Last Wednesday marked the sixth anniversary of the passage of the Patient Protection and Affordable Care Act. As of this week, the five Presidential aspirants have each articulated key changes they’d propose, though polls show interest in the law is largely among Democrats who consider healthcare a major issue along with national security and the economy.
GOP candidates Trump, Cruz and Kasich say they will repeal the law; Democratic frontrunner Clinton says she will repair it, and her challenger, Bernie Sanders, promises to replace it with universal coverage. Some speculate that candidate Clinton’s plan will ultimately mirror her Health Security Act of 1993 that parallels the Affordable Care Act in many respects. But the law gets scant attention on the campaign trails other than their intent about its destiny if elected.
I have read the ACA at least 30 times, each time musing over its complexity, intended results, unintended consequences and hanging chads. At the risk of over-simplification, the law purposed to achieve two aims: to increase access to insurance for those unable to qualify or afford coverage, and to bend the cost curve downward from its 30 year climb. It passed both houses of Congress in the midst of our nation’s second deepest downturn since the Great Depression. Unemployment was above 10%, the GDP was flat, and companies were cutting costs and offshoring to adapt.
The “Patient Protection and Affordable Care Act” soon after became known as the “Affordable Care Act”, and then, in the 2010 Congressional Campaign season that followed its passage, “Obamacare”. It was then and now a divisive law: Kaiser tracking polls show the nation has been evenly divided for and against: those opposed see it as “the government takeover of healthcare” that will dismantle an arguably expensive system that works for most, while those supportive see it as a necessary to securing insurance coverage for those lacking.
In the Congressional campaigns of 2010, proponents of the Affordable Care Act took a beating: control of Congress shifted from Dem’s to the GOP and from that day forward, what followed in the GOP controlled House of Representatives were 52 votes to repeal it including last week’s 228-199 vote on HR37 included in the GOP FY2017 budget. The Senate lacked the muster to follow suit but the House persisted.
The PPACA was to be implemented for the period of 2010-2019. It was the Senate version that ultimately passed the House, with the drama focused on late vote-getting by Democratic leadership who concluded the Senate’s less aggressive, more state-friendly law was the only hope for health reform legislation. It is premised on simple assumptions:
Covering those without insurance is preferable to letting their ranks swell. At the time of passage, the uninsured rate in the US was 16% and trending upward. Today, it’s 9%. Theoretically, offering insurance to lower income qualified citizens through either Medicaid expansion or the insurance exchanges would serve two purposes: lower costs for their care by pre-empting expensive emergency room visits, and lower costs for everyone else through lower insurance premiums, lower hospital costs because bad debt would be lower and so on.
Quality of care can be measured and its relationship to volume made known to purchasers. The law builds on reputable work by RAND, IHI, Dartmouth and others showing more care is not better care, and process improvements in diagnosing and treating conditions results in better outcomes and lower inappropriate variation. Further, it presumes that quality can be measured and its correlation to costs made known to purchasers who can decide for themselves if more is better. Throughout the law’s myriad of programs, demonstration and pilots, quality measures are embedded: most are process measures and a few are actual patient outcomes.
Provider organizations will compete on the basis of value. The law places the burden of financing (insurance) and the delivery of care on doctors and hospitals because they’re trusted. By doubling down on transparency and tightening the screws on self-referrals and business practices that benefit producers over consumers, the law presumes the system will adapt to competition based on a provider organization’s performance around its costs, outcomes, error, user experiences and service delivery. Thus, by changing the incentives for providers from volume to value, a competitive private market will result.
States must play a key role in implementing health reforms. Finally, the crafting of the law drew on the reality that health reform circa New York State is a decidedly different path than Arkansas or Iowa. That was the vigorous debate in the Senate’s Finance Committee where the law was crafted. Thus, defining essential health benefits, credentialing providers around scope of practice, the option of state-run health insurance exchanges et al were left to the devices of state legislatures and the state’s Chief Executives. The Supreme Court’s ruling June 28, 2012 that affirmed the constitutionality of the law reinforced the state role by negating the law’s mandate that Medicaid be expanded in every state.
Of 88 provisions in the law, 82 have been or are on target to be implemented (Kaiser Family Foundation). HHS’ touts the law as a huge success: 12.7 million have gained coverage through the health exchange marketplaces (83% of these are counting on tax credits averaging $290/month to help them pay their premiums), 2.3 million young invincibles gained coverage by staying on their parent’s plans and Medicaid expansion in 32 states plus DC added 6 million. In almost every community, physicians and hospitals are participating in some form of shared risk with Medicare via accountable care organizations or bundled payment programs, and the Congressional Budget Office predicts the law will cost $465 billion to implement between now and 2019, which is 25% lower than it estimated when passed in 2010.
Others call attention to the law’s unintended consequences: massive consolidation of the industry in every sector, disruption of physician-patient relationships as narrow networks gained traction, higher insurance premiums due to the law’s restrictions, added costs for drugs and devices as a result of the law’s new excise taxes, and a general sense of frustration by the industry’s frontline workers accustomed to operating on axioms like ‘all healthcare is local” and “doing less means poor quality”.
Retrospectively, what have we learned?
The law has fundamentally changed the structure of the healthcare industry across the board. Private insurers adapted quickly: premium increases and plan design changes were almost immediate. Providers—hospitals and doctors especially, adapted slowly, since the risks are unclear and the disruption costly. Drug and device manufacturers focused their R&D on surer bets and raised prices, and healthcare investors took advantage of the changes to drive efficiency and innovation through consolidation. Today, more than one in three physicians is employed in a hospital; Anthem’s acquiring Cigna and Aetna’s acquiring Humana, and United Health Group is repositioning itself as Optum, the innovation company. Go big or get out is new the rule of the realm.
No one knows for sure how much the ACA will cost or how many will receiver coverage. Keeping up with forecasts of the law’s cost and coverage impacts from the CMS Office of the Actuary and the Congressional Budget Office is virtually impossible. When passed, the estimates were increased coverage for 52 million by 2019 through the cumulative impact of Medicaid and CHIP expansion, employer and individual mandates, tax credits for small businesses to provide employee coverage, and tax credits to individuals with incomes between 100-400% of the federal poverty level to purchase coverage. In the latest CBO forecast, the costs of the ACA are lower than projected, but that’s largely due to lower-than-expected enrollment in the new programs and the Supreme Court ruling June 28, 2012 that states could not be forced to expand their Medicaid programs.
The PR campaign for the law was ineffective. Calling the law Obamacare hurt public support. What would have happened if Lyndon Johnson’s great society had been coined as “Johnsoncare”. It would have died a slow, painful death. “Medicare” made sense. Perhaps the creative genius behind “Grande” and “Latte” at Starbucks should have been tapped to craft the law’s PR campaign. The law’s supporters failed to harness the public’s support for many of the law’s provisions that were wildly popular–cessation of pre-existing conditions for insurance coverage, expansion of coverage to eligible adults under 26 who could stay on a parent’s plan, elimination of annual and lifetime limits on coverage, elimination of the prescription drug donut hole obligation for seniors and many others features. But the law’s proponents failed to galvanize a public mandate to reform the system and wilted against counter-attacks from its opposition in the toxic climate of partisan politics.
The law is complicated. Might a more prudent strategy have been to tackle insurance industry reforms first, and delivery system changes later? We’ll never know for sure.
So the Campaign 2016 question is this: what’s the likelihood the Affordable Care Act will be repealed? It’s highly doubtful for three reasons:
First, the composition of Congress required to support its repeal isn’t likely to override a Presidential veto, assuming a Democrat is in the White House next year. It takes a two-thirds majority in both Houses to override a Presidential veto. If a Republican is in the Oval Office next year, it would likely still require 60 GOP votes in the Senate to advance its repeal bill—a prospect that’s suspect since 24 of the 34 seats up for election in this cycle belong to Republicans who currently hold 54 seats in the upper chamber.
Second, the undoing of the law’s expansion of coverage is problematic. Granted, the extension of Medicaid could default to the states, and the federal government is on the hook for the tax credits, but the myriad of provisions in the law that enable individuals and small businesses to access coverage with tax credits seems intractable in the near term.
And third, replacing the ACA sets up a testy legislative process that the country might not tolerate. A new set of laws, in the toxic climate of partisan politics, means chaos for the industry just-now adapting to the new normal and default efforts to replace it with “Medicare for All” might take its place. Millennials, cohorts of middle income and hourly workers, with uninsured citizens joining in would be a majority in its favor.
So the likelihood of repeal is low; the inevitable is its repair. And at the top of the list will be several notable hanging chads that might be addressed:
- Provisions in the law that de-stabilize the individual insurance market by driving premiums higher at double digit rates annually.
- Provisions that tie provider payments to “value” without a consistent methodology for defining and measuring value.
- Provisions applying new excise taxes to medical device, drug manufacturers and health insurance companies that they’ve subsequently passed on in their prices
- Provisions that encourage providers toward integrated delivery systems that serve regions without adequate protection and clarity around safe harbors and antitrust constraints
- Provisions that address the fragmentation and highly variable performance in post-acute care
- Provisions that force employers to provide coverage need attention punishing employers with 50 or more fulltime employees where much of the job growth is stunted by the penalty
- And lack of attention in the law to personal accountability, liability reforms, adequate funding for preventive and primary care that’s inclusive of mental health, dentistry, ophthalmic care and nutrition, and others
It safe to say the ACA is here to stay regardless of the election outcome. What’s also clear is that it will continue to change. Here to stay are its fundamental shift toward provider sponsored risk, increased transparency in all aspects of the system’s performance, connectivity through information technologies, comparative effectiveness studies to discern what works best, and insurance reforms that hold companies accountable for business practices that are understood by all.
In Campaign 2016, the ACA will be an issue. It’s unlikely it will be repealed and specifics of its repair unlikely to get headline coverage—offering specific remedies in the heat of political contests can be risky.
But lest it be forgotten, healthcare matters to American’s and the system’s reform has proven to draw voters, especially Millennials who seek reforms and seniors who seek assurance.