PROGNOSIS FOR THE ACA IN MIDDLE AGE—PRETERMINAL

1. PROGNOSIS FORTHE ACA IN MIDDLE AGE—PRETERMINAL John P. Geyman, M.D. Professor Emeritus of Family Medicine University of Washington, Seattle April 15, 2014

2. THE ACA’S ROLLOUT • Glitchy website • Dysfunctional exchanges • Low signups and enrollments • Serial delays • Mixed public reaction and confusion

3. SOME POSITIVE GAINS OF THE ACA • Newly insured: 4 million through the new exchanges 6.3 million new or renewed Medicaid 3.1 million young people on parents’ policies until age 26 TOTAL 16.4 million • Subsidies 138 percent up to 400 percent FPL • USPSTF preventive services without cost sharing • Limited funding primary care and community health centers

4. DELAYS IN IMPLEMENTATION OF THE ACA • April 2013—ACA’s cap on out-of-pocket costs delayed from 2014 to 2015. • Summer 2013—employer mandate for firms 50-99 workers delayed from 2014 to 2015. • November 2013—insurers can sell non-compliant policies at least another year. • February 2014—above employer mandate delayed further to 2016. • February 2014—employers with 100 or more workers required to offer coverage to at least 70 percent of full-time workers, not 95 percent. • March 2014—open-enrollment for 2015 delayed until after Nov. elections.

5. HOW ACA FALLS SHORTON ACCESS TO CARE • 25 states opt out of Medicaid expansion. • Medicaid coverage gap • Medicaid cuts limiting benefits and physician reimbursement. • Primary care shortage. • Out-of-network barriers.

6. REASONS YOU CAN’T KEEP YOUR INSURANCE IF YOU LIKE IT • Cancelled policies • Employers drop coverage, shift workers to part-time, or pass them to exchanges • Premiums unaffordable • Loss of choice of doctors and hospitals

7. REASONS YOU CAN’T KEEP YOUR DOCTOR • Out of network (70 percent through exchanges) • Exclusion by ACO • Physician won’t accept low reimbursement • Retirement or death of physician

8. THE COST VS. CHOICE “EXPERIMENT”: INSURERSWIN, PATIENTS LOSE • Narrow networks with lower premiums, worse benefits • Patients lose continuity of care at affordable costs • Leading hospitals often out of network • Insurers profit by gaining enrollees with lower-cost physicians and hospitals. • Déjà vu over again since managed care of 1990s

9. REASONS WHY ACAWILL NOT SAVE COSTS • No price controls. • Ongoing perverse incentives to profit. • Increased costs of expanded bureaucracy. • Market failure without limits.

10. BURDENSOME MEDICAL DEBT FOR THE “INSURED” • In-network cost sharing • Out-of-network care • Unaffordable premiums • Insurance coverage limits or exclusions • Unaffordable out-of-pocket costs • No limits for out-of-network costs.

11. WHY ACA IS FAILING, AND WON’T WORK • Leaves almost 40 million uninsured, many millions underinsured • Unaffordable costs of care even if costs of insurance are subsidized • Continued barriers to access • Improvement in quality unlikely • Increased bureaucracy, overhead and waste • Profits trump care • Unaccountable and unsustainable

12. LESSONS FROM THE ACA • You can’t control costs by leaving for-profit health care industries in charge. • You can’t reform the delivery system without reforming the financing system. • Private health insurance does not offer enough value to be bailed out by government. • It is futile to use unproven or discredited incremental strategies to “reform” the system (Egs., CDHC, P4P, ACOs) • You can’t have an efficient insurance system without a large risk pool. • The safety net continues to unravel, especially in non-expanding states.

13. HOW INSURERS PROFITEER FROM THE ACA • Premium hikes with minimal regulatory constraint • High deductibles (eg., $5,000 before covering office visit) • Overheads averaging 19 percent, including profits • Overpayments to private Medicare Advantage plans • Limited benefit plans • Gaming what counts as care under the medical loss ratio rule. • Selling short-term policies that last less than 12 months.

14. A FIFTH TIER?(“Pyrite” or “Fools Gold”) If you take ten categories of coverage and you have a giant step-up, that is a bridge too far for some individuals… that was being telegraphed pretty clearly in the fall, not from us but from people who were buying the product and would have to spend more. So I would create a lower tier, so that people could gradually move into the program, so they could be part of the risk pool so we don’t hold the healthier people outside, so the process could be working the way it was designed, so we get the healthy and the sick… They’re in control if they have more choices. —Karen Ignagni, President and CEO of America’s Health Insurance Plans (AHIP).C-SPAN, March 21, 2014

15. THE HEALTH INSURANCE INDUSTRY: DYING WITHOUT THE ACA’S BAILOUT • Continued inflation of health care costs • Growing unaffordability of premiums • Subsidies as direct pass through to insurers • Unaffordability of cost sharing & out-of-pocket costs • Adverse selection in fragmented risk pools • Decreasing actuarial value of coverage • Continued decline of employer-sponsored insurance

18. “[Obamacare] is not a government takeover of medicine. It’s the privatization of health care. . . . It will make some people very rich.” —Tom Scully, former administrator of CMSin the George W. Bush administration Health care stocks went up by almost 40 percent In 2013, the highest of any sector in the S&P 500.

19. “Broadening health insurance coverage to include more than 50 million Americans is a worthy goal—as is any attempt to get a handle on cost inflation in health care expenses on the United States. But we believe that the idea that these goals are best pursued through market-mimicking and means-tested social programs is profoundly misguided. Fragmented risk pools will not promote either perceptions of fairness or us-us politics in the provision of health insurance. And patient choice and competition among insurers has no demonstrated record of cost control in medical care either in the United States or elsewhere in the developed world.” —Marmor, TR, Mashaw, JL, Pakutka, J. Social Insurance: American’s Neglected Heritage and Contested Future. Sage Publications Inc, 2014

20. LIKELY UNINSURED IN 2019 Original projection31 million Medicaid coverage gap4.8 million Estimated opt-out from individual mandate2-10? Million Likely totals uninsured37-45 million Uninsured before ACA48 million

21. THE ACA VS. SINGLE-PAYER NATIONAL HEALTH INSURANCE ACA NHI Universal coverage when enacted Covers all ages regardless of work status, gender, etc. Comprehensive benefits Single standard for all, based medical need Free choice of doctor and hospital 37-45 million uninsured in 2019 Employment and Medicaid based, with subsidies for many millions Variable coverage and benefits Multi-tiered system, based on ability to pay Limited choice of doctor and hospital

22. THE ACA VS. SINGLE-PAYERNATIONAL HEALTH INSURANCE (continued) ACA NHI One big, efficient risk pool Administrative simplicity Service ethic Cost containment through negotiated fees, budgets and prices Sustainable through progressive taxes; employers and individuals pay less than they do now Fragmented, inefficient risk pools Large intrusive bureaucracy For-profit business ethic No cost containment Unsustainable

23. All things are possible until they are proved impossible—and even the impossible may be only so, as of now. —Pearl S. Buck