Eight changes that would improve the ACA

The Affordable Care Act (ACA) has led to some positive changes, including reducing the ranks of the uninsured. However, nothing is perfect, so we asked industry insiders: How would you improve upon the ACA? Here are their responses:

"I would include managing the cost of pharmaceuticals by allowing CMS to leverage their buying power to significantly lower drug costs,” says Managed Healthcare Executive Editorial Advisor Don Hall, a former health plan CEO, and principal, Delta Sigma LLC, in Littleton, Colorado."

"A young adult may prioritize prevention of health problems, suggesting better incentives for primary care,” says Ross Armstrong, a healthcare expert at Kurt Salmon, a global management consulting firm. “But a person at the end of life may prioritize a comfortable death. One way to align patients and caregivers on desired outcomes is to offer end-of-life counseling for each Medicare beneficiary and require that they complete an advance directive. This would help ensure patient wishes are adhered to and prevent billions of dollars in spending on efforts that patients don’t actually want."

This provision has been the number one concern of employers since the day the law was passed, according Tracy Watts, senior partner and U.S. healthcare reform leader at Mercer in Washington, D.C. Here are three reasons why she says the excise tax should be repealed: 

• Benefit design is just one factor influencing cost, and the cost basis for the tax is unfair to organizations in high-cost locations and those with older-than-average workers. Proposed adjustments don’t come near to creating a level playing field. 

• Too much is included in the calculation.  Dental, on-site health clinics, flexible spending accounts, health savings accounts are added into the base medical plan cost––providing a strong disincentive to offer these highly valued benefits.   

• The tax threshold is indexed to rise more slowly than benefit cost, which means that even a minimum 60% plan is likely to become a “Cadillac” plan at some point.
 

While the ACA has brought health insurance to millions of previously uninsured Americans, the costs they must pay out of pocket before a deductible kicks in are still prohibitive for many people, according to Jacob Horak, a healthcare expert at Kurt Salmon. “As a result, Americans across the country are opting for cheaper but higher-risk plans that cover only emergency-related costs,” he says. “In other words, countless people are still not getting the primary and preventive care the ACA intended to provide.”

“While the ACA addressed some known problems, particularly in the individual market, it did so via strict, inflexible reforms that have since straight-jacketed the market, driving up costs as a result,” says Joel White, president of the Council for Affordable Health Coverage.

Additional flexibility will improve ACA functionality by addressing the “law’s rigid aspects that increase costs for businesses, families and taxpayers,” White says. “Businesses can no longer provide standalone health reimbursement accounts because the accounts don’t meet insurance rules-despite the fact that bank accounts aren’t insurance. As a result, workers receive less, not more assistance from their employers.”

Likewise, rating rules ensure all premiums are higher because rates cannot vary outside of narrow factors, according to White. Finally, he says that consumers can only use subsidies on government monopoly exchange sites, despite the existence of many private and insurer exchanges that, in many cases, provide more and better tools to make coverage decisions.

Drugs, diagnostics, and devices are held to differing standards when it comes to payment and coverage, according to Managed Healthcare Executive Editorial Advisor Joel Brill, MD, chief medical officer, Predictive Health LLC. “Our current coding and coverage system retards the adoption of new diagnostics, therapeutics and technologies that can improve patient outcomes and care,” Brill says. “Rather than encouraging the adoption of technologies that can move patients from inpatient hospital to outpatient settings, payers have placed barriers on the adoption of new technologies, requiring companies and providers to conduct extensive studies for multiple year periods, shifting the burden of paying for the technology to the device companies, providers, and investors.”

In the meantime, he says, new drugs, once approved, are often covered for their FDA-approved indications. “While the Office of Inspector General permits pharmaceutical companies to create foundations that can help defray most of the patient financial responsibility for costly drugs, no such equivalent exists for devices,” Brill says. “Further, many health plans are unwilling to cover observational registries to demonstrate the efficacy of FDA-approved technologies, hiding behind legal artifice and claims that ERISA is their justification for not embracing innovation. This needs to be fixed-now.”

“The ACA has succeeded in expanding the number of people ‘covered’ by mandating the consumption of insurance ‘products,’” says Georganne Chapin, former head of Hudson Health Plan, and president and CEO of the Hudson Center for Health Equity and Quality, in Tarrytown, New York.

“Participating individuals are required to bear responsibility for maintaining ‘eligibility’ and paying-via premiums, deductibles and copayments-for steeply escalating costs,” Chapin says. “To ensure equitable access to healthcare, the fundamental premise of the ACA must be changed from one of insurance to one of universal, continuous, and stable entitlement to services."

A recent Congressional Budget Office study reports virtually no change in the number of people obtaining health insurance from their employer since the ACA was passed, says Watts. “And yet employers have taken on an enormous administrative burden to modify their plans, track worker hours, manage eligibility and report coverage in order to prove they are doing something they have been doing all along,” she says.

In Mercer’s 2016 survey on the impact of health reform, none of the 644 respondents thought they would be liable for the “offer of coverage” penalty, and only 8% thought they might be at risk for penalties related to minimum plan value and affordable contributions. Meanwhile, the mandate has had an impact on part-time workers: One in four employers have pulled back on the use of limited-duration employees because of the law and another 15% are considering changes, according to the survey. “The ACA would be better if it was more supportive of employer-sponsored medical plans.” Watts says.