The Affordable Care Act (ACA) has survived its biggest challenge to date with the failed attempt to repeal and replace by the GOP. But will it survive in the long run? Republican comments and President Trump’s many tweets would suggest the law is still doomed. It is hard to predict what will happen, but let’s examine some themes we are seeing so far to try to gain some insight:
One of the first things the GOP Congress wanted was to retract the cost sharing payments to insurers for low-income exchange plan members. Without these payments, insurers would lose even more money, driving many of them to not offer plans in the state exchanges. The jury is still out on whether the replacement bill’s failure will move the budget reconciliation process forward, but insurers have only two months to decide if they will provide a plan in the exchanges for 2018. If insurers do decide to stay in the exchanges, significant premium increases are very likely to help cover their costs. This will force many people who cannot afford the monthly cost to drop out of coverage. Either of these situations would push people back into the uninsured ranks where providers would lose that reimbursement revenue and drive up uncompensated care.
Loosening the individual mandate’s enforcement is another theme being discussed. New HHS Secretary Price has stated he plans to allow states to loosen the restrictions on waivers for the individual mandate. Combined with premium increases, this would allow people to opt out of coverage much more easily. The CBO report has stated 7 million people would have opted out of coverage if the American Health Care Act (AHCA) had been passed, since many people do not think they need it. Most of these people would be younger and healthier, creating higher costs for insurers, while driving up premiums and/or driving insurers to exit the exchange.
Secretary Price has also mentioned giving states the ability to set requirements to individuals to maintain Medicaid coverage, like applying for work. Studies have shown in the past this activity causes people to fall out of coverage. It is expected that this move would cause many to fall off the Medicaid roles and drive them to the uninsured ranks as well.
The federal deficit is upwards of $540 billion for 2017. And If the ACA does not change at all, then the federal government is expected to spend $1.2 trillion on Medicaid coverage alone through 2026. Previous CBO estimates indicate this would drive our yearly national deficit to over a trillion dollars in 10 years. The U.S. economy survives today because financial institutions buy treasury bonds to fund that deficit each year. But when deficits reach the heights predicted if the ACA remains entirely intact, and the national debt reaches a significant portion of our yearly GDP, bond sales could and likely will slow down. That means damage to the U.S. economy as it continues to stabilize post-recession.
A federal budget has been submitted that makes some spending cuts, but without the AHCA’s passage they pale when faced with the real problem of balancing our budget. This is not an indictment of policy to cover people with insurance, but simply a fact that our nation must find a way to balance our finances. There are many ways to cut cost, but the GOP seems fixated on cutting Medicaid spending as the key to accomplishing this.
We can only theorize what might become of the ACA, but looking at some of the themes and recent comments by the current administration, it would appear some things will change if not a complete revisit of the repeal and replace bill. Will those changes effectively kill the law since it will lack the ability to function as planned? Quite possibly, but only time will tell.
Change will happen. It will result in some sort of reimbursement cuts and very likely push more people back to the uninsured roles. Providers need to ready themselves, and start thinking about ways to improve productivity and reduce the cost to collect while increasing cash collections.
Shawn Yates serves as Director of Product Management for Ontario Systems, defining the company’s strategy for product and service offerings in the health care market. With over 20 years of experience managing self-pay receivables and collection operations for a top 20 health care system, Shawn’s background also includes working for a national outsourcing company helping clients manage their insurance and self-pay receivables, and Experian Health, the largest data and analytics company in the country.