Implications of an ACA-less World (Or, Why I am Not Devastated about my Short Term Job Security)

A week ago, I listened to a talk by a health care consultant from McKinsey, who relayed an aptly-chosen term for the health reform law. “Those of us in the consulting industry don’t refer to the bill as the Affordable Care Act. We call it the Jobs-For-All Act.” As in, the uncertainty and turmoil surrounding the impending (?) rollout of many health reform provisions in 2014 may have hospital systems and insurance companies scrambling, but it’s great for the health care research and consulting industry, whose services will be in high demand.

This is probably also a good time to interject that I’ve not entirely an objective observer anymore; beginning this summer, I will be working at a health care research and consulting firm in D.C. And so it’s not entirely unreasonable that the possibility of the Supreme Court overturning part or all of the health reform bill has made me somewhat concerned about my short term job security prospects.

But upon closer inspection, it appears my fears are unfounded. Even without the health reform law, many industry changes are already underway and will continue to occur.

Because of the complexity of the ACA, people often lump all of its provisions into a single entity. Breaking it down into two major groups of provisions makes it clearer why a scuttling of the mandate may have minimal effects on the rest of the bill:

  1. First, there are the insurance-expanding, mandate-dependent provisions that any person who cares about the plight of those who can’t access care should reasonably be concerned about.
  2. And then there are the quality-improving, cost-curve-bending provisions that any person who has a stake in the future of America must absolutely be concerned about.

All of the public debate is focused around the first set of provisions, but what is often overlooked is the fact that the individual mandate affects less than 10% of the US nonelderly population. What is arguably more crucial in improving the quality of care delivered in the U.S. and holding down long-term cost growth are provisions such as the meaningful use of electronic health records, payment reforms that tie incentives to quality, and myriad delivery system reforms such as Accountable Care Organizations and Patient-Centered Medical Homes. Hopefully, the Justices will recognize today that these provisions are perfectly implementable, even without the individual mandate.

But let’s imagine a worst-case scenario: The entire health law is repealed. 32 million Americans remain uninsured. Medicare loses all of its potential to improve quality and control costs with reform pilots. Will the hospital and health insurance industries go back to fee-for-service, mediocre-quality business as usual?

The first answer I heard to this question came from an alum I shadowed over the winter, who runs Neighborhood Health Plan of Rhode Island, a highly successful Medicaid managed care organization. “What do you think will happen to the industry if the health law is repealed?” I had asked him. And I had been somewhat surprised to hear his answer: “In reality, the health insurance industry had been moving toward reforms similar to those proposed by the ACA for a few years now.” Rising health care costs aren’t only a problem for the federal government; they’re a big problem for health insurers, who are looking for ways to get more value out of the care they pay for.

A recent article by Kaiser Health News confirms this observation. The health law did not instigate the current shifts in the health care industry; it merely accelerated them. Hospitals have been hiring doctors and buy up independent practices at an accelerating rate, to expand their control over care beyond the “four walls” of the hospital. And IMHO, if the ACA falls in its entirety, most of the continued pressure for these delivery system reforms will have to come from private insurance plans, many of which are already experimenting with new payment systems.

So, despite the uncertainty over the repeal of the health law, I believe that industry changes will continue, driven by private insurance plans who are looking at diminishing profit margins, and by hospital systems who want to fundamentally change the outdated, fragmented system of care delivery. A lingering question, though, is whether we will see a repeat of the 1980s and 1990s, when insurance plans formed HMOs in an attempt to control costs. They were successful, at least temporarily. But they succeeded in controlling costs not by improving the value of care, but instead by denying coverage for expensive services that people needed.

Without the quality provisions of the ACA, can we ensure that patients are not similarly overlooked in future industry changes?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s