PROGNOSIS FOR THE ACAIN MIDDLE AGE—PRETERMINAL

John P. Geyman, M.D.

Professor Emeritus of Family MedicineUniversity of Washington, Seattle

April 15, 2014

THE ACA’S ROLLOUT

• Glitchy website

• Dysfunctional exchanges

• Low signups and enrollments

• Serial delays

• Mixed public reaction and confusion

SOME POSITIVE GAINSOF THE ACA

• Newly insured:

4 million through the new exchanges

6.3 million new or renewed Medicaid

3.1 million young people on parents’ policies until age 26

TOTAL 16.4 million

• Subsidies 138 percent up to 400 percent FPL

• USPSTF preventive services without cost sharing

• Limited funding primary care and community health centers

DELAYS IN IMPLEMENTATIONOF THE ACA

• April 2013—ACA’s cap on out-of-pocket costs delayed from 2014 to 2015.

• Summer 2013—employer mandate for firms 50-99 workers delayed from 2014 to 2015.

• November 2013—insurers can sell non-compliant policies at least another year.

• February 2014—above employer mandate delayed further to 2016.• February 2014—employers with 100 or more workers required to offer

coverage to at least 70 percent of full-time workers, not 95 percent.• March 2014—open-enrollment for 2015 delayed until after Nov.

elections.

HOW ACA FALLS SHORTON ACCESS TO CARE

• 25 states opt out of Medicaid expansion.

• Medicaid coverage gap

• Medicaid cuts limiting benefits and physician

reimbursement.

• Primary care shortage.

• Out-of-network barriers.

REASONS YOU CAN’T KEEP YOUR INSURANCE IF YOU LIKE IT

• Cancelled policies

• Employers drop coverage, shift workers to

part-time, or pass them to exchanges

• Premiums unaffordable

• Loss of choice of doctors and hospitals

REASONS YOU CAN’T KEEP YOUR DOCTOR

• Out of network (70 percent through

exchanges)

• Exclusion by ACO

• Physician won’t accept low

reimbursement

• Retirement or death of physician

THE COST VS. CHOICE “EXPERIMENT”: INSURERS

WIN, PATIENTS LOSE

• Narrow networks with lower premiums, worse

benefits

• Patients lose continuity of care at affordable costs

• Leading hospitals often out of network

• Insurers profit by gaining enrollees with lower-cost

physicians and hospitals.

• Déjà vu over again since managed care of 1990s

REASONS WHY ACAWILL NOT SAVE COSTS

• No price controls.

• Ongoing perverse incentives to profit.

• Increased costs of expanded bureaucracy.

• Market failure without limits.

BURDENSOME MEDICAL DEBT FOR THE “INSURED”

• In-network cost sharing• Out-of-network care• Unaffordable premiums• Insurance coverage limits or exclusions• Unaffordable out-of-pocket costs• No limits for out-of-network costs.

WHY ACA IS FAILING, AND WON’T WORK

• Leaves almost 40 million uninsured, many

millions underinsured• Unaffordable costs of care even if costs of

insurance are subsidized• Continued barriers to access• Improvement in quality unlikely• Increased bureaucracy, overhead and waste• Profits trump care• Unaccountable and unsustainable

LESSONS FROM THE ACA• You can’t control costs by leaving for-profit health care

industries in charge.• You can’t reform the delivery system without reforming the

financing system.• Private health insurance does not offer enough value to be

bailed out by government.• It is futile to use unproven or discredited incremental

strategies to “reform” the system (Egs., CDHC, P4P,

ACOs)• You can’t have an efficient insurance system without a large

risk pool.• The safety net continues to unravel, especially in non-

expanding states.

HOW INSURERS PROFITEER FROM THE ACA

• Premium hikes with minimal regulatory constraint

• High deductibles (eg., $5,000 before covering office visit)

• Overheads averaging 19 percent, including profits

• Overpayments to private Medicare Advantage plans

• Limited benefit plans

• Gaming what counts as care under the medical loss ratio rule.

• Selling short-term policies that last less than 12 months.

A FIFTH TIER?(“Pyrite” or “Fools Gold”)

If you take ten categories of coverage and you have a giant step-up,

that is a bridge too far for some individuals… that was being

telegraphed pretty clearly in the fall, not from us but from people who

were buying the product and would have to spend more. So I would

create a lower tier, so that people could gradually move into the

program, so they could be part of the risk pool so we don’t hold the

healthier people outside, so the process could be working the way it

was designed, so we get the healthy and the sick… They’re in control

if they have more choices.

—Karen Ignagni, President and CEO of America’s Health Insurance Plans (AHIP).C-SPAN, March 21, 2014

THE HEALTH INSURANCE INDUSTRY: DYING WITHOUT THE ACA’S BAILOUT

• Continued inflation of health care costs• Growing unaffordability of premiums• Subsidies as direct pass through to insurers• Unaffordability of cost sharing & out-of-pocket costs• Adverse selection in fragmented risk pools• Decreasing actuarial value of coverage• Continued decline of employer-sponsored insurance

“[Obamacare] is not a government takeover of medicine. It’s the privatization of health care. . . . It will make some people very rich.”

—Tom Scully, former administrator of CMSin the George W. Bush administration

Health care stocks went up by almost 40 percent In 2013, the highest of any sector in the S&P 500.

“Broadening health insurance coverage to include more than 50

million Americans is a worthy goal—as is any attempt to get a

handle on cost inflation in health care expenses on the United

States. But we believe that the idea that these goals are best

pursued through market-mimicking and means-tested social

programs is profoundly misguided. Fragmented risk pools will

not promote either perceptions of fairness or us-us politics in

the provision of health insurance. And patient choice and

competition among insurers has no demonstrated record of cost

control in medical care either in the United States or elsewhere

in the developed world.”

—Marmor, TR, Mashaw, JL, Pakutka, J. Social Insurance: American’s Neglected Heritage and Contested Future. Sage Publications Inc, 2014

LIKELY UNINSURED IN 2019

Original projection 31 million

Medicaid coverage gap 4.8 million

Estimated opt-out from individual mandate 2-10? Million

Likely totals uninsured 37-45 million

Uninsured before ACA 48 million

THE ACA VS. SINGLE-PAYER NATIONAL HEALTH INSURANCE

37-45 million uninsured in 2019

Employment and Medicaid based, with subsidies for many millions

Variable coverage and benefits

Multi-tiered system, based on ability to pay

Limited choice of doctor and hospital

Universal coverage when enacted

Covers all ages regardless of work status, gender, etc.

Comprehensive benefits

Single standard for all, based medical need

Free choice of doctor and hospital

ACA NHI

THE ACA VS. SINGLE-PAYERNATIONAL HEALTH INSURANCE (continued)

Fragmented, inefficient risk pools

Large intrusive bureaucracy

For-profit business ethic

No cost containment

Unsustainable

One big, efficient risk pool

Administrative simplicity

Service ethic

Cost containment through negotiated fees, budgets and prices

Sustainable through progressive taxes; employers and individuals pay less than they do now

ACA NHI

All things are possible until they are proved

impossible—and even the impossible may be

only so, as of now. —Pearl S. Buck