults without insurance already by allowing children to stay on their parents’ insurance until they are 26. It will move those who make minimum wage or work several part time jobs into Medicaid. It sets up insurance exchanges to allow those who work for small business who do not provide insurance (for example, if the boss has TriCare insurance so doesn’t feel compelled to purchase coverage for his or her employees). For these folks, affordable coverage with a defined benefits package will be available. For large employers, there are many elements which should reduce the cost of providing health insurance to employers.
The ACA is not perfect. The CBO estimates that 7% of folks will still not have coverage, most of whom are undocumented workers or folks working for companies who elect not to purchase a product and pay the fine. This will be work for another time. And there is still the question of the constitutionality of the mandate. In all, though, this is one impressive 10 year plan.