Health Reform to Insure 32 Million: Are you ready for them?

The new health system reform law is expected to reduce the number of uninsured Americans by 32 million people, and that means more paying patients for physician practices. Many doctors, however, worry that the law’s lack of Medicare payment reform and medical malpractice caps will exacerbate a looming physician shortage. This raises questions about how successful the law will be in increasing health care access.

The Patient Protection and Affordable Care Act, signed into law on March 23, takes a gradual approach to expanding health insurance access. This tactic aims to avoid disrupting the insurance system, U.S. Department of Health and Human Services Secretary Kathleen Sebelius said in an April speech. The reforms will “fit together like puzzle pieces, each one leading logically to the next,” she said.

President Obama signing the health reform bill

The first changes that could result in more insured patients are the development of state-based high-risk insurance pools for people who don’t have coverage due to preexisting conditions, health insurance tax credits to encourage small businesses to purchase coverage, and a number of insurance market reforms designed to protect and expand coverage. These provisions begin this year.

But the biggest reforms start in 2014. That’s when the mandate for individuals to buy insurance, income-related tax credits to help individuals and families afford coverage, and penalties for businesses that don’t provide insurance kick in. At the same time, state-based health insurance exchanges, which aim to provide affordable coverage options, are supposed get off the ground.

A mandatory expansion of Medicaid eligibility, which will allow very low-income childless adults to enroll, also is slated for 2014. The law will reduce the number of non-elderly uninsured Americans by 32 million by 2019, according to the Congressional Budget Office (CBO). Of that figure, about 16 million would get their coverage through Medicaid and the Children’s Health Insurance Program.

“Having 32 million more people insured is good for America,” said Michael M.E. Johns, MD, an otolaryngologist and chancellor of Emory University in Atlanta. “Those (physicians) who accept Medicaid and those who are seeing uninsured patients should see some benefit.”

The American Medical Association estimates that physicians provided $24 billion in charity care in 2008, much of it to uninsured patients. The law is not expected to eliminate the problem of the uninsured, however. The CBO estimates that 23 million non-elderly adults—about one-third of them illegal immigrants—will remain without coverage.

What the Bill Doesn’t Address

While the act includes many laudable changes, the provisions it lacks raise much concern, says Gavin Setzen, MD, chair of the American Academy of Otolaryngology—Head and Neck Surgery Board of Governors. A major disappointment for physicians is lawmakers’ failure to pass Medicare payment reform as part of the law. Although, in April, Congress again delayed the 21 percent Medicare physician payment cut, this time until June 1, it has not replaced what physicians consider a flawed reimbursement formula.

The financial pressure physicians would face if the Medicare cut occurs would worsen a projected physician shortage, Dr. Setzen said. The Association of American Medical Colleges predicts the U.S. will have between 124,000 and 159,000 too few physicians by 2025.

A recent survey of more than 14,000 surgeons and anesthesiologists by the American College of Surgeons found that 37 percent will change their Medicare status to nonparticipating if the cut goes through, and 29 percent will opt out of the program for two years and privately contract with Medicare patients. Of the 31 percent of respondents who plan to continue Medicare participation, three-fourths plan on making some change in their practice in the next 12 months. Sixty-nine percent plan to limit the number of Medicare patient appointments.

The law’s medical malpractice reform provision also is a missed opportunity, Dr. Setzen said. Physicians have stressed that a cap on noneconomic damages is another important part of health system reform, but the act includes no such limit. The measure authorizes funding for five-year state demonstration programs to develop, implement and evaluate alternatives to the current system. “I don’t see how that is going to do anything meaningful in a reasonable timeframe,” Dr. Setzen said.

Dr. Setzen and others expressed concern about the law’s Medicaid eligibility expansion. Many doctors accept Medicaid patients because they believe they have an obligation to those patients, he said. The payment rates are so low, however, and the administrative burden is so high that providing care to Medicaid patients is essentially equivalent to charity care, he said.

The law increases primary care physicians’ Medicaid payment rates to the Medicare level, but that provision doesn’t apply to specialists, such as otolaryngologists, Drs. Setzen and Johns noted. The low reimbursement level for specialists raises questions about how many of them would be able to afford taking on newly covered Medicaid patients, Dr. Setzen said.

The combination of the Medicare payment cut threat, low Medicaid reimbursement rates and physicians’ medical malpractice issues could limit the health system reform law’s success, Dr. Setzen said. “When you take an already burdened system and there is such a strain with respect to workforce and you introduce 32 million people, access by necessity is going to be limited,” he said.

The act establishes a National Health Care Workforce Commission that will evaluate whether the demand for health care workers is being met and recommend solutions. “That’s something we’re very interested in—how the commission will be structured, what it will do,” Dr. Johns said.

Fear and uncertainty exist in the medical community about the new law’s implications, Dr. Setzen said. “A lot of people are waiting to see how this unfolds.”

It is unclear how the individual mandate and the penalties for businesses that don’t provide coverage will pan out, Dr. Setzen said, pointing out that some individuals and employers could opt to pay the fines rather than buy insurance. “Because the penalties are low and incremental, I think a lot of patients will pay the penalty in the first and second years and still show up in the ER,” he added.

Given the budget crises in the states, physicians also worry whether the state health insurance exchanges are financially sustainable. If the states can’t afford to operate the exchanges, they could become a federal responsibility, Dr. Setzen said. “Is the government the best entity to run the health care system? I’m not convinced of that,” he said. It’s also unclear whether some states will want to create exchanges, Dr. Johns noted. If they don’t, the federal government can step in and develop them. “How that will work and whether that will work remains to be seen,” he said.

The law’s true impact won’t be known until the regulations are written, Dr. Johns said. “There are going to be thousands of pages of regulations. That will be the interesting part of it.”