The Aﬀordable Care Act (ACA): Facts, Issues, Implica/ons, Opinions
Summary of ACA • Individual requirement • Subsidies to individuals – Tax of $695 or 2.5% of up to 400% FPL taxable income in 2016 • Exchanges created by – Only $95 in 2014 states • Employer requirement to – Beneﬁt Lers oﬀer “minimum essenLal • General insurance rules: coverage” – Guaranteed issue, no life – Only employers with >50 limits, no pre-‐exisLng FTE clauses, limits on premium – PenalLes for not oﬀering variaLon coverage or oﬀering • Taxes: ñMedicare, unaﬀordable coverage Cadillac plans, Pharma • Small employer tax credit and Devices, Insurance, • Medicaid expansion Tanning Salons
Summary of ACA, con/nued • Medicare $ changes • Several measures to – Ind. Payment Adv. Board “improve quality, health – Cut in DisproporLonate system performance” Share Hospital Payments – ACOs – Cut in growth rate of – InnovaLon Center Medicare payments – ComparaLve – Restructure payments eﬀecLveness research for Medicare Advantage – Medicare pilot program on bundled payment • NaLonal strategy on prevenLon/wellness
The subsidies (tax credits) are substan/al Congressional Research Service, Private Health Insurance Provisions, 4/15/10
What do I think? • On the plus side • On the minus side – Expansion of coverage to – Hodgepodge of taxes needy – Doesn’t move away from – Sorely needed ﬁxes to employer sponsored health insurance markets insurance – Some impetus and a – Doesn’t break down state plaGorm for barriers experimenta/on (ACO, – Too much government bundled payments) control over beneﬁts design – Exacerbates market power on supplier side – Cons/tu/onal issues linger
Equity concerns have to be given heavier weight Eﬃciency Equity
“...Last year, Georgia hospitals lost an esLmated $1.5 billion caring for people without insurance...The promise of fewer uninsured is what led the naLonal hospital industry to agree to the health law’s $155 billion in Medicare and Medicaid cuts over a 10 year period.” “Hospitals face lower payments from insurers and pressures to consolidate. One in three Georgia hospitals lose money...” “Georgia is one of at least 10 states that may reject the Medicaid expansion, according to...the nonproﬁt Brookings InsLtuLon.” “Get as big as you can get and as strong as you can get as an organizaLon is the overarching strategy,” Jennings said (CEO of Wellstar Health System in Atlanta) Williams and Teegardin, Atlanta Journal ConsLtuLon, July 8, 2012
Issue #3: Employer Sponsored Insurance: Will it Disappear under ACA? • You cannot just compare the penalty with the cost of an employer providing health insurance! – Dropping a beneﬁt is not free... • Indeed, why would a penalty on employers for not providing insurance lead to a decline in ESI?? • The right comparison is penalty to employer vs. subsidy to employees on exchange, less tax advantage of employer-‐provided insurance
L DuBay, SK Long, and E Lawton, Will Health Reform Lead to Job Loss? Urban InsLtute, June 2012. Thanks to J. Skinner, Dartmouth, for slide.
Issue #4: Isn’t the employer mandate a tax on employees? Wage S1 Demand, supply of labor D1 D2 Labor
As a ﬁrst approximaLon, wages should fall and employment stay the same S1 Wage S2 Demand, supply of labor D1 D2 Labor
Caveats • If insurance was not available compeLLvely, employees might value it more than cost to employer • On the other hand, some employees might prefer cash to health insurance...especially with exchange-‐ available insurance • And wages tend to be inﬂexible downward...especially at low wage levels • And many employers have already chosen to not oﬀer insurance... Overall, I have a hard /me not seeing this as a net tax on employment
Opportuni/es • Mergers – (NYU Langone/ConLnuum/Mt. Sinai) – Turs Health Plan buys Network Health – Yesterday: Wellpoint acquires Amerigroup! • Health plan creaLvity, for exchanges and employer-‐sponsored – Design of networks – Tiering (of plans, of suppliers) – Beneﬁts creaLvity • Focus on value of health care delivery!
The Major Management Challenges (Some of the…?) Balance mission with ﬁnancial viability Adapt to new reimbursement/payment models Cope with health care reform/regula?ons Deal with changing popula?on health and demographics Get the incen?ves right Create managerial and leadership capacity Coordinate/collaborate – at all levels, including across organiza?ons Build a capacity for organiza?onal innova?on/change Deal eﬀec?vely with technological advances Appropriately use evidence in determining care
Why we are here Tremendous change… Massive challenges… For an unimaginably important cause… And all happening at once