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Early Challenges and Possible Long Term Implications of the Affordable Care Act

An Interview with Doctor Siegal by Jennifer Lap, WeiserMazars LLP Health Care Group

Implementation of the Affordable Care Act (ACA) is upon us. To date, the most visible effect is neither the promised decrease in medical costs nor the promised increase in healthcare quality, but rather the increasing frustration of healthcare payers, providers, and consumers. As payers struggle to apply for exchanges, where they will be directly compared to their competitors, doctors’ offices make plans to expand the size of their waiting rooms, and consumers spend hours crossing their fingers hoping they’re one of the chosen few who will successfully navigate healthcare.gov, the national blood pressure is sky rocketing. Never was there a better time to expand health insurance coverage.

The WeiserMazars Health Care Group was recently joined by Dr. Michael Siegal, who will act as our Chief Medical Officer. Dr. Siegal obtained his M.D. and Ph.D. degrees from Columbia University, and currently runs a boutique “concierge” internal medicine and cardiology practice in New York City. Dr. Siegal has extensive administrative medical management experience within both the hospital and health plan environments. He has also acted as a consulting Medical Strategist with Ogilvy CommonHealth World Wide, a medical communications division of WPP, the world’s largest advertising network, for the past 14 years. We expect that his expertise will greatly enhance our capacity to help clients understand the ACA.

I had the privilege of interviewing Dr. Siegal regarding his take on the early challenges in the implementation of the ACA, and the possible long term implications of the law, if it survives repeated congressional attempts to dismantle it.

Q: From your perspective as a doctor, what are your greatest ACA concerns?

A: That it will financially backfire early on, and that the baby will be thrown out with the bathwater. The ACA is ultimately designed to reduce healthcare costs, but there will be a very lengthy implementation period during which the cost-related benefits of the act will not be seen. Initially, a significant part of the burden of insuring an additional 40+ million individuals rests on the shoulders of the Federal and State governments. Severe reimbursement cuts for medical services have already been made, and the added cost pressure of supplementing insurance costs will only exacerbate the situation.

Quality is a cornerstone of the ACA, and healthcare providers will be required to increase accuracy and transparency when reporting performance for various quality indicators. Approximately 1,500 hospitals have already been penalized by Medicare for substandard quality scores, and the number is likely to increase. In a single payer system the method by which this is done is usually related to data gathering from a single, uniform medical IT system, provided by the payer. Since we have neither a single payer system nor a uniform IT system  for tracking the delivery of medical care, practices and hospitals are responsible for implementing their own home-grown, or purchased off-the-shelf, tracking and reporting systems. This is an expensive endeavor for providers and hospitals already complaining about shrinking reimbursement.

Q: From your perspective as an individual running a practice, what are your greatest concerns regarding the ACA?  

A: Americans spend an average of 4 hours and 7 minutes in emergency rooms (Press Ganey). Much of this time represents inefficient provision of primary care to the uninsured. When these 40 + million newly insured people stop going to emergency rooms and  start seeking primary care in appropriate primary care settings, the flood gates will open. How will the current supply of doctors and allied medical professionals be able to handle such a huge increase in demand?

Q: Health insurance is a complicated and highly nuanced topic to begin with, and the ACA, in its complexity, may be seen as making matters worse. What is the most important thing that consumers should take away?

A: First and foremost, consumers need to understand why insurance works. Insurance works because a large group of people agree to get together and each pay a small individual fee to the common pool, so that when the group incurs the costs of major medical catastrophes for a small number of members of the group, enough money is present to cover the costs. The ACA is structured to reflect the belief that it is the individual’s responsibility to bear the cost of insurance in order to benefit from the protection afforded by the group’s cooperation. The law mandates that not carrying insurance, and counting on Emergency Room/Charitable Pool care, is no longer an option for most Americans. Though registering for health  insurance is mandatory, it’s important for consumers to know that they do have a say regarding the level of coverage they purchase—consumers can opt for a less expensive option that only covers severe or  catastrophic illnesses, under which they remain responsible for the costs of other services.  It will no longer be legal to be entirely without insurance in the case of catastrophic illness.

Q: What about employers?

A: The uninsured are not generally unemployed. Increasing health insurance costs have forced more and more small businesses (under 50 employees) to cancel the health insurance benefits they used to offer. Yet the benefits to an employer of providing health insurance reach far beyond that of the financial incentive such coverage represents to employees. Multiple parameters of workplace productivity are intertwined with healthcare. Healthy employees not only take fewer sick days, they perform better while at work. Employees with healthy children also have much better work attendance.

Q: And payers?

A: As public understanding of the ACA increases, insurance companies will likely be the target of considerable vilification; they should be prepared to deal with this backlash. In the wake of President Obama’s recent announcement that individuals may keep their current health insurance policies for an additional year, even if those policies are not consistent with the standards set by the ACA, payers are locked into the premium rates that they have already established for 2014. There will be far-reaching onfusion regarding the choices of consumers who may feel they prematurely terminated their coverage and wish to resume it. Coping with this will be challenging.

Q: Do you think the ACA will achieve its goals of reducing costs, increasing access, and increasing quality?

A: In the case of healthcare, a partial solution is not a solution at all. The ACA will only be successful if all components of the plan are allowed to come to fruition. However, there are powerful forces committed to maintaining the duplicative, inefficient and wasteful current practices which exist throughout the US healthcare delivery system. It’s also important to note that the reduction of costs through improvement of   quality and access will not happen all at once, but will take considerable time.  It was recently reported that although health care costs continue to rise in the US, the rate at which they are rising has actually decreased in the past two years. The administration is taking credit for this as one of the first signs that ACA is actually beginning to work. Of course, the interpretation of the statistic is controversial— naysayers relate it simply to the general economic slowdown we have experienced. I have to leave that one to the economists!

Q: What are some indirect impacts of the ACA that people may not be thinking about? (i.e. will there be a drop in medical school applicants?)

A: Medical school applicant pools are at an all-time high, but I think medical school admissions offices are seeing a shift in the type of students who are interested in going to medical school. Students are now enrolling with more appropriate expectations, especially regarding earning potential. It’s important that medicine still be perceived as a worthwhile and creative endeavor, not one that just involves filling out paperwork.

Medical school costs also remain at an all-time high. Paying off medical school loans is already an arduous task; this will only become more difficult as reimbursements to healthcare providers decrease. In order to continue educating enough doctors to meet the needs of a country whose entire population will now be insured, the government will most likely have to subsidize the cost of medical school tuition. Responsibilities of physician’s assistants and nurse practitioners will also likely increase in order to service the medical needs of the growing insured population.

Q: Universal healthcare has been successful in many ways in many other countries around the world; do you think it will be different for the United States?

A: I don’t, but I do foresee the development of a two tier system, similar to that seen in many countries with a single payer. By two-tier system I mean a system which will allow for private (non-insurance reimbursed) care, and likely provide faster access to non-emergency care, for those who are able to afford it. This type of hybrid has evolved in various countries around the world including Canada, Denmark, France, Germany, Israel and Ireland. However, the extent to which private   hospitals (i.e. hospitals providing elective care which is not reimbursed by insurance) are utilized varies from country to country. Thus the use of private healthcare providers in the United States, for both ambulatory and hospital care, and the impact this will have on the healthcare market, are difficult to predict at this time. H

The final chapter of the ACA is far from being written, and the impact on individuals, payers and providers so far has had a negative effect on all stakeholders. To date, multiple tenets of the Affordable Care Act have either been delayed or changed which begs the question, what will the final implementation of the ACA look like?