The ACA Revisited
The Affordable Care Act (ACA) is in serious trouble, and the next president and Congress may well have to gut or replace it.
While many Affordable Care Act supporters remain optimistic, concerns are bipartisan. An article by two conservative writers proclaims, “ObamaCare’s Meltdown Has Arrived … half of Tennesseans covered under the plan are losing their coverage.” Minnesota’s Democratic Governor Mark Dayton says the law has "some serious blemishes and serious deficiencies" and is “no longer affordable to increasing numbers of people.” Former President Bill Clinton said, “the people who are out there busting it … wind up with their premiums doubled and their coverage cut in half. It's the craziest thing in the world."
The ACA was promoted as a solution to billowing costs, quality deficiencies, and financial and health perils for the uninsured and underinsured. All those problems remain, compounded by new ones. With the ACA, some gained access to insurance and care, but others lost access. Some pay less now; others pay more (through premiums, deductibles, or taxes).
As the health care debate revs up, here are six important thoughts:
1. Big problems: The ACA created individual exchanges, small business (SHOP) exchanges, and CO-OPs to generate competition among insurers. Supporters swore the law would push costs down and reduce the federal deficit. They vowed patients would no longer suffer or die for want of small amounts of cash to pay for inexpensive but vital care (like antibiotics), or go bankrupt paying for medical care. They promised Americans could keep the insurance plans and doctors they liked.
However, most CO-OPs have closed, and the rest will soon follow. SHOP exchanges barely function. Insurers flee individual exchanges, leaving one-third of U.S. counties with only one plan. To stanch the bleeding, insurers push premiums through the roof, impose enormous deductibles, and limit patients’ choices of doctors and hospitals. The administration searches for loose change to finance subsidies, but the legal authority for many sources is drawing to a close.
2. Metrics needed: No one ever adequately defined what success or failure would look like for the ACA. Hence, supporters could cite higher coverage numbers as proof of success, and opponents could as easily claim failure on the basis of other metrics. Next time around, it would be great to have the definitions of “success” and “failure” carved in stone. We could also use better metrics on the ACA’s fiscal effects and effects on insurance costs.
3. Three goals, three approaches: Lawmakers of all political stripes share three broad goals—lower costs, broader coverage, and better care. To achieve all three, it’s necessary to slash waste, fraud, and abuse or to change the technology and structure of health care delivery. If those two approaches fail, then it’s necessary to discard at least one of the three goals.
4. Elusive waste: Whether in defense budgeting or in health care, political schemes to reduce waste, fraud, and abuse usually disappoint. Supporters thought the ACA could dampen inefficiencies using new insurance markets, Accountable Care Organizations, and novel payment schemes. Similarly, conservatives tout competition among providers and states as the key to eliminating waste. Single-payer advocates imagine a powerful federal government forcing doctors, hospitals, and drug companies to provide the same care at lower prices.
Fraud and abuse are difficult (and costly) to prevent and often less pervasive than outsiders imagine. Waste is often highly subjective, observable mostly in hindsight, and tough to snuff out. Suppose, as some contend, 30 percent of health care expenditures are waste. Suppose, too, that only half of that is foreseeable and half of that half is preventable. Then the most successful reform would reduce health care expenditures by 7.5 percent (30 percent x 50 percent x 50 percent)—a small, one-time improvement. And even this might be an overly optimistic outcome.
5. The answer, but …: Over the long haul, we can enjoy all three goals—lower costs, broader coverage, and better care. This will come in part from technological advances (including genetic medicine, big data, wearable telemetry, 3D printing, and nanotechnology) and in part from operational changes (including greater use of telemedicine and non-physician providers). But it’s important to understand that government-sponsored innovation, while potentially valuable, is rarely cost-reducing.
6. States’ prerogative: While Congress gears up for the struggle, states are free to leapfrog over Washington. States can pursue all three goals through legislation regarding telemedicine, nurse practitioners, professional licensure, occupational regulation, hospital licensing, medical liability, and so forth.
This will be an interesting few years.