- When the Patient Protection and Affordable Care Act was passed into law, it has had a variety of proponents as well as opposition from the GOP with many calling on the healthcare law to be repealed. However, repealing the Affordable Care Act may lead to more harm than good, as federal funding for healthcare coverage would decrease quickly.
For instance, federal funding for tax subsidies on the exchanges and for Medicaid expansion would drop by $927 billion, according to a brief from the Robert Wood Johnson Foundation and the Urban Institute. A repeal of the Affordable Care Act is also expected to lead to 24 million people losing their health insurance by the year 2021.
Last month, House Speaker Paul Ryan introduced a plan from the GOP to replace the Affordable Care Act. This replacement plan would change Medicare eligibility from 65 years old to age 67 by the year 2020. Also, this plan would take away Medicaid coverage from millions of low-income individuals who gained healthcare access when the ACA provided funds for state Medicaid expansion.
Health insurance would become more costly for older Americans by eliminating an ACA cost threshold for premium prices among the young and old. Any individuals with pre-existing conditions who faced a gap in coverage would be positioned into high-risk pools.
Kim Buckey, Vice President of Client Services at DirectPath, provided her perspective on the changing healthcare landscape in an interview with HealthPayerIntelligence.com.
When asked whether repealing the Affordable Care Act would negatively affect the health insurance industry and the healthcare system, Buckey replied, “The short answer is yes. Particularly, looking at the different perspectives of both parties, when the ACA was first implemented six years ago, what seemed to a lot of us, as we began implementing the policies required by the ACA, how not well-thought out the regulations were.”
“As I’m reading through the proposals by both Republicans and the Democrats, we’re being faced with the same thing. I’m not seeing any real, concrete analysis of what the repercussions and implications of these proposed changes are going to be,” she continued.
Essentially, a repeal of the Affordable Care Act and a substitution will need much more thought and analysis of potential impacts if the federal government is looking to preserve the health insurance industry and keep hospitals running smoothly.
“As with any major change, as we found with the ACA, it has a huge ripple effect from the payers themselves down to the providers who are providing the services and getting paid to the employers offering the plans to their employees who then have to choose which plan and how to use that plan,” Buckey elucidated. “It has tremendous implications. Regardless of what happens and certainly there will be some kind of change, it is definitely going to have an effect and not just on insurers themselves but on every aspect of this whole industry.”
Consumer impact from ACA replacement
When asked about the type of impact the GOP replacement plan for the Affordable Care Act would have on consumers, Buckey explained that there would be much more emphasis on consumer choice and health plan education or engagement.
“I see so much emphasis on enabling more choice and enabling the consumer to make their own health plan choices. There’s a lot of emphasis on consumer-driven health plans and high-deductible health plans,” she pointed out. “It assumes that this will increase consumerism and individuals will be able to shop for the plans that make sense for them.”
“We’re already finding this doesn’t work,” she continued. “For years, there’s been this trend of trying to encourage employees and individuals to be better consumers of healthcare, but we’re seeing study after study that people would rather do taxes than research their benefits. I just came across a study the other day from the Journal of Health Economics found that 86 percent of people can’t define the most basic terms like deductible or copay. If they can’t understand these basic concepts, how can we expect them to be highly educated consumers of plans and programs?”
Essentially, Buckey finds that consumer-driven healthcare emphasizing choice may not be suitable in an environment where consumers don’t understand basic health insurance concepts. As such, consumer education will need to be incorporated more vividly throughout the health payer industry.
“More often than not, they’re choosing based on price instead of on what’s the best choice for them. I find that very problematic. The other thing that struck me was the notion of backing away from deductions for healthcare premiums. One of the great benefits of employer coverage to pay for that coverage on a pre-tax basis,” she explained.
“That goes away. We might see employees pushing their employers to increase compensation to compensate for this,” she predicted. “I think employers will be taking a harder look at whether they’re going to offer coverage and what kind of coverage they’re going to offer their employees.”
Health payers' investments in ACA, exchanges
As the health insurance industry continues managing the many changes that have occurred since the Affordable Care Act was passed, any potential substitutions for the ACA may only pose more headaches for health payers especially those operating through the health insurance exchanges. This move has required payers to implement new technologies and invest time and money, which will go out the window if the ACA is replaced and the federal health insurance exchange is shut down.
When asked what would happen to payers operating on the health insurance exchange if the ACA was to be repealed, Buckey replied, “That’s kind of interesting. Thinking about the huge investment that payers and the big consulting firms have made with millions or tens of millions of dollars that they have invested in systems to support the requirements of the ACA, if the ACA is repealed, they would lose the investment they’ve made.”
“They may be able to redirect or repurpose it somewhat, but there’s going to be additional investment required to meet whatever new requirements are set forth in this replacement plan,” she continued. “There’s going to be a shift in their business model. If the Republicans win, there’s going to be more and more people who will be left uninsured.”
On the other hand, the democrats are more interested in expanding Medicaid even further and cutting the rates of uninsured, Buckey explained.
“It will have a huge impact on payers and their whole business model. I noticed in Ryan’s proposal, a whole section devoted toward encouraging the use of private exchanges like it will be the silver bullet that will solve all the problems of the healthcare industry. Well, employers haven’t been moving to those private exchanges in droves as anticipated, so I’m not sure how much impact it would have on insurers who are offering plans on private exchanges.”
When it comes to shutting down Medicaid expansion and dropping coverage for many low-income individuals, Buckey found some major problems with the proposition.
“There are suggestions of putting out tax credits to be paid at the beginning of the month so people could use that money to pay for premiums on plans. Again, there seems to that be focus on high-deductible plans with an HSA. What concerns me is if someone is making low wages, where are they going to come up with the money to put into those accounts,” she said. “Individuals may end up going without care or landing in the emergency room.”
“The ACA is so entrenched in almost every aspect of our healthcare system. Unwinding that would take at least another six years. We may see some incremental change, but I don’t think we’re going to see anything wholesale regardless of what the Republicans are promising just because of the wide-reaching implications of the ACA,” she concluded.