Health Care Changes Coming With, Without Obamacare

The Affordable Care Act has reduced the number of uninsured Americans, but many of the most important changes in health care have come as a result of market forces that would have happened with or without the act, said Michael Sparer, chair, health policy and management at the Columbia University Mailman School of Public Health.

Speaking at the Clinton School of Public Service Tuesday, Sparer said the system is in a period of transition amidst continued difficult and partisan debates.

He said 10 marketplace trends have slowed the rate of increase in health care costs:

• Consolidation in the health care industry;
• Integrated systems where the lines between providers, insurance and others is blurring; New players like CVS and Urgent Care;
• Narrow networks and high deductibles;
• Value-based reimbursement where providers are paid according to quality of care;
• A new focus on care management;
• More engaged employers;
• Population health management of communities of people;
• A focus on costs versus benefits; and
• Greater use of health information technology.

Those changes are happening to a system that composes 18% of the country’s gross domestic product and costs $8,500 per person – far more than other First World countries, Sparer said. As recently as the 1970s, the United States was in the middle of the pack. Costs are high here despite the fact that Americans visit the doctor less often than people in many other countries, take fewer prescription drugs, spend fewer days in the hospital, smoke less tobacco and, as a population, are younger.

To illustrate the problem’s complexities, the United States has far more MRI units than Germany – 26.5 per million Americans versus 7.7 per million Germans. By most laws of economics, that greater volume should lead to cheaper prices. And yet the average MRI procedure cost $1,057 in the United States and $216 in Germany.

Sparer said that policymakers largely agree that the system is broken but sharply disagree on how to fix it. The various interest groups blame each other, while potential reforms are immersed in the larger national debate about the role of government.

Much of the rest of the world has tried to control costs through a single-payer government system, but that was politically impossible when the Affordable Care Act was passed and is unlikely to be done in the future, Sparer said.

Some Americans say the solution lies in making consumers more cost-conscious. The Affordable Care Act largely addressed the cost problem by attempting to make medical providers more cost-conscious through various attempted reforms.

The Affordable Care Act has decreased the nation’s uninsured population by expanding Medicaid, creating state and federal exchanges, imposing employer and individual mandates, and “a host, a host, a host” of federal regulations, Sparer said.

About 11.5 million Americans have gotten coverage through the exchanges and another 7.5 million through expanded Medicaid, leaving about 32 million who will claim not to have had health insurance in 2014 for more than nine months. Of those, however, only 6 million will pay a penalty, Sparer said.

When it comes to the Medicaid expansion, many states are looking to Arkansas’ “private option,” which uses federal dollars to buy private insurance. Sparer said he expects every state eventually to expand Medicaid, just as it took 17 years for the last state, Arizona, to join the Medicaid program in 1982.

The Affordable Care Act provides subsidies for most individuals who purchase health insurance through an exchange. Those subsidies are the subject of a lawsuit, King v. Burwell, because the act says they are available in exchanges “established by the state,” and 34 states are using the federal exchange.

Sparer expects the Supreme Court to uphold the law. If it doesn’t, some states will establish their own exchanges, he said.

However, the exchange subsidies face challenges in the court of public opinion. About 85% of Americans who have bought insurance through the exchange are receiving subsidies based on their estimated incomes for 2014, and Sparer said it’s likely that many guessed low and therefore will have to make up the difference through a higher tax bill this year. They won’t be happy, he said.