Affordable Care Act: Negative Implications

Roger Anderson, Leslie Burgy, Margie Pokorski, and Carolyn Sucaet

Siena Heights UniversityLDR-614

August 13, 2013

Introduction to the Affordable Care Act

• Key Areas of Concern

– Quality– Satisfaction– Cost– Access– IT Issues

Overall, issues with implementation will outweigh any potential benefit

ACA Quality Issues -Overview

One stated intent of the Affordable Care Act is to improve quality. This is to occur using the following methods:

1. Values-Based Purchasing (VBP)

2. Health Insurance Exchanges (HIE)

ACA Quality Issues-VBP

33 Approved measures to determine how well ACOs meet minimum quality standards

Issues• This is a very finite or limited list• No high-level evidence that this enhances quality

(O’Brien, Kumar & Mertsky, 2013)• Described as a “…program built on penalties…”

(Shoemaker, 2011)• Gaps in areas of focus may lead to decreases in

quality (e.g. Behavioral Health)

ACA Quality Issues-VBP

Diversion

• Funding will tend to follow those areas that are being measured– This is parallel to the “carve-out” methodology seen

earlier in Medicaid programs

• Costs increase when care shifts to another setting– This could be seen when a patient with behavioral

health issues such as depression is unable to receive OP services and seeks emergent care during a crisis, possibly leading to an acute admission

ACA Quality Issues-Resources

• The ACA’s quality mandates have forced funding to shift in order to support these initiatives

• Now that key quality measures are linked to reimbursement, there is more money dedicated to initiatives around re-admissions and LOS

• This can draw away from funding of new research and clinical innovation

ACA Quality Issues-Technology

• Costs will also be incurred for technology related to Health Information Exchange (HIE) development and the use of data.

– No total has been quantified inclusive of capital, operations, and ongoing maintenance

– No provision in the act to keep the systems current or up-to-date

– Concerns have been noted with the public trust regarding data security. This can result in lack of accurate or complete data and undermine the quality

ACA Cost Issues – Goals/Methods

• Goal: Increase coverage for 32 M uninsured

• Methods:

– Medicaid Expansion

– State Insurance Exchanges

– Uninsured Purchase Mandate

ACA Cost Issues – Projections/Funding

• CBO projects increased Federal Government spending by almost $1Trillion over the subsequent decade.

• Six Funding Sources:– 14% Reimbursement reduction to private Medicare

Advantage Programs– 33% decrease in MC reimbursements to hospitals– 0.9% increase in MC payroll tax with extension for

higher incomes

ACA Cost Issues – Projections/Funding

– 11% revenues from new taxes from other health sectors

– 3% increase in revenue from Cadillac tax

– 21% increase in tax revenue from other areas such as

penalty payments and “higher wages resulting from

reduced employer spending on health care insurance”

Cost Projections- Administrative

• CBO’s estimates do not include $274.6 B to administer programs related to ACA

• $7.5 B IRS enforcement• $7.5 B CMS administration• $50 B Grant programs• $209.6 B MC Physician Payment Reform• Additional deficits of $562 B in the first 10 years

ACA Cost Issues - Medicaid Expansion

• As of June 2013, 14 states have chosen to opt out of expansion due to cost

• Tennessee: 1994 Expansion to cover 500,000 residents increased costs from

$2.5 - $8B in 10 years• Alabama: Gov. Bentley refused to

participate due to projected cost of $50M annually

• Massachusetts: costs continue to grow 8% annually despite recommendations to control spending

ACA Cost Issues - Health Insurance Exchanges

• CBO projects 20-23 million covered through exchanges

• Average 2014 individual market premium in 11 states for silver-tiered plan $321 compared to $450 current market average

• How feasible to predict individuals will begin spending $4000 or 8.4% of their income for insurance versus paying penalty of 2.5% ($1,150) or $695 (whichever greater)

ACA Cost Issues - Employers

• Employers opting out and paying penalties may be more economic than mandates

• SouthWest Airlines estimated costs to company at additional $414 M annually in order to comply with ACA regulations

• Unclear as to extent of corporate savings achieved to offset increased tax revenue projected

ACA Costs- Summary

• Implementation Costs:$940 B by 2019

• Additional Administration Costs $562 B in first 10 years

• Total $15.02 B in 10 years

ACA Access Issues Supply Driven Demand

Growth of Senior Citizens age 65 is expected to

increase from an average of 7,600 a day in 2011 to more than 11,000

a day in 2019The national shortage of RNs will produce a need for 340,000 to 1 million new and replacement nurses throughout the

next decadeShortages of 35,000 – 44,000 generalists are

likely by 2025 and shortages of NP/PAs

ACA Access Issues Underuse

Bureaucratic barriers with enrollment, workforce obstacles, and state

practicesPre-existing conditions unaffordable premiums, uninsured for six months

prior. Enrollment lower than initial projections (U.S.

Government Accountability Office, 2011)Higher deductibles

“undermine accountable care” (Grens, 2013)

Young adults delay or avoid care due to

confidentiality issues.

ACA Access Issues Information Technology

Infrastructure, explosion of

knowledge, and technological

advancesLack of IT experts and training required

for process improvement

Patient’s records need to be integrated throughout each level of the continuum of care between

physician offices and hospitals

ACA Access Issues Patient Satisfaction

Lack of ease of access. Need

immediate scheduling and short

wait timesLack of care coordination with feedback of test

results Fragmented, not a one stop consumer

shopping model

ACA Access Issues Physician-Centric Care

Turf issues and politics

Dismantle cultural barriers of physician

autonomy (Lee, 2010)

Stark Laws resistance from the

Physicians Hospitals of America

CONCLUSION

“The changes we would need to mobilize in pursuit of the Triple Aim (care, health and cost) are large, and the obstacles are daunting” ( Berwick, Nolan, & Whittington, 2008,p.76)

Biggest Barriers: Supply driven demand New Technologies Physician-centric Care

Conclusion• Cumulative impact of barriers is making any substantial

increase in quality unlikely• “Iron triangle” of healthcare reform prevails:

“Cost, quality, and access constrain each other in complicated ways” (Clarke, 2013, p. 47)

• Leaders should prepare for increased costs• Consumers should prepare for increased expenses or

increased taxes, or both

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