The Ying and Yang of the Affordable Care Act (ACA) Part I

The ACA has changed the landscape of healthcare in the United States. The change, however, is ongoing, has many competing interests, and what the long-term future holds is really guesswork. The consequences will have a huge effect, not only on the provision of healthcare but, I believe, on the U.S. economy.

The cost of healthcare in the United States, which was $2.9 trillion dollars in 2013, remained the same 17.4% of the GDP that it has been since 2009.

Some actuaries predict that National Healthcare spending will increase and that by 2023 it will rise to 19.3% of the GDP.

While experts may have varying definitions of the GDP, I believe it means that we are headed toward a course where almost one-fifth of everything produced in this country will go to pay for healthcare. Even at today’s 17.4% rate, it is truly alarming when we realize that we don’t have a plan where everyone is insured, and we have not yet determined what “insured” really means (which is a discussion for another day).

There is no doubt that the ACA has increased the number of individuals who either have or are eligible for healthcare coverage.

Larry Levitt of the Kaiser Family Foundation has stated that “The fundamental impetus for the law was to the lower the number of uninsured, and it has clearly done that … but simply getting people insured doesn’t mean healthcare is affordable.”

The affordability issue is best underscored by an analysis conducted by McKinsey and Co. that, on a nationwide basis, the median deductible for individuals was $4,100 for bronze plans, and $2,500 for silver plans.

If one follows the reasonable assumption that the purchasers of bronze plans are people who either cannot afford a more expensive plan, or in some cases, choose to seek the cheapest plan, a $5,000 out-of-pocket expense could drive them away from seeking medical care.

A recent poll has indicated that as of November 2014, 46% viewed the law unfavorably and 37% were in favor, which is an increase in the “disfavor” column of Americans’ opinion from just four years ago.

For better or worse, it is likely that more people will be driven to seek health insurance coverage as 2015 is the first year in which tax returns require people to report if they had health insurance for the previous year. If you don’t qualify for one of the approximately 30 exemptions (once again, our government deserves an advanced degree in complexity), you face fines of either 1% of your household income above the threshold for filing taxes or $95, whichever is greater. The following year it will at least double, and by 2016 the average fine, (or as the Supreme Court recently classified, the average tax) will be approximately $1,100 based on current estimates.

As more people become eligible for Medicaid and more people are driven to obtain insurance, the looming question becomes, will doctors accept the increased or even the current level of Medicaid patients?

The reason why this question arises, is primarily because there were enhanced Medicaid reimbursements allowed in 2013 and 2014, which will (as it currently stands) not be available in 2015.

Primary care physicians, the people that I believe are at the epicenter of healthcare, will probably be the most affected by these cuts, or more accurately, the end of enhanced reimbursement. Call it what you want; as it currently stands, doctors will earn less on Medicaid patients in 2015 than they earned in 2014.

A significant study conducted by the nonpartisan Urban Institute indicates that Medicaid payments for primary care services could drop by 50% or more in California, Florida, New York, Pennsylvania, and many other states.

It is well within the realm of possibility that many doctors will not accept new Medicaid patients, possibly stop treating Medicaid patients, or in some cases, simply retire.

If that is not enough, on March 4, 2015, the United States Supreme Court is scheduled to hear King v. Burwell, which questions if the Obama administration is improperly providing tax credits to the almost 5,000,000 people who purchased health insurance through the Federal Exchange. Obviously, these tax credits were a major inducement to the enrollees, and a major consideration for the purchase of insurance through the Federal Exchange which currently serves 37 states.

I hope to continue with some additional factors playing into the mix in the next segment, and respectfully request my readers to post their comments as there are so many stakeholders who have intelligent and meaningful perspectives.

It will be interesting to see how the ACA plays out in 2015, particularly with the shift in Congress and the various competing interests facing off.

2 thoughts on “The Ying and Yang of the Affordable Care Act (ACA) Part I

  1. Linda Forbes

    I appreciate the update and viewpoint. I agree that PCP’s will most likely limit the Medicaid patients as they already do so in many practices of which I consult with or interface with through other practices. I am not a fan of the government controlling healthcare. Working in the field for the past 30 years I have seen problem after problem with government inefficiency/errors and insurance company denials/demand for increased paperwork/time from practices to justify care needed resulting in additional wasted costs which add greatly to the rising healthcare expenses. Many providers have had to double/add staff to manage all the government annual rules/law changes and manueaver through the insurance company denials/games (chaos). Lack of standardization between insurance reporting impacts physician/hospital practices (e.g., denials without justification) and increased documentation/paperwork demands from the provider’s office with every patient encounter. Although I strongly believe medical offices/hospitals need to be electronically connected and consistent via documention of patient care to improve patient care and minimize duplication of testing and services, the government’s demand for implementation of EMR’s in practices (or face penalties) has added more staff to practices to manage and transition records, let alone the significant burden of increased costs to obtain and support the EMR.

    I find it quite frustrating that the big lobbyists control the government and therefore very little legislation / cost controls in healthcare are being focused on with insurance companies, drug companies and legal malpractice which both drive up the healthcare costs significantly.

  2. Marc LeVine

    The health insurers are the most direct beneficiaries of the law. In recent years, the private insurance market for adults under 65 has steadily declined as more companies stopped offering insurance to employees and more individuals became unable to afford coverage, a trend expected to continue. But the Affordable Care Act has provided subsidies that have helped millions afford coverage. For the insurers, the health care exchanges are now “really the only game in town in terms of growth” for private insurance, said John F. Holahan, a policy expert from the Urban Institute.


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