America’s Health and the ACA

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America’s Health and the ACAOn March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (ACA). The law put in place comprehensive health insurance reforms that will roll out over four years and beyond, with most changes taking place by 2014.

On March 26-28, 2012, the Supreme Court heard six hours of oral argument in National Federation of Independent Business v. Sebelius. On June 28, in a 5-4 ruling, the Court upheld the constitutionality of most of the law, including the individual mandate requiring most Americans to have health insurance by 2014—declaring it a constitutional exercise of Congress’s taxing power.

So the ACA will play a role in shaping the future of health care in the United States. What might that future look like? To find out, Berkeley Health convened a roundtable of experts to address questions from the big picture down to the brass tacks.

Meet our Experts

Stephen M. Shortell PhD, MBA, MPHWe’re fortunate to have at our fingertips one of the nation’s preeminent health care scholars in the School’s dean, Stephen M. Shortell PhD, MBA, MPH. Achieving high-quality, cost-efficient health care in our nation has been his passion for more than 40 years. Now an established expert on organized health delivery systems in the United States, Shortell’s extensive research has helped establish determinants of health outcomes and quality of care for health care organizations. William Dow PhDFor a health economics perspective, we invited William Dow PhD, professor and head of the School’s Health Policy and Management Division. Dow has broad international experience in health policy and has contributed his expertise domestically as well, both in California and at a national level. In 2005-06 he served as senior economist for health at the White House Council of Economic Advisors. Mark B. Horton MD, MPH.Finally, we were privileged to have Mark B. Horton MD, MPH, at the table, a health policy expert who has had a distinguished career in public health service in addition to 18 years of clinical practice as a pediatrician. Dr. Horton is the former director of the California Department of Public Health and State Public Health Officer. He is currently a lecturer at the School of Public Health.
Q. Is expanded care affordable for our country? What will be the effect on national spending—do you think it will lead to increased or reduced deficits?

 
Stephen Shortell: I think a big issue in all the health reform debates over the last couple of years has been the increased access to care and coverage of the uninsured: Can we afford it in the long run? Is it going to be sustainable? I think many people feel that it won’t be sustainable with our current delivery system, that it just doesn’t have the capacity to deal with some of the problems we have. So a major challenge for health care reform in the United States is going to be the ability of the delivery system to make significant changes in order to provide the care that’s needed for the increased coverage.

Mark Horton: One thing that occurred to me in response to the question, is, ‘Do we have an affordable health care system now?’ And I’m not sure our current system as it exists is affordable. We are adding additional burden to the system, but I think overall we’ve got to address affordability irrespective of how many people are included in the system.

mark horton quote

Will Dow: I think that’s right. It’s going to be quite a while before we can change the system substantially. We’re doing a lot in the short run to try to alter the system, but it could be a good decade or more before any of the reforms are really kicking in and bending that cost curve. For political reasons, Congress attempted to structure the bill so it would be scored as essentially budget neutral. There are lots of political questions about whether the cuts to Medicare spending that will be necessary to finance the expansions and subsidies for low-income populations are actually politically feasible. This is where a lot of folks politically are arguing that this is actually going to be very expensive to the country in terms of budget expenditures.

Horton: What does it mean to be affordable in the wealthiest nation in the world? It’s a rhetorical question, but the point is, ‘Are we getting the value for the money that we’re putting into the system?’

Shortell: [We’re putting in] nearly 18 percent of GDP now, far more than any other country. And, by most of the health statistics that we know about, we’re not getting the value of other countries. I think many people would like to think that if we could transfer some of that in the long run into other determinants of health—our educational system, housing, transportation, and so forth—that would reduce the burden of illness on the health system. But that’s going to take a long time to do.

Dow: The ACA as structured wasn’t intended to bend the trend, frankly. There’s a lot of political discussion about wanting to bend the trend, but the main goal of the ACA was to expand insurance coverage, with the acknowledgement that this is going to cost a lot of money and it will take us a while to figure out how to cut the costs out. But the big win of the ACA is that if this goes through and is implemented as it was passed, we should reduce uninsurance by tens of millions of people, and that’s huge.

Shortell: Right.

Horton: A social justice issue, really.

Dow: Very much so.

Q. Presidential candidate Mitt Romney has said that, if elected, he will try to repeal “Obamacare.” What will happen if either the individual mandate or the entire law is repealed?

Shortell: One immediate consequence if the individual mandate is eliminated is the issue of selection; there’s going to be a higher-risk pool if these people don’t have coverage. If the entire legislation somehow is revoked, that could have even wider spread repercussions. My own view is that even if both of those were to occur, it doesn’t fundamentally change the challenge we face as a country. The activities that are already out there—particularly in the private sector, among insurers and medical groups—have so much energy behind them even in this past year, that if the law is revoked there are still going to be some fundamental changes you’re going to see occurring around accountable care organizations and patient-center medical homes. The basic issue is moving away as fast as we can from fee-for-service payment. We’ve got to create an entirely different set of economic incentives in this country for more cost-effective care and rewarding providers based on the results that they achieve and keeping people healthy.

Online exclusive: Watch a video of our experts answer the question,
“Will the system be able to reduce the rate of growth in health care costs to no more than the rate of growth in the GDP?”

Dow: I agree that on the delivery side, I see in the private sector this huge amount of energy. In fact some of the accountable care organization efforts are moving much faster in the private sector than they are in the public sector. The problem is that if this [the ACA]does get reversed, then we’re not going to have the subsidies in place to address some of the uninsurance issues.

Horton: There’s so much momentum. What’s happening with the concept of an insurance exchange, I think that will be a valuable contribution to how affordable and purchasable insurance will be. The other area is all the particular aspects of insurance reform: My guess if the bill is repealed there will be a major rush to establish various components of the insurance reform. Kids staying on their parents’ insurance until 25? No pre-existing conditions? Those kinds of things, people are going to have a taste of that and are going to insist those be reestablished if it’s repealed. I’m confident that there’s going to be several major chunks of the ACA that I think the states will take on and lock into place, irrespective of what happens at the national level.

Shortell: And I know here in California, the people I talk to at least, they’re going to go full-bore ahead with the California exchange and other reforms we have to do in this state.

Dow: There’s a lot of will to do so. I’m worried about where the rubber meets the road, and that is going to be in the financing. So if the ACA gets repealed and there is not the federal financing coming into the state of California, then what that would imply is that there would not be funding for lower-income people either to get expanded Medicaid coverage or to get subsidies to buy insurance in an exchange. Without those subsidies you can’t have an individual mandate. You take away the individual mandate and then, the insurers are arguing, it’s going to be very difficult to have community rating, essentially allowing people to pay the same insurance premium regardless of their pre-existing conditions. If you take away that community rating, then we’re back into the same world that we’ve been in in California. It’s a huge lift what the State is trying to do even with all of the federal dollars. Without those federal dollars, I’m not as optimistic. So if we want to see the uninsurance rates coming down, I think we have to put our eggs in the federal reform sticking.

Horton: And states would not be able to afford Medicaid expansion, no question.

Dow: Not in this current environment. In 2008, we got very close in California, and you know we failed on the financing. That is where it stuck. And that was pre-recession.

Shortell: It’s going to depend on the future economy, and right now, that doesn’t look very optimistic.

Q. In what ways could individuals see their health coverage change by 2014? Will they bear greater or less personal costs?

Dow: We certainly know that cost sharing is going up and up and up. There’s a long-term trend towards more cost sharing in plans. Part of that is intentional in trying to use the demand side to bend the cost curve. When the ACA goes through in 2014, we’re going to see a huge reduction in cost sharing by currently uninsured individuals, and better access to care. And for those individuals who are going to get subsidies that will allow them to buy into plans with lower cost sharing or who are newly eligible for Medicaid. The vast majority of the population I think is not going to see any immediate effect in their cost sharing, and those are the people with employer-based insurance and that’s a huge portion of the country. There will be some people that will see increased costs and that is going to be particularly those people who are healthy and buying insurance on the individual market right now who are benefitting by not cross-subsidizing the sick people in the population. The way that we are going to change our premiums, they’re going to have to pay more.

Horton: I think that people will see changes and are already beginning to see some changes in the scope of services that are provided. I’m referring specifically to the clinical preventive services that will be provided without cost by both public and private insurance programs. I think people are already beginning to notice that.

Q. Do you see the need for further health care reform in the United States at the federal level? Would you take a different approach than the ACA?

the 3 speakers

Horton: Yes. I see some opportunities. I’m still one who gives some thought to the single-payer concept. I think that we’ve got much, even with ACA, that’s going to need to be done both in terms of cost and efficiency. We’ve got a lot of waste that needs to be eliminated, a lot of inappropriate care and adverse events that are occurring. I think as we move forward we need to see, can ACA do as much as a single-payer system could over time? If not, are there further adjustments that need to be made to move in that direction?

Shortell: There’s something to be said for that, because most of the international world—Europe, Australia, New Zealand, and so forth—have lower GDP spent on health care and better outcomes than we have in this country. They do it one of two ways or both: they have global budgets and/or they negotiate very strictly with the physician community. And many of the global budgets resemble single payer. In this country what we’re trying to do that makes it a huge, huge challenge is we’re trying to achieve those kinds of outcomes through the pluralistic kinds of values that we have in this country. We’re trying to thread the needle through fifty states, insurance exchanges, private market, private/public, and so on. It’s very complex because we’re not willing to bite the bullet to say we’re going to have a global cap of sorts. We’re simply not there yet politically, so we’re trying to do it through all these other kind of approaches.

Dow: There’s so much uncertainty about how that would actually play out in the U.S. that it makes it even more difficult politically to even try it. A lot of economists I talk to worry about the role of money in politics being so strong in the United States. If you think of Medicare essentially as government price setting, frankly Medicare hasn’t been terribly good at reigning in costs. And there are lots of reasons why there all sorts of pressures on the costs. So whether or not a single-payer system, even if it were politically feasible, would actually substantially reduce costs in the U.S., I think that is a huge unknown.

Shortell quote

Shortell: It would have to be accompanied though, Will, I think with some type of global budget. A state saying, in effect, here’s the money up front and we’re not going to increase, for example, more than the rate of increase in the GDP. So in California, we’re not going to spend more than our growth in GDP and that’s it. And whether or not we have six insurers in the state or one, all payer rates are the same. I agree it’s not just single payer. You’ve got to have a mechanism that says, in effect, ‘This is the limit.’

Dow: But do you allow balance billing? You don’t allow people to pay beyond that? Then, now, that gets pretty tough if you allow them to pay beyond those costs—

Shortell: No, people can choose health plans that are richer, that they pay themselves, they can do that.

Dow: But once you allow that, then you get into this discussion that we’re having at the national level about Medicare. So if we set some fixed amount that the government is going to pay, well as long as the providers have lots of market power and they can balance bill above that, then that government contribution is going to go less and less far toward covering the costs of care. So the details of how this would work are kind of hard to think about.

Shortell: They are, yes. What we have to realize is we’re like 50 different countries in many respects. So when you are the UK, right, you can get your arms around it and it’s much easier to do in that kind of setting.

Dow: Certainly if there was more ability for states to experiment, I think that would be a huge lift. And there’s lots of talk of that, but there are many federal restrictions on actual state experimentation today. As much as states want to experiment, it’s been very difficult for them to do so.

Q. Do you think the ACA will have an effect on reducing health inequities in the United States?

 

Online exclusive: Watch a video of our experts answer the question, “What are the challenges that hospitals, physicians, health insurers, and the public at large have in trying to implement health care reform?”

 
Shortell: It will be great that finally a lot of people are going to get insurance coverage. People will have greater access to health care services financially. But that has to do with access to health and medical care services. In terms of the underlying reasons as to why we have differences in health status along so many socioeconomic dimensions, this in itself is barely touching that problem in my view. It’s great that we have $10 billion presumably allocated for disease prevention and health promotion. But until we understand it’s the underlying social and physical determinants of health—education and what happens where people live, the housing and transportation and so forth—we’re not going to do much about dealing with health inequalities. Having greater insurance coverage can certainly can help at the margin.

Horton: I think it’s fairly well accepted that health care access is only responsible for about 10 percent of the overall individual health and the health of the population. So there will be a marginal impact, likely, on health inequities across the population. But I don’t think we can expect that this is going to have a major influence on whether the percentage of different subgroups of the population have diabetes or obesity or suffer from various diseases that are now so unacceptably different from population to population.

Dow: I agree. It’s sort of a heresy sitting in the health care field to say so, but in some ways I think that the biggest impact that health care reform can have on health for the U.S. population is if we can bend that cost curve and free up more dollars to invest in things like education. If you look at the way that California’s been disinvesting in education, K through 16 and even pre-K, it has very predictable long-term consequences for worsening the health of the state. That I think in the long run is going to be swamping whatever health benefits accrue from health care reform.

Q. What role does prevention and health promotion play in health care reform? What impact can those efforts have?

Horton: The fact is that health care is just outrageously expensive and it’s going to continue to get more unaffordable and more expensive both for individuals and for systems. We have to work toward making our population healthier and having less people enter the system in the first place. So I think that’s why it was so important that a critical part of the Affordable Care Act be investment in various public health endeavors to try to improve the general health of the population so that they don’t come into the system. I really think that, unless that’s a critical component of all of our reform efforts going forward, we are never going to be able to achieve an affordable system.

Shortell: I absolutely agree with that, Mark. And we know the political pressures—the proposal has been in Congress that in order to reinstate student loans, they’re going to take money away from the prevention fund. And that’s just not the thing to be done. I think we’re going to have to fight to maintain a lot of that. Also, the challenge of prevention is that it is long run. They’ll argue no one sees the immediate benefits. We’ve got to change the incentives somehow, and the exchange can help in this, by thinking creatively about how do you give incentives for insurers where they won’t get harmed as a result of making sure people get their vaccinations and immunizations and other kinds of behaviors, even if that patient leaves that insurer for another. And I think there are ways of doing that and drawing on behavioral economics for some incentives on that. But we do have to figure out a way and it gets back to issues of education. And when children are born, right then we begin to start on a path that’s going to lead into healthy lives and reduce illness along the way. I sometimes think simplistically one of the best things we could do in this country, or maybe two things, one is to put a school health nurse in every school in the country. And secondly, make sure every child can simply read by the age of six or seven. Because once you get that capacity for self-efficacy your whole world opens up for you in so many different ways. But we all realize it’s much more complicated than that.

Dow quote

Dow: I agree that the preventive health care is a challenge, but I think that’s something we can overcome. There are ways of sort of tweaking the health insurance or the reimbursement system; it’s not easy, but we can do that. What we don’t know how to do, frankly, is on the upstream prevention side. Take obesity, a major public health crisis. We have lots of ideas, but we don’t really know whether any of those are working. We critically need the public health research to understand what is actually going to work at the end of the day and where we should be spending that money. And this is where, as a School, we have a huge mission in front of us, well beyond everything in the ACA and health care reform, to understand what’s actually going to work.

Horton: But let’s not lose sight of the huge successes there have already been that have proven the value. When I was a resident, every hospital had kids with meningitis in it. Today, individuals go through an entire training program without seeing a kid with meningitis. Look what we’ve done here in California with anti-tobacco. We’re not only seeing less smokers now, we’re actually seeing the incidence of lung cancer coming down much faster. We have to be convinced that this can work. But you’re right; we’ve got some major challenges in making sure our interventions are science-based and effective.

1 Comment

  1. Medicare Delaware on

    This is very good information for US people. By this conversation US people know about Romney views about Obama care.

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