There is increasing controversy about the Affordable Care Act, with a lot of people wondering if healthcare reform will work. We asked Michael Howley PA-C, Ph.D., associate clinical professor of marketing at Drexel LeBow, to share his thoughts on this heated subject.
Q: How is implementation of the Affordable Care Act going? It seems like a very rocky start.
A: Yes, the federal online exchange or marketplace rollout has been disappointing. The state exchanges have been working well, however. As we know, the ACA is much more than about exchanges, though. There have been a lot of exciting developments that have not made the news reports. For example, the ACA has created a new age of patient-centered research and insurers have created a lot of exciting new offerings for people who have been lacking research. There are a lot of exciting developments about how to pay for doctor services like Accountable Care Organizations (ACOs) and quality incentives.
To me, the biggest failure of the implementation is the large group of states that have not embraced reform. In the early stages, we are seeing that reform works if you engage and invest to make it work. The states that are unhappy with reform have refused to set up exchanges and left it to the federal government. Now those states are complaining that the federal exchange is overwhelmed.
“Satisfaction with reform depends on how much you invest in it.”
Q: What is the problem with the exchanges?
A: These exchanges are far more complicated than anything that has been tried before. These are not like simple travel sites or even comparable to the earlier state exchanges in Massachusetts. They are trying to integrate databases that handle very sensitive information and present the results in an instant.
Think about what is happening in the background. When someone applies for health insurance, the website has to verify their identity, their income, disability status, citizenship status, employment and other benefits the person is already receiving. We expect the technology to do this in a few seconds and handle millions of requests simultaneously. It’s really a remarkable accomplishment.
Q: There have been other significant problems. I heard that UPS, for example, said that they were cutting off health benefits for spouses.
A: This is true, but only if a spouse has access to insurance through his or own employer. My delivery person was upset, for example, because his family got a $250 check for his wife to use UPS health insurance even though she has access to coverage through her own job. With this policy, he loses the $250.
While this is unfortunate I don’t see this as a problem related to health reform. The problem is that employer costs for insurance are very high (about $12,000 per family this year). Companies have always excluded spouses if they had access to health insurance from another employer, but they never really enforced the policy. Costs are getting so high that they are starting to enforce the policy.
We are seeing that health reform is getting blamed for all of the problems in healthcare. The ACA is basically a restructuring of the health insurance markets. It is not designed to fix all of our problems with healthcare. We know, for example, that we will probably need another round of healthcare involving costs relatively soon. These are the really tough problems in healthcare, so it is likely to be even more controversial than the current reform.
“Employers unfortunately bear the brunt of health reform.”
Q: They delayed the employer mandate. What is the problem in that area?
A: Employers are required to provide qualified insurance to their employees and be able to document which employees are insured and the benefits they are receiving. The problem is the documentation, not the coverage. The vast majority of employers, even in small companies, provide coverage. The problem is that the documentation is very burdensome. They are still in the midst of talking with the government to figure out the best way to document the insurance coverage, so they put of the mandate for a year.
Q: There is a lot of conversation about postponing the individual mandate like the employer mandate. Is that a good idea?
A: It can’t be done for three reasons: adverse selection, pricing and the customer pool.
- The first issue, adverse selection, means that only the sick people will sign up for health insurance. That is a problem. If only sick people sign up for insurance, then the markets don’t work. To make the markets work, we need everyone in the marketplace.
- If we defer the mandate, the second problem is incorrect pricing. The insurance companies are trying to figure out what is the average price they can charge to get it to work. If you only have the sickest people, the process will be off, too low, and they will get hammered.
- Finally, it is just not fair to all of the companies that have invested in the new exchanges. A lot of companies have invested in a market that is supposed to be about 50 million people. They have all made investments in technology, marketing, and business processes for this large group of people.
“We cannot put off the individual mandate because the resulting dysfunction will ruin the healthcare market place and would not be fair for those investing in the larger pool of customers.”
Q: How should we think about healthcare in the post-ACA world?
A: We need to think about healthcare differently. Now we tend to react to an illness and count on insurance to be there if we ever need it. Instead, we need to look ahead at our future health situation and prospectively manage that risk. We should manage our health insurance, in other words, like we manage our retirement plans.
Q: In the end is health reform going to work?
A: Yes, this issue with the web portal will work itself out. If you doubt it, remember the experience with implementing Medicare Part D in 2003. The real impact of the ACA comes from the restructuring of the insurance markets, which should help our healthcare markets function more efficiently. The technology is just a tool we can use.