Experts Reveal a Multitude of Affordable Care Act Repeal and Replace Challenges at BoyarMiller Breakfast Forum
Chris Hanslik of BoyarMiller; Don Gilbert, healthcare consultant and lobbyist; Kelly Larkin with The Larkin Group; Jim Springfield with Optum; Bill Boyar of BoyarMiller.
HOUSTON (April 24, 2017) – The challenges and complexities involved to repeal and replace the Affordable Care Act (ACA), and the impact on the business community, were discussed by three leaders in healthcare industry consulting at the BoyarMiller Breakfast Forum on March 30.
Don Gilbert, healthcare consultant and lobbyist, Jim Springfield, senior vice president of Optum, and Kelly Larkin, M.D., FACAP, president and CEO of The Larkin Group, all agreed that certain aspects of the ACA are not sustainable and predicted that, within this year, changes will be made to reduce regulations and institute more management oversight by primary care physicians in the delivery of healthcare services.
“Our guests heard an excellent overview of the issues impacting the ACA exchanges and the federal government’s $8.3 billion debt to insurers from the ACA’s risk-corridor program established to offset losses on the exchanges from 2014 and 2015,” said Chris Hanslik, chairman of BoyarMiller. “There are very complex issues being addressed currently in Washington. Our expert panelists provided eye-opening insights on the complexities of our nation’s healthcare policy, which has far-reaching implications for every Texas business owner.”
The current state of the ACA
There are 20 million people enrolled in the ACA exchanges with 70 percent of them in Medicaid, representing one of the biggest challenges of the program.
“The Medicaid program and the ACA are temporarily in a ditch. In Texas, Medicaid represents 25 percent of the state budget and as the financial structure of the ACA changes, there will be tremendous impact in the public and private sectors,” said Gilbert. “If subsidies that cover Medicaid are reduced, then a greater share of the cost is shifted to the states. 31 states have expanded Medicaid; Texas is not one of them. But that means those 31 states will be spending more to support the program.”
Gilbert believes that the result of shifting costs will be the deterioration of private insurance programs because they will be so costly. He suspects it may lead to more people not having insurance and currently there are four million uninsured Texans—the highest in the nation.
Springfield further explained one of the current challenges with the ACA is the minimum benefit requirements for policies sold on the exchanges. The costs associated with these policies were, in many cases, much higher than the premiums associated with them. As these realities became clearer, insurance companies began leaving the exchanges, unwilling to continue losing money.
“The ACA provides a feature for the federal government, through its Risk Corridor mechanism, to reimburse insurance companies for these losses,” said Springfield. “As has been widely reported, the government owes in excess of $8 billion under this program for the last two years that it has not paid.”
Springfield said this situation has contributed to the exchange markets not working as efficiently as originally hoped as so many insurers have opted out of the exchanges in numerous states. The companies that contiuned on the exchanges, in many cases and with significant publicity, increased their policy premiums to levels that were simply too expensive for many individuals.
Larkin added that now providers are seeing sicker patients because of the delay in receiving care, and they are working harder for the same revenue as before the ACA. “There are more patients and fewer reimbursements, and that’s not a good business model,” she said.
Shifting market dynamics
The panel agreed that federal proposals to change Medicaid funding to block grants or per capita caps are intended to reduce the federal matching share of expenditures for that program, potentially forcing additional costs to state budgets. The point was made that unless the states can find additional efficiencies in Medicaid, additional costs for the state will likely result in efforts that may reduce benefits and payments to hospitals and other providers. As that happens, providers will be forced to further shift their losses related to Medicaid and the uninsured to other payers.
“When the rising costs of Medicaid and the uninsured are shifted from the state to hospitals and other providers, these costs often find their way into the payment rates that are ultimately negotiated with other payers and driving up the cost of healthcare coverage for businesses,” said Gilbert.
Jim Springfield added that “unless we learn to manage risk more effectively, shifting costs will irreparably harm the healthcare system in this country.”
Characteristics of a successful system
In looking ahead, the panel discussed some of the possible elements of a successful program.
“First, take away some of the regulations,” said Larkin. “Physicians spend an enormous amount of time reporting and doing paperwork, and that is not a good use of time.”
She also believes that tax credits for employers would be beneficial, as well as having primary care physicians responsible for managing healthcare access for patients. “If the physicians and internists manage a population of patients appropriately, they will receive better care and the physicians will be able to get back to an appropriate revenue stream.”
Springfield said that the program will likely take a different form characterized by block grants from the federal government to the states. Medicare may move toward a premium support program, utilizing the existing Medicare Advantage platforms and move away from the current fee-for-service model.
Gilbert agreed and cited that the federal government cannot take back the states’ enhanced Medicaid programs so it will need to reconcile with the states. “Currently, it is a cost-to-benefit program based on enrollment growth and not year-to-year cost. We may see that change.”
“Currently, Medicaid is a shared expense between state and federal government. Block grants and per capita caps that are part of the proposed federal reforms will limit federal participation in the cost of Medicaid over time, whereby pushing a greater share of the cost of the program to the states,” explained Gilbert. “To offset the loss of federal support, states must find sufficient program savings. In a state like Texas that has full penetration of managed care and notoriously low provider rates, it is unclear how those savings can be achieved.”
The conversations between panelists at the BoyarMiller Breakfast Forum can be viewed online at www.boyarmiller.com.
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