Will the ACA achieve universal, equitable coverage?
By Johnathon S. Ross, M.D.
Toledo Medicine, Winter 2013
In 2004, well ahead of the passage of the Affordable Care Act (ACA), the Institute of Medicine (IOM), in their report “Insuring America’s Health,” outlined a set of principles for health insurance reform: universal, continuous insurance coverage that is affordable and sustainable for individuals, families, and society, and should enhance well-being through care that is effective, efficient, safe, timely, patient-centered, and equitable.
Will the ACA meet the IOM’s principles?
The recent election guarantees that the ACA be implemented. This will be a complex and expensive effort.
States must create insurance exchanges or let the federal government do it for them and expand Medicaid to138 percent of poverty or face a significant loss of federal support. Systems must be created to educate employers and the uninsured about their opportunity and obligation to obtain health insurance or pay a tax.
Physicians get increased Medicaid and Medicare payments for primary care services, but new bundled payment methods and Accountable Care Organizations (ACOs) with their uncertainties and complexities enter the payment mix.
Hospitals face bundled payments, ACOs, and cutbacks in uncompensated care subsidies, but also increased payments through the expansion of private insurance and Medicaid to the uninsured. Added cuts could come from any federal budget deal.
Insurers must cover everyone without pre-existing condition exclusions or lifetime limits on care and cover all preventive services without co-pay. Premium hikes will be reviewed and 80-85 percent of premiums must be spent on care instead of administrative costs and profits. The insurers gain 10-20 million new customers through the exchanges and managed care Medicaid.
Patients will have no co-payments for preventive services, but will see new “wellness plans” that allow employers to increase the employee portion of premiums. The Medicare drug “donut hole” gets filled, but lower tax deductions for medical expenses and taxes on “Cadillac health plans” will come into play.
Sadly, the ACA covers only half of the uninsured and is unlikely to control costs. In Massachusetts, after six years, their ACA-like plan has not controlled costs and administrative complexity has increased. Those newly insured still find health care bills overwhelming and medical bankruptcy in Massachusetts has not decreased.
Can American healthcare meet the IOM principles through the ACA? If you had a house with a crumbling foundation, would you add a third floor? The ACA builds on the crumbling foundation of competing private insurers and decades of market competition in health care which failed to control costs, improve access or the quality of care.
Nonprofit health insurers were once effective in spreading costs across entire communities. Now, the complexity of the insurance market and the profit motive make insurers a bad bargain.
Private insurers make money by denying claims. Physicians and hospitals waste enormous amounts of time and money on excess paperwork and bureaucracy. More competition has only created an army of bureaucrats whose “generals” – the CEOs – get astronomical salaries.
Money-changers and paper-pushers thrive by chasing the money to pay for care – not by delivering it. In our complex, multi-payer system, chasing money is expensive work. The new Accountable Care Organizations look more like byzantine health care bureaucracies than paths to cost containment.
Individual market forces (medical savings accounts) will never effectively lower costs. The most expensive services are the least negotiable. Can a patient with a ruptured appendix on morphine haggle over fees? Look! Open heart surgery is on sale. Let’s have two!
Health care is not a bar of soap. It is a human need and should be a human right in the richest country in the world.
Physicians fearing change stampede into larger groups and employment in “integrated systems” with their own burgeoning bureaucracies. This consolidation of physicians, health systems and insurers will leave most communities with only a handful of provider organizations. In many, there will be only one. In this context, the rhetoric of market efficiency is nonsense.
We have a tested model. Medicare would work for all of us because it has worked for seniors for almost 50 years. In 1995, Taiwan replaced their private insurance system with one based on Medicare. They went from 60 percent to 100 percent coverage with hardly any growth in costs, and the patients and physicians are happy.
This is no surprise since studies show that the administrative simplicity of Medicare for all could save $400 billion yearly, cover all the uninsured, eliminate significant co-pays and deductibles, allow complete choice of doctor and hospital and improve coverage for all. Physicians could practice privately and independently with guaranteed payment for every patient.
Can the ACA meet the principles of the IOM? The IOM report discussed prototypes for reform, noting if they would satisfy their principles. They note that an individual and employer mandate with premium subsidies (i.e. the ACA) would fail to provide universality, continuity, affordability, and access to equitable care. They also note Medicare for all could satisfy all of the principles.
Perhaps the ACA was the best that could be achieved given the resistance of powerful vested interests to even a “public option.” Those who say “repeal and replace” the ACA will still face the same recommendations from our best health policy scientists when it comes time to choose a “replacement.”
Polls consistently show that Medicare for all is supported by the majority of Americans and a plurality of American physicians. Yet, some in Congress suggest privatizing and replacing Medicare with vouchers for private insurance. If we want Medicare to meet the IOM principles, this is exactly the wrong solution.
In our quest for health reform, we are not done yet. The ACA allows states to experiment with other types of reforms, including Medicare-for-all systems in 2017. Vermont, California, and Hawaii are considering Medicare-for-all reforms that will provide continuous lifetime coverage, save lives, and save money. When they prove it works then other states might follow. They could place our nation on the path toward a health care system that finally meets the principles of the IOM and can finally truly boast of being the best in the world.