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

In the previous segment, I touched upon both the high cost and the various competing interests relating to lowering the cost of the provision of healthcare.

The number of people eligible for health coverage has increased, and to that extent, the ACA gets a check in the plus column.

If, however, the newly covered people use emergency rooms in situations for which there are significantly less expensive avenues of treatment available, e.g. urgent care centers or primary care physicians, the already staggering cost of healthcare will increase.

Frankly, there are conflicting reports as to how this will play out, and the truth is that it is very hard for anyone to predict the future.

That said, I am reminded of a letter I wrote to the Washington Times in 2008 [ – Scroll to the bottom of the page – letter with the heading Health Crisis] when healthcare costs were 16% of the GDP, as opposed to the current 17.4%. I think some of the issues raised then are still unanswered, as we must have a multidimensional approach in which a plan answers how coverage will be implemented,where the money is coming from, and how to effectively reduce the real aggregate cost of healthcare. I believe that we have not yet achieved the balance necessary, or the 360 degree view that healthcare reform demands.

It is readily apparent that there are various stakeholders (often with competing or divergent interests) involved in healthcare. These include:

1.  The government (which includes those charged with fiscal stability as well as those charged with a social/ethical mandate allowing for medical coverage.)
2.  Insurers.
3.  Healthcare providers (including hospitals, surgical centers, urgent care centers,primary care doctors, support staff and specialists).
4.  Medical equipment suppliers.
5.  Pharmaceutical companies.

In addition, we also have to deal with the voters, plus the apparent fundamental disagreements between the executive branch and Congress (along with their own internal disagreements).

It is no wonder that there is no simple answer or silver bullet.

As a predicate matter, and in an effort to remain both accurate and intellectually honest, the emergency room visits that need attention are those that could be dealt with in a less costly setting. The best barometer (giving it rough justice) would be to measure the emergency room visits for which a hospital admission was not necessary.

The big question is where will newly insured individuals seek treatment? I believe the most scientific study (albeit limited to Oregon, and possibly, Portland) was a Harvard study done over a number of years in which 25,000 Medicaid patients went to the emergency department at the Portland area hospitals, on average 1.43 times over 18 months, while those who were not insured only made an average of 1.02 trips to the emergency room in the same time frame. This leads to the conclusion that those on Medicaid avail themselves of the emergency room 40% more than the uninsured. While this may be an oversimplification of a very detailed study, from the media’s perspective, that was the takeaway.

Obviously, if the study is indicative of forward-going and national trends, President Obama’s belief that increased coverage of the populace would drive people away from emergency rooms (more expensive) to doctors (less expensive) should be revisited.

On the other hand,it will take time for people to realize that not only is it cheaper, but it is probably more convenient and advantageous to take minor medical issues to a doctor’s office or urgent care center rather than an emergency room.

In fact, recent reports from Los Angele’s for the first few months of the new healthcare system’s operation seem to indicate that the Oregon study may not be an accurate predictor. There are reports that emergency rooms visits that did not require hospital admissions grew by 3.9% in Los Angeles County for the first half of 2014, which was well within the average 3 to 5% increase for the prior three years.

An interesting fact is that while the county’s three large public hospitals that historically cared for uninsured patients saw a 9% drop, several private hospitals reported double-digit increases in outpatient visits. This would indicate that even if there was no net increase in emergency room visits attributable to the ACA, there may be a significant shift from public to private hospitals.

This possible shift raises another issue which arguably will put significant strain on the not-for-profit hospitals. The ACA initially placed certain requirements on the not-for-profit hospital sector, which comprise approximately half of the hospitals in the United States. Failure to finalize and implement these various measures means risking their not-for-profit status or making them subject to excise taxes. This can only increase their cost of operation.

While one might argue that the measures are fair, that does not mean that they do not come without financial cost.

The requirements of charitable hospitals include limiting charges to patients eligible for financial assistance to those that are generally billed to patients with insurance, affirmatively establishing and posting financial assistance policies,significant limitations on billing and collection, including an inability to garnish wages until reasonable efforts are made to determine if the individual is eligible for assistance, and performing community health needs assessments.I am not certain if this is limited to the not-for-profit’s community, but if it is, my question is why? In any case,my focus is not on the propriety of these measures, but merely to point out that they invariably will increase the cost of operation.The tax on medical devices is a total enigma to me. Other than raising revenue, how is this in anyway supposed to help affordable healthcare?

All of this discussion, however, maybe for naught if the Supreme Court decides that the ACA does not cover the approximately 5 million people who signed up on the Federal Healthcare portal with the expectation that they would get tax credits. Under normal circumstances, if the Supreme Court were to disallow the tax credits, the legislation would go back to Congress and it would be rewritten. As we all know, however, the Congress that the ACA will return to, is not the same Congress that passed the legislation in the first place, which means that there is a distinct possibility that the ACA may be dealt a significant blow from which it may not recover, which will send us back to the drawing board.

It is clear to me that there are many divergent interests, and it will take significant open communication and dialogue as well as a singular and uniform interest in affording at least a certain level of healthcare to everyone to achieve what the ACA set out to do.

One thought on “The Ying and Yang of the Affordable Care Act (ACA) Part II

  1. Marc LeVine

    While a survey of emergency department physicians’ impressions lacks hard data about patient behavior and can’t be considered conclusive, the results are consistent with studies about the effects of Massachusetts’ 2007 health care reform law and a 2008 expansion of Medicaid in Oregon. Trevor Fetter, CEO of the for-profit hospital chain Tenet Healthcare, told CNBC this month that his company’s facilities also are seeing an uptick in emergency room visits.

    Another recent survey, however, reports the opposite is occurring in Arkansas this year. Forty-two hospitals in the state told a legislative committee that emergency department visits are down 2 percent so far this year, and that the number of emergency room visits by uninsured patients fell by 24 percent.

    Nearly a quarter of the doctors who responded to an American College of Emergency Physicians survey observed fewer visits to their facilities, and more than one-quarter report no change.

    Emergency departments seeing a smaller number of patients may be those doing a better job educating individuals about the availability of non-emergency care at other settings, such as urgent care clinics, she said.

    The information released by American College of Emergency Physicians is the latest indicator of how the Affordable Care Act’s coverage expansion is affecting patients and the health care industry.


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