Access and Affordability Are At Odds With The ACA (OPINION)

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Every year in early February, Punxsutawney Phil emerges from his wintery burrow and through his sleepy, beady eyes offers hope of an early spring with a mere glimpse of his shadow. The absence of his reflection, however, forebodes six more weeks of cold and misery at the hands of winter.

Data, regardless of its form, can be interpreted many ways. Predictions based on insufficient data can lead individuals, or organizations, to frame a positive narrative around what is but a portion of the truth. This has certainly been the case with the Affordable Care Act (ACA) and the positive spin on enrollment numbers presented each spring by the Department of Health and Human Services.

If success is measured by improved access to health insurance to a demographic once excluded from coverage then yes, the ACA has been a success. If success is measured by enhancing affordability through the extension of federal subsidies to individuals and families demonstrating financial need then yes, the law has been successful — to date.

But how many individuals now covered through the Federally Facilitated Marketplace (FFM) lost their private insurance a year ago because of the health reform law? How long will coverage remain affordable as health care costs and utilization increase? What happens if the Supreme Court strikes down financial subsidies later this month for individuals buying coverage from exchanges operating in 34 states?

Data supports that access to health insurance has been improved by the health care law. What is not supported by data is that the law has, or will have, a positive impact on reducing health care costs over time or improve the quality of care for millions of Americans.

Case in point is the announcement this month made by BlueCross BlueShield of Tennessee, proposing to raise premiums by more than 36 percent next year. It was touted an early success because more than 230,000 citizens enrolled via the federal exchange last year and BCBS picked up almost two-thirds of them. Even with critical mass, the insurer admitted it underestimated claims filed by the new customers, losing more than $141 million last year. While national estimates indicate that health premiums within the exchanges will rise on average 10 percent next year, that seemingly modest number applied to a $500 per month premium will mean an additional $600 per year in costs.

What is not addressed in the health care law is behavior and what I call a “rental car” health care system. The more we continue to suppress the true costs of health care through subsidies and even co-pays, the less likely individuals will take ownership of their health care costs. The U.S. Census Bureau recently published new estimates on health spending that illustrate a 7.3 percent increase in the first quarter of 2015 over the same period last year. Hospital spending this year alone has increased by 9.2 percent. The survey found that greater use of health services as well as more people covered by the ACA are the primary cost drivers with individuals using more physician and outpatient services again as the economy improves.

A storm brewing on the horizon that has the potential to derail health care financing at both the public and private level is specialty pharmaceutical spending. Specialty drugs are on the rise and we are already seeing the financial impact on employer-based health plans. Spending on these drugs, estimated at $55 billion in 2005, is expected to rise to $1.7 trillion in 2030, according to the Pharmaceutical Care Management Association. Estimated to reach $400 billion by 2020, one class of pharmaceuticals alone could account for 10 percent of total health spending in just five years.

So while the law is titled the Affordable Care Act, keeping it that way will be a challenge. Improved access to health care doesn’t mean improved health care. Absent a strategy to address cost and quality, access will be a moot point. 

Tom Hayes is the national practice leader for employee benefits at Regions Insurance, a top-30 national insurance brokerage with 23 offices in eight states in the Southeast and Indiana. He can be reached at tom.hayes@regions.com.

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