We are excited to bring you the first installment of an exciting three-part series focusing on health policy as it impacts the ED. With the collaboration of the illustrious Dr. Seth Trueger, we are planning a deep-dive to understand the health care climate around the time of the passage of the Patient Protection and Affordable Care Act (PPACA, or simply, ACA), how the ACA has impacted health care and the ED, and what the future holds, particularly with respect to this nation’s leadership transition.
TWTWTW (THIS WAS THE WAY THINGS WERE)
The main tenets of the ACA aim to improve access to high quality medical care through insurance expansion, cost controls, payment reform strategies, and quality improvement initiatives.(1) Prior to the ACA’s passage in 2010, the US has experienced a long, circuitous route of healthcare system development and reform. More than 100 years previously, then President Theodore Roosevelt advocated for an increased involvement in the healthcare system by the federal government (2,3) highlighting the negative externalities and burden of ill health on a nation. Some forty years later, FDR advocated for the contentious perspective that healthcare and the opportunity to enjoy good health was a right—not merely an economic good.(4) In an effort to incentivize job procurement during the WW2 wage freeze, employers offered tax-free health insurance benefits to employees.(5) Twenty years later, around the time of the other TWTWTW across the pond,(6) LBJ established the Medicare and Medicaid programs, taking significant steps towards providing funding for elderly, persons with disabilities, and the poor. Later, Nixon furthered the vision for the future of the American healthcare system with his vision for America to be the “wealthiest [...] and healthiest.”(7) In 1986, Congress passed the Emergency Medical Treatment and Active Labor Act (EMTALA),(8) assuring access to emergency departments for those in need, regardless of ability to pay. Later, during the 1990s, we experienced the rise of managed care, notably through health maintenance organizations (HMOs), modifications of the fee for service payment models, modest increases in bundled payments, and an explosion of medical innovations and technologies.
ACCESS, QUALITY, AND COST
The main features of the ACA took shape with an eye on the concerning trends of Access, Quality, and Cost. National health expenditures (NHE) as a whole, and as a percentage of gross domestic product (GDP), continued to increase (Figure 1) as the population became increasingly older, sicker, and fatter—burdened with chronic disease and the aging of the Baby Boomers (Figure 2). Lack of adequate coverage led to increased unscheduled care with higher relative costs. In fact, despite Emergency Physicians comprising approximately 5% of the national physician workforce, we deliver 28% of acute unscheduled care(9) – responsible for as low as 2% or as high as 5-10% of healthcare costs.(10) Fee for service (FFS) payment models incentivize delivery of services rather than patient outcomes or efficiency. Higher care delivery, overconsumption of health care services from the expectation of diagnostic perfection, and the moral hazard of health insurance generated upward pressure on prices, furthering the rising costs. Yet, the costs of ongoing research and development supported by the American healthcare system has led to the most advanced therapeutics, pharmaceutical agents, and capabilities to create a global public good of advanced medical care.
Despite increased spending on care, lack of access and poor quality outcomes remained. In 2010, there were 48.3 million uninsured.(11) Despite 75% of uninsured coming from working families, the main impediment to gaining insurance was unaffordability; 2 out of 5 uninsured Americans earned incomes below the federal poverty line (FPL) (Figure 3). In 2007, 62% of individual bankruptcies were due to medical conditions.(12) Further, and perhaps most importantly for advocates of the ACA, uninsured individuals suffer worse health outcomes as a population relative to those with insurance, although the degree to which this is a causal relationship is certainly debatable. The US’s poor health-related outcomes compared to the international community are well-known, as we rank behind other countries in life expectancy, infant mortality, violence, alcohol and other drug-related deaths. Emergency Department visits, burden of chronic disease, and costs of missed workdays were all on the rise. It was into this climate that the ACA was born, to address several, if not all, of these factors.
The ACA has a number of aims, primarily: insurance coverage expansion, payment and care delivery reforms (including quality improvement), and “other” (including a grab bag of pay-fors and various health system reforms). The major elements of coverage expansion include requiring insurers to allow children to remain on parents’ plans until they turn 26; the Medicaid expansion; and perhaps most notably, the creation of state-based health insurance marketplaces. Conceptually, the marketplaces are substantial reforms to the individual health insurance market prior to the ACA (i.e. for people without insurance through their employers). The ACA requires insurance companies to offer plans to all individuals regardless of preexisting conditions (“community rating”). In order to limit individuals from going without insurance, the ACA required all individuals to obtain insurance coverage or face a penalty (“individual mandate”), perhaps the most politically controversial aspect of the law.(3) The law also provided certain consumer protections, including requirements for essential health benefits, limits on price increases, limits on administrative expenses and profit margins (“medical loss ratio”), and the protections against coverage limits (which also applies to those with employer sponsored insurance). A sliding scale of federal subsidies are also provided to enable purchasing (“advanced premium tax subsidies”) for those who make less than 4 times the FPL. Additional components of the ACA involve tax increases on unearned income (capital gains and dividend); an increase in the Medicare tax for high earners; a 3% medical device tax; an excise tax on particularly generous employer sponsored health insurance plans (“the Cadillac tax”); payment reforms based on quality measures; bundled payments for some conditions and procedures; the Hospital Readmission Reduction Program; and, the creation of the CMS Innovation Center (CMMI) to pilot and expand new care delivery models for Medicare and Medicaid.(1)
Nearly 17.9 million Americans now purchase individual insurance plans,13 and another 17.9 million are insured through the other major element of the ACA’s coverage expansions: the Medicaid expansion.(14) Medicaid is jointly administered by the federal and state governments; prior to the ACA, each state set eligibility criteria, generally a percentage of the federal poverty limit plus various criteria and this varied substantially between different states, with the largest group of uninsured being employed, childless men.(15) The ACA aimed to expand coverage for the poor and simplify the eligibility criteria by expanding Medicaid to all who earn up to 138% of the FPL. However, in the same Supreme Court case that upheld the individual mandate, the Court determined that the option to expand Medicaid could be left to each state. Not surprisingly, many states have not expanded Medicaid (Figure 4). Further, in non-expansion states, those who make less than the FPL are not eligible for subsidies on the health insurance marketplaces (as they were intended to be covered by Medicaid).
Proponents of the ACA anticipated long-term cost savings, increased access, decreased rates of uninsured, decreased ED utilization, and improved healthcare quality. Opponents struggled with the constitutionality of the individual mandate, the lack of realistic cost containment principles, and the impact of the ACA on the incentive to earn and save income.
Passed into law in 2010 and implemented gradually until presently, what impact did the ACA have on the American health care system and on the role of the ED? How have insurers, patients, and providers responded to these impacts? What role can we as Emergency Physicians and other acute care providers play in the months and years to come, given the complexities of the future of the ACA and the healthcare system as a whole in the face of new leadership? Stay tuned for more…
Posted by Dan Axelson, MD, Tim Loftus, MD and Seth Trueger, MD
- Theodore Roosevelt, State of the Union Address. December 3, 1907. http://www.presidency.ucsb.edu/ws/index.php?pid=29548
- Weinzierl M, Flanagan K. “Obamacare.” Harvard Business School. Boston: HBS Publishing. Rev. Jan 14, 2015. 9-714-029.
- Richard M. Nixon, Annual Message to Congress on the State of the Union. January 22, 1971. http://www.presidency.ucsb.edu/ws/index.php?pid=3110.
- Pitts SR, Carrier ER, Rich EC, et al. Where Americans get acute care: Increasingly, it’s not at their doctor’s office. Health Affairs 2010;29(9): 1620-1629.
- Lee MH, Schuur JD, Zink BJ. Owning the cost of emergency medicine: beyond 2%. Ann Emerg Med 2013;62:498-505.
- Hummelstein DU, Thorne D, Warren E, et al. Medical bankruptcy in the United States, 2007: results of a national study. Am J Med 2009;122(8):741-746.