Last month I looked at how health insurance eligibility changed under the Affordable Care Act and explored the “coverage gap” in states choosing not to expand Medicaid. This month we’ll explore other implications of this revolutionary change in how health insurance is secured and paid for.
Cutting the ranks of the uninsured is a key objective of the ACA. Not all of the 8 million Americans who signed up for new plans were previously uninsured: According to early surveys, two-thirds to three-quarters of these enrollees were changing plans. No surprise here. The ACA offers subsidies that are significant for many people, making the federal and state marketplace plans very attractive for those who qualify. Others who didn’t qualify for subsidies still found the marketplace plans a good deal. Competition spurred by the marketplace drove down prices for non-employer plans in some states, including New York.
Yet some people will choose to pay the penalty for being uninsured instead of paying the premiums. Insurers are now required to cover a fixed set of preventive services at no extra cost to the consumer. The law also limits what consumers can be charged for care within a single year. Initially, the law required that a 2014 policy must cover all costs above $6,350 for singles or $12,700 for families. That’s the “out-of-pocket maximum,” now delayed until 2015. (These deductibles are subsidized for individuals and families below 250 percent of the poverty line.) This shifts the financial burden of major illness from the insured to the insurer. Both changes make for better insurance—but they cost insurers more, and premiums will rise.
Premiums will change in future years, too, and thus the balance of that “buy insurance or pay the fine” calculus. Actuaries, the beleaguered insurance staffers who have the job of estimating cost were flying blind in this first year. Normally, insurers can assume that the health status and behavior of the insured population will be much the same as before. But with so much changing at once in 2014, the task of setting rates was perilous.
In summary, while rates of insurance among those who qualify for subsidies should rise, ACA critics warn that higher overall policy costs may actually cut coverage rates for others. While this seems unlikely, it is possible. And the “coverage gap” in some states remains, as explained in last month’s column. Stay tuned.
Cost of new enrollees
Increasing insurance coverage is only one step. Can our health care system serve all of these new patients?
Medicaid enrollees already have a hard time finding physicians willing to accept the rates offered, particularly in New York, where primary care reimbursement under Medicaid, when compared to Medicare rates (which are the same nationwide), is second-lowest in the nation and higher only than in Rhode Island. That’s why health care delivery under Medicaid in New York is so dependent on federally qualified health centers like Rochester’s Jordan Health Center. These clinics are better funded under Medicaid than are physicians in private practice.
When the ACA is fully in force, primary care doctors could be in short supply across the board. The Association of American Medical Colleges estimates that the nation will face a shortage of 130,000 physicians by 2025. Inevitably, a larger share of primary care will be performed by other health professionals, particularly nurse practitioners and physician assistants.
New York just made this easier by passing the Nurse Practitioners Modernization Act, effective next January. Statewide, most NPs will probably continue to be part of physician-led practices, but the law opens new possibilities.
Greater reliance on mid-level health practitioners can help address the shortage. The Rand Corp. estimates that nurse-managed health centers can help fill the gap (see http://goo.gl/gKpACq). Research indicates that NPs and PAs provide excellent primary care. Johns Hopkins and the University of Maryland performed a meta-analysis of 37 studies comparing care from NPs and from physicians. They concluded that rates of hospitalization, mortality, patient satisfaction and several other specific measures were equivalent across NPs and docs (http://goo.gl/yE4g1z).
Primary care also is going retail. Downstaters now have access to a network called CityMD, staffed by emergency medicine doctors. Look ’em up on Yelp: The clinic at Broadway and 89th earned 4.5 stars from 103 reviewers. (Now that’s retail.) Retail clinics score well on quality measures, too.
Can we accommodate the newly insured? Probably, but not without changing service delivery for primary care. Look for more states to expand the role of mid-level professionals.
Finally, what’s the likely impact of the Affordable Care Act on cost? Putting aside formal cost-control efforts like payment reform and the Patient-Centered Outcomes Research Institute for another column, the law’s big impact on cost may come from the rise of high-deductible plans. Between out-of-pocket maximums and required preventive care services, insurers have dramatically expanded the share of plans with substantial deductibles.
High deductibles do change behavior and will cut spending. Last July, the Employee Benefit Research Institute reported the results of a five-year trial with high-deductible plans: Spending in the first year fell by 25 percent. (Yes, we worry about the impact on health outcomes. But that, too, is another column.) While more high-deductible plans may be an unintended consequence of the ACA, they could have a larger impact on cost than any of the planned cost-control measures.
Kent Gardner is chief economist and chief research officer of the Center for Governmental Research Inc.
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