The PPACA creates structure and laws that provide insurance for 94 percent of the legal residents of the U.S. (Wingfield B, Whelen B, Herper M. “Health Care Reform Winners and Losers.” forbes.com). It also removes all preexisting condition prohibitions for insurability, extends insurance to our children on our policies until they are 26 years old and creates guaranteed access to health care insurance for almost everyone via exchanges.
Explore This IssueSeptember 2011
The Numbers Speak Loudly
Unfortunately, these changes come with three major unintended consequences. The first is the hidden cost burden placed on physicians and patients to pay for the reform. According to the Congressional Budget Office, the cost of the health care reform will be 940 billion dollars in the first 10 years (Jackson, Jill, and Nolen, John. “Health Care Reform Bill Summary: A Look at What’s in the Bill.” cbsnews.com). Have you wondered how it will reduce the deficit during that time? Remember that the government currently pays for 45 percent of all health care in the U.S. and will pay more in the future (http://en.wikipedia.org/wiki/Health_care_in_the_United_States). Cuts in payments and services will save the government money, and the sources of payment for health care reform will come mostly from taxpayer dollars.
The second unintended consequence is the destruction of the private insurance industry, which today pays many physicians for their services. How will this work? Many firms are finding it more cost effective to pay the penalty rather than offer the health care insurance that they currently provide. You have likely read about the 125 major firms that have requested and gotten a waiver from that part of the law (Morris M. “Health Care Waivers Being Abused by Companies.” Insurance News).Thousands without the political clout of the bigger firms do not qualify for these exemptions. This will force hundreds of thousands, if not millions, of previously covered lives into the health care exchanges. These exchanges must offer four tiers of coverage at different premium rates.
Accountable Care Organizations (ACOs), the creation of Elliot Fisher, MD, MPH, of Dartmouth University, were intended to reduce Medicare expenditures by offering discounts back to Medicare for services performed by physicians or hospitals and then splitting the savings with the providers. The PPACA authorizes the formation of ACOs in all states. Other structures are insurance exchanges that will allow everyone to have affordable health insurance. To be a member of the exchange, or to be on the provider list, physician-providers must accept significant cuts for their services. Remember the old health maintenance organizations (HMOs)? The exchanges will demand the same discounts from providers as ACOs will and HMOs did and will be able to offer premiums to the public at far lower rates than the traditional insurers of today. Several executives of these traditional firms foresee the vast majority of future polices being written by the exchanges. There will be cutthroat competition, mismanagement and possibly fraud among the exchanges, like we saw with the managed care organizations of TennCare (Chang, Cyril F, and Steinberg, Stephanie C. “TennCare Timeline: Major Events and Milestones from 1992 to 2009.” healthecon.memphis.edu/).