Affordable Care Act: Negative Implications

Roger Anderson, Leslie Burgy,

Margie Pokorski, and Carolyn Sucaet

Siena Heights University

LDR-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

ACA Access Issues Underuse

ACA Access Issues Information Technology

ACA Access Issues Patient Satisfaction

ACA Access Issues Physician-Centric Care

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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