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Look for ways to maximize the PPACA legislation
The recent decision by the U.S. Supreme Court on the Patient Protection and Affordable Care Act is one of the most significant pieces of legislation passed in recent years. I’m not quite old enough to remember when the Social Security program was passed, but I do remember the coming of ERISA and all the alphabets that followed.
They all were intended to ruin business and the economy and another giveaway to the loafers. They certainly are a pain when it comes to administering them, but I don’t see many people asking that they be taken back. They actually do some good. That doesn’t mean they can’t be improved, or revised to meet current conditions. So how long will it take for today’s discussions to abate? Maybe it will take an election. However, I’m betting that even if there is a change in administration, the PPACA won’t go away.
Many of us know bits and pieces of the act, many only know sound bites, and some have tried to avoid the topic completely. For all of us, including those avoiding the topic, it is now a reality that will affect our lives, whether you like it or not.
The Supreme Court case was built on technical/legal points, but it was philosophical aspects that fueled the debate. For many, it boiled down to feeling that government should stay out of our lives and out of health care. What many people failed to consider was that more than 60 percent of people already have government in their health care lives through Medicare, Medicaid, VA benefits, Military Tricare, CHIP benefits, and rules that prevent hospitals from turning away people who come for care.
Most Americans don’t study legislation in detail. They get their understanding from the news media in sound bites. By digging into the law, you learn there are good things and not-so-good things, but, on balance, people who learn the details of the law are not as alarmed as what you might think. Maybe Congress should get more knowledgeable about the law provisions and our health care system and see what it can do to improve the plan, not spend time trying to dismantle the legislation.
Main components of PPACA
The law is hundreds of pages in length, but there are a few general categories of actions that are intended to bring better health care to U.S. citizens. I mention intended objectives, because there are likely to be some unintended aspects that result from the law; for example, for businesses with “illegal” employees, it may cause some problems down the road.
A principal strategy is to get more folks covered and eligible for insured care. This includes the following:
**Program extensions that will re-define eligibility for state Medicaid programs. This could mean persons under the age of 65 with incomes up to 133 percent of the federal poverty level ($11,170 for a household of one in 2012).
**Making certain standard insurance industry practices illegal that excluded people from coverage (pre-existing conditions, excluded women’s health needs, one standard for group plans and another for individual plans, or excluding young uncovered adults from the parent’s policy).
**Set up provisions that encourage people to get coverage. These are referred to as “the individual mandate” and “play or pay” for employers.
**Establishing an insurance market mechanism, called an “exchange,” that allows individuals to purchase health care coverage based on “easily” understood and uniformly administered plans without discrimination.
The current U.S. health care system, which establishes charges for services obtained, drives utilization. Although limited, PPACA places more emphasis on prevention and early care to limit costs. It also encourages positive-outcomes reimbursement and caps on the portion of premiums that can be associated with administration.
The present financing system results in dramatic variations in reimbursement for medical practitioners. The average percentage of charges actually received for services depends on the method of payment, which are: direct pay/uninsured 11 percent; Medicaid 40 percent; Medicare 60 percent; insured 55 percent to 80 percent. This results in major cost shifts in financing. PPACA will rebalance some of this, especially by minimizing the number of uninsured, or those who choose not to be covered, or those who can’t afford coverage, or who are not in a position to get coverage. The penalty/tax for those who don’t get coverage is part of the financing shift.
We should also remember that health care is a money-making proposition for the industries of pharmacy and medical equipment that have 20 percent-plus profit margins. Maybe Congress should look at ways to address this. If nothing else, perhaps it could combine Medicare and Medicaid to cut out substantial administrative costs.
The huge influx of newly covered people will put significant strains on the existing U.S. care system. It could also result in increased demand, further driving up costs. How about competition? Why not allow Medicare and Medicaid to pay for services in low-cost foreign facilities?
The cost of PPACA was a significant discussion point. Can our current system be sustainable and who will pay for it? U.S. health care is the most expensive in the world at approximately 18 percent of GDP. Most of the cost is incurred after age 50, when a substantial portion is paid by Medicare. At a recent meeting, it was said that the problem is cultural because, “in the U.S., we believe death is optional” — a bit of humor for a difficult issue. What we can afford applies in all aspects of our lives except health care, especially when society picks up the tab. When will we have the courage to change our social norms? PPACA may help with the encouragement of wellness care.
How does it affect you?
Stay tuned! It all depends on your circumstances. The legislation will evolve regardless of what the politicians do. It will be regulations and those in critical administrative positions who will do a lot of the shaping. Also remember, the health care and insurance industries are not just sitting on their hands. We need more education and fewer sound-bites if we are going to maximize the value of this legislation.
Ardon Schambers is a principal of P3HR Consulting & Services LLC.