As an organization built to service employer-sponsored-health plans, we have spent the last three years researching, interpreting and developing strategies to deploy in response to the Affordable Care Act. Unlike most of the population who is just now experiencing its impact and providing direct feedback, we have been debating the direction of this landmark legislation almost on a daily basis.
At our November C-Suite Series--A Chief Executives’ Guide to Thriving in the Chaos of Health Care Reform, our Managing Principals Bill Carew and Brian Driscoll surveyed the audience regarding their forecast of the fate of ACA. The two most popular positions were:
- The ACA will survive, but will be significantly modified
- The ACA will fall under its weight
Though time will produce the final answer, we asked Bill and Brian to provide thoughts and arguments to support both viewpoints. Brian’s response is below and Bill’s will follow this Thursday.
Please note that these views are published for the sake of argument only, and are not the expressed views of OneDigital Hartford or the Managing Principals.
The ACA Will Fall Under Its Own Weight
–Brian Driscoll, Managing Principal
“In theory, theory and practice are the same. In practice, they are not.” --Albert Einstein
If we were to look back on polling surveys four years ago, public opinion ran strongly in favor of the concept of affordable healthcare for all—the theory. Though a noble mission, the mechanics and impact of transforming one sixth of the economy weren’t likely factored into most people’s response—the practice.
Applying an analogy; if we were to run a survey regarding an environmentally sensitive alternative energy program, most folks might agree with the idea. However, if you let them know that part of the program would include construction of a large wind turbine in their backyard, they would likely have a significantly different response.
That is where we are with the ACA. The theory part is over and the practice part has arrived. After discussing and debating the impact of the ACA for more than four years, the country is finally beginning to personally experience this sweeping legislation. The early returns are troubling—so much so, that one could strongly argue that this public policy will fall under its own weight.
Let’s take a look at the potential winners and losers:
Previously Uninsured: the primary goal of ACA was to expand access and affordability to a target uninsured population of 47 million. Those that can now enroll in coverage either for free or highly subsidize will benefit.
Pre-existing Conditions: anyone who previously did not have access to employer-sponsored healthcare and may have been denied individual coverage due to a pre-existing illness.
Medicaid Expansion Eligible: 25 states have expanded the definition of eligibility to include in most instances income levels up to 133% of the Federal Poverty Level.
35+ Demographic: The underlying economic model of ACA requires the younger population to subsidize the older population.
Premium Subsidized: The population that receives a significant premium subsidy will find the program financially beneficial.
Insurance Companies: With a target of adding 30+ million new subscribers insurance companies will recognize an advantage.
Dependent Age 26: Expanding the definition of dependent in employer’s plans allows dependents to remain on their parents/ plans longer.
Cancelled Individual Plans: Though all states have yet to report their data, 6+ million individual policies have been cancelled around the country. Though states have been authorized to reinstate policies, some significant portion of this population will be negatively affected.
Enrollment Struggles: With the website problems continuing, there are likely to be folks who fall through the cracks and do not have coverage for January 1, 2014.
Rate Shock: This will largely occur on a state by state and demographic segment basis, but there will be a sizable portion of the population that will find their prices increasing significantly.
Doctor Loss: Some exchange models are offering plans with significantly reduced provider networks. We anticipate this will be a growing issue moving forward as carriers struggle to control costs, they will have to consider shrinking their networks. Losing access to one’s doctor is a highly emotional event and will affect a large number of individuals. Recently, United Healthcare removed 2,000 providers from their Medicare Advantage programs a move that was hugely disappointing to their senior members.
Security Violations: Though at some point this will be less of an issue, the general lack of security surrounding the federal website will expose users and their personal information to improper use.
Medicaid Gap: Since almost half of all states have decided not to expand the eligibility definition, there will be a segment of the population who are lower income earners but will not qualify for either Medicaid or a Premium Subsidy.
Spousal Subsidies: If a husband or wife has access to affordable coverage, the other spouse is not eligible for a premium subsidy regardless of whether their combined household income would qualify.
18 to 34 year-olds: Insurance is a risk sharing game and the only way the economic model works is to load up pricing on this population, which arguably is the most adversely affected group of all.
Religious Groups: There continues to be a disgruntled Christian population that is fighting the law on reproductive concerns.
Insurance Companies: We have the companies on both lists. Since the twist and turns of the law continue, there is a large concern that the demographic mix in the exchanges may lead to a “death spiral,” meaning more of the old and sick vs. young and healthy. This could lead to large losses.
Since public opinion often informs public policy, the balance and size of the winners vs. losers will determine whether the law succeeds. There is a strong argument to be made that the “losing” groups will continue to grow in both number and volume. A recent Rasmussen poll illustrated that 55% of respondents want the law repealed and this was largely before some of the 2014 implementation impact hit. These numbers will continue to worsen.
By the middle of next year and as a run up to the mid-term elections, the public outcry and pressure on politicians to stop this well-intentioned leviathan will be so severe that the legislature will be forced into taking corrective action to stop the law and the President will reluctantly sign on to dismantling his signature legislation.
Remember to check back in on Thursday for Bill Carew's response in support of the ACA (but with major modifications).