Affordable Care Act: Negative Implications

1. Affordable Care Act: Negative Implications Roger Anderson, Leslie Burgy, Margie Pokorski, and Carolyn Sucaet Siena Heights University LDR-614 August 13, 2013

2. Introduction to the Affordable Care Act • Key Areas of Concern • Quality • Satisfaction • Cost • Access • IT Issues Overall, issues with implementation will outweigh any potential benefit

3. ACA Quality Issues -Overview One stated intent of the Affordable Care Act is to improve quality. This is to occur using the following methods: • Values-Based Purchasing (VBP) • Health Insurance Exchanges (HIE)

4. ACA Quality Issues-VBP • 33 Approved measures to determine how well ACOs meet minimum quality standards Issues • This is a very finite or limited list • No high-level evidence that this enhances quality (O’Brien, Kumar & Mertsky, 2013) • Described as a “…program built on penalties…” (Shoemaker, 2011) • Gaps in areas of focus may lead to decreases in quality (e.g. Behavioral Health)

5. ACA Quality Issues-VBP Diversion • Funding will tend to follow those areas that are being measured • This is parallel to the “carve-out” methodology seen earlier in Medicaid programs • Costs increase when care shifts to another setting • This could be seen when a patient with behavioral health issues such as depression is unable to receive OP services and seeks emergent care during a crisis, possibly leading to an acute admission

6. ACA Quality Issues-Resources • The ACA’s quality mandates have forced funding to shift in order to support these initiatives • Now that key quality measures are linked to reimbursement, there is more money dedicated to initiatives around re-admissions and LOS • This can draw away from funding of new research and clinical innovation

7. ACA Quality Issues-Technology • Costs will also be incurred for technology related to Health Information Exchange (HIE) development and the use of data. • No total has been quantified inclusive of capital, operations, and ongoing maintenance • No provision in the act to keep the systems current or up-to-date • Concerns have been noted with the public trust regarding data security. This can result in lack of accurate or complete data and undermine the quality

8. ACA Cost Issues – Goals/Methods • Goal: Increase coverage for 32 M uninsured • Methods: • Medicaid Expansion • State Insurance Exchanges • Uninsured Purchase Mandate

9. ACA Cost Issues – Projections/Funding • CBO projects increased Federal Government spending by almost $1Trillion over the subsequent decade. • Six Funding Sources: • 14% Reimbursement reduction to private Medicare Advantage Programs • 33% decrease in MC reimbursements to hospitals • 0.9% increase in MC payroll tax with extension for higher incomes

10. ACA Cost Issues – Projections/Funding • 11% revenues from new taxes from other health sectors • 3% increase in revenue from Cadillac tax • 21% increase in tax revenue from other areas such as penalty payments and “higher wages resulting from reduced employer spending on health care insurance”

11. Cost Projections- Administrative • CBO’s estimates do not include $274.6 B to administer programs related to ACA • $7.5 B IRS enforcement • $7.5 B CMS administration • $50 B Grant programs • $209.6 B MC Physician Payment Reform • Additional deficits of $562 B in the first 10 years

12. ACA Cost Issues - Medicaid Expansion • As of June 2013, 14 states have chosen to opt out of expansion due to cost • Tennessee: 1994 Expansion to cover 500,000 residents increased costs from $2.5 - $8B in 10 years • Alabama: Gov. Bentley refused to participate due to projected cost of $50M annually • Massachusetts: costs continue to grow 8% annually despite recommendations to control spending

13. ACA Cost Issues - Health Insurance Exchanges • CBO projects 20-23 million covered through exchanges • Average 2014 individual market premium in 11 states for silver-tiered plan $321 compared to $450 current market average • How feasible to predict individuals will begin spending $4000 or 8.4% of their income for insurance versus paying penalty of 2.5% ($1,150) or $695 (whichever greater)

14. ACA Cost Issues - Employers • Employers opting out and paying penalties may be more economic than mandates • SouthWest Airlines estimated costs to company at additional $414 M annually in order to comply with ACA regulations • Unclear as to extent of corporate savings achieved to offset increased tax revenue projected

15. ACA Costs- Summary • Implementation Costs: $940 B by 2019 • Additional Administration Costs $562 B in first 10 years • Total $15.02 B in 10 years

16. ACA Access Issues Supply Driven Demand

17. ACA Access Issues Underuse

18. ACA Access Issues Information Technology

19. ACA Access Issues Patient Satisfaction

20. ACA Access Issues Physician-Centric Care

21. CONCLUSION “The changes we would need to mobilize in pursuit of the Triple Aim (care, health and cost) are large, and the obstacles are daunting” ( Berwick, Nolan, & Whittington, 2008,p.76) Biggest Barriers: Supply driven demand New Technologies Physician-centric Care

22. Conclusion • Cumulative impact of barriers is making any substantial increase in quality unlikely • “Iron triangle” of healthcare reform prevails: “Cost, quality, and access constrain each other in complicated ways” (Clarke, 2013, p. 47) • Leaders should prepare for increased costs • Consumers should prepare for increased expenses or increased taxes, or both

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