Obamacare: Two Steps Forward, One Step Back

Friend and fellow blogger, Wayne Oliver, give a harsh critique of the Affordable Care Act (ACA) / Obamacare.  I felt compelled to respond and add my thoughts to the conversation, from the perspective of an executive working in the industry.

To begin, I think it fair to say that most people don’t fully understand the law.  Last September, the Washington Post stated that 62 percent of Americans said that they don’t have the information they need to understand the law.  Furthermore, most Americans, or 55%, disapprove of the way the President is handling the implementation of the new healthcare law.  So, it’s not a surprise that there has been loud objections by pundits and general disapproval by the public.  It is a complex law and, by most measures, the Administration has done a poor job of explaining it.  Yet, it doesn’t mean that there isn’t substance there.  In fact, a number of changes have already helped millions of average Americans and has the potential to transform how healthcare organizations are delivering care to their patients.

Wayne painted Obamacare as the “federal healthcare disaster.”  This is a bit extreme and ignores some of the immediate wins with the law.  There are a few parts of it that have already had a profound and positive impact on millions of Americans.  As frequently reminded by this Administration, ACA covers pre-existing conditions.  If you have had a serious health problem in the past (cancer, asthma, etc.), insurance companies can’t turn you down.  In addition, the law allows young adults under age 26 to stay on their parent’s health insurance (3.1 million have done this already) and ends lifetime caps on how much insurance companies will pay if you get sick.

There is also the issue of higher premiums.  Rates will likely go up for most Americans but not nearly as much as earlier anticipated.  A recent RAND study of 10 states that “there will be no widespread premium increase in the individual health insurance market.”  There will be wide variability by state though.  However, tax credits will be available (as high as 400% of the federal poverty level) and it is estimated that 5 million people in 2014 will benefit from these credits, according to the nonpartisan Congressional Budget Office (or “CBO”).  Any hit to an individual’s pocket book won’t nearly be as bad as opponents would lead you to believe.

Wayne was quick to note that the CBO released a report in early February that states that there will be a reduction of the labor force by 2.3 million fulltime workers through 2021.  As noted in the report, this is not the result of employers laying off employees to avoid the requirements of Obamacare.  Instead, the CBO argues that their projections are based on people exercising their choice to cut back their own working hours as to receive higher subsidies for their health insurance (e.g. some people may come out ahead financially if they work less and receive a higher subsidy).  Clearly, this is not good news for the Administration and is not the intended consequences of the law.  However, it does show that there is a drastic need for healthcare coverage and the chance for employees choosing to leave their jobs must be weighed against the large number of previously uninsured who will have access to insurance. (The expected number of newly insured varies but the consulting firm Avalere estimated that 68% of the people who will obtain insurance through the exchanges will be the newly insured, once the law is fully implemented in 2017).

Then there is the argument of bending the cost curve.  Obamacare subsidies for insurance, as noted by the CBO, will cost $1.1 trillion over 10 years.  I agree that much more needs to be done around costs.  Yet, the CBO has estimated from 2013 through 2022 that the ACA will reduce the deficit by $109 billion.  Over the following 10 years, the deficit will decrease by an average of 0.5% of the GDP each year.  This isn’t all bad news.

As an administrator in the field, there are a lot of system-level changes that may have a profound impact on healthcare delivery that the public is largely unaware of.  Things like “value-based purchasing”, “bundled payments”, and “accountable care organizations” are being piloted as new ways of delivering health services at a lower cost.  As a part of these programs, health systems and providers have the ability to be rewarded for delivering higher quality care as well as being held accountable for ER readmissions and poor patient outcomes.  My own health system is fully embracing many of these new models and, overall, I believe that these pilots will have a tremendous positive impact for patients and help to re-align incentives for paying for care quality versus simply for service.

I recognize that it isn’t all smooth sailing with ACA.  This is not comprehensive healthcare reform.  Wayne correctly emphasizes the urgent need for medical malpractice reform and price transparency.  In addition, a lot more needs to be done in controlling costs and not simply through pilots or one-off solutions.  The next wave of major reform must be focused on payments and how providers are being compensated for the care they deliver to their patients.

Overall, I believe Obamacare is in fact a step in the right direction.  It isn’t perfect but we can no longer sit on the sidelines of inaction.  No one thinks that what has been done will solve all of our problems but what we have seen so far since the law started isn’t as bad as Wayne and others suggest.  So, in evaluating Obamacare so far, I think it easy to see that forward progress has been made and critics like Wayne may have found themselves just turned around.

One comment Add your comment

Dominic Mack - Co Director, National Center for Primary Care, Morehouse School of Medicine

February 13th, 2014
3:02 pm

I definitely agree with your comments. It may not be what we want but it is a little of what we need. I don’t think any president, congress, political party, etc. could have gotten this all right at first try. It is going to take time and a collective effort to get our health system to where it needs to be. That said, all you have to do is look at the millions of Americans without insurance and the morbidity and mortality that has been associated with being uninsured (or underinsured) to realize that we need to expand coverage. I think we would have to live in the shoes of many of the uninsured to really understand the need. Great points and thanks for responding.