The Affordable Care Act: Perfect? Hardly.

By Debra Gordon

By Debra Gordon

I did a radio interview last week with KZYX public radio in Mendocino, CA. The topic was one near and dear to my heart – the Affordable Care Act (ACA). Towards the end of the show, the host asked me if I thought the ACA would solve the myriad of problems in our healthcare system.

Since I was on live radio, I didn’t want to laugh hysterically. That would have been rude. So I swallowed the words one doesn’t say in public and very politely told her “no.”

I say “no” for numerous reasons, not the least of which are the flaws in the legislation that, over the past few months, have become more apparent to me. Here are just two:

  • Hospital readmissions. I’ve been writing a lot lately about hospital readmissions and one thing I keep stumbling upon is the fact that the Medicare penalty for a 30-day readmission for patients with pneumonia, acute myocardial infarction, or heart failure doesn’t begin to counter the financial benefit of that readmission. Thus, doomsters predict that the new policy will have little effect on actual readmission rates. And, indeed, data from the Centers for Medicare and Medicaid Services finds little change in readmission rates overall between 2007 and 2011, when hospitals should have been preparing for the regulations.

However, deputy administrator and director for the Center of Medicare at CMS Jonathan Blum told a Senate Finance Committee last month that that all-cause readmissions in the last quarter of 2012 fell from between 18.9 percent and 19.5 percent over the last five years to 17.8 percent. What isn’t clear is whether that drop occurred in the three conditions for which hospitals are penalized, and if admissions also dropped, which would make any change moot.

So the policy has some bumps. Am I wringing my hands over this? Calling it a failure? No way. A recent article in the New England Journal of Medicine concludes that, given some tweaks, the policy could be quite effective. For instance, the authors recommend not just penalties for readmissions, but financial incentives for hospitals that do reduce readmissions.

They also call for changes in the calculations used to assess preventable readmission rates that account for the impact of socioeconomic status on readmissions.

As the authors wrote: “The latest evidence suggests that the readmissions reduction program has potential: it can change the hospital business model by asking institutions to become increasingly accountable for what happens to their patients beyond their walls.”

I expect we’ll see more of that as more accountable care organizations spring up and accept bundled payment models—most of which cover inpatient as well as outpatient care.

  • The individual “mandate.” Mandate insurance for all Americans, set up easy-to-navigate insurance exchanges (or so we hope), and provide subsidies for those with certain incomes. Sounds like a no brainer to bring many of the 49 million uninsured Americans into the fold.

Except for one problem that I learned about, from all places, a paper from the libertarian Cato Institute authored by attorney Thomas A. Lambert. Lambert warns of a “time bomb” inherent in the current construction of the ACA, namely: the penalties for not buying insurance are too small.

For instance, someone earning $35,000 a year would pay a $60 monthly penalty for not buying insurance and someone earning $100,000 would pay $200. Given that the cost of a qualifying insurance policy is projected to be $400 a month, where’s the incentive for the “I-don’t-need-insurance-because-I’m-healthy” person (we all know someone like this).

I’d say the incentive is not to go bankrupt if they get sick or a bus hits them. But, and here’s the time bomb, since the ACA does away with discriminating against someone with a pre-existing condition, that person could sign up for health insurance within days of a cancer diagnosis.  Anyone who knows anything about risk pools knows where that leads.

There are other weaknesses in the bill. Just a few off the top of my head:

  • No single payer system
  • Continuation of fee-for-service reimbursement system, although the bill does introduce new value-based options.
  • Does not address the huge shortage of primary care physicians that’s coming or the high cost of medical school
  • Does not allow Medicare to negotiate directly with pharmaceutical companies
  • Does not allow the outcomes of comparative effectiveness studies to influence payment
  • Does not cover illegal aliens—who are responsible for a disproportionate share of unreimbursed health care, which drives up costs for the rest of us.

I’m also afraid that the health insurance exchanges are going to be a disaster for a while, assuming anyone can really get them operating by the October 1 deadline.

Does this mean we should chuck the program as some suggest? Of course not. As I told the radio host, the ACA is far from perfect, but it is a step in the right direction. And given the plethora of problems with the US healthcare system and its massive size, nothing could be expected to “fix” it in one fell swoop. Baby steps—politically and economically—are all we can do.

As the authors of the aforementioned NEJM article wrote: “No policy is ever perfectly designed at inception, and policies should be changed as new evidence emerges.”

I couldn’t agree more.

Debra Gordon, MS, is a healthcare communications consultant with more than 25 years experience writing about the US healthcare system and medicine. Learn more about her at www.debragordon.com.