It’s a wonder if anyone knows what to make of the upcoming Affordable Care Act, better known as Obamacare.
What the headlines say
Obamacare will help drive down health care costs
How Obamacare Raises Healthcare Costs
Health Care Plans Under Obamacare Will Cost Even Less Than Expected
New Study Shows Higher Health Care Costs under Obamacare
Obamacare Should Make Health Care Cheaper – Just Not Right Away
No shortage of theories…
There is no shortage of theories about what will happen on January 1, 2014, when the Affordable Care Act (ACA) becomes law.
… But plenty of questions
- What will really happen on January 1, 2014?
- How significant an event is The Affordable Care Act for healthcare?
- What will be the impact on Medicare?
Bracing for The Affordable Care Act
One of the most bitterly debated acts before Congress in years, the Affordable Care Act will finally become law on January 1, 2014. Impacts of it will include:
- An estimated 14 million additional Americans will be eligible for health insurance.
- Even before that date, on October 1, 2013, those same Americans will be eligible to sign up for the insurance plan provider that will cover them when the act goes into effect.
- Some of the newly-insured will participate in corporate health insurance plans.
- Others will elect to, or have to, obtain their insurance from the new Exchanges being established in each state.
What remains to be seen is the impact of the new Exchanges and the millions of newly-insured individuals on the overall cost of healthcare.
The Massachusetts model
One region of the country that is taking a wait-and-see approach is Massachusetts, which has the first-in-the-nation mandatory healthcare coverage legislation.
The healthcare “Hub”
- Known for its concentration of top hospitals and healthcare facilities, Massachusetts was the model for the Affordable Care Act.
- Massachusetts was the home state for late Senator Ted Kennedy, who was successful in getting a national healthcare reform commitment from President Obama during his presidential run.
How it works in the Bay State
Under the Massachusetts model, all corporations that meet minimum staffing sizes must provide healthcare coverage for their employees, or pay a penalty to the state. The penalty goes toward the funding of the state healthcare exchange established to provide coverage for those individuals that don’t have access to a corporate plan.
An eye toward Washington
“There are several features of the ACA designed to lower the healthcare cost trajectory,” said Tim Gens, executive vice president of the Massachusetts Hospital Association. “The MHA and hospitals have concerns about the financial impact and implementation process of some of these programs. But they are likely to result in reduced growth for the Medicare program.”
“Massachusetts reform has already greatly expanded coverage here. Looking at the ACA impact nationally, the insurance expansion should have a positive impact on reducing bad debt and uncompensated care experienced by hospitals; reduce financial exposure and burden for countless American families; and bring better healthcare management to the uninsured over the long-term.”
Immediate impacts of the ACA
Gens cites a number of impacts he expects to see when The Affordable Care Act becomes law:
- “Payment cuts to providers in the form of reduction in annual updates for Medicare payment rates to hospitals, skilled nursing facilities, home health agencies, and hospices, as well as reductions in Medicare disproportionate share payments and payments to Medicare Advantage plans.”
- “Readmissions reduction and hospital-acquired condition reduction programs for hospitals.”
- “Pilot programs for Medicare to experiment with bundled payments.”
- “Use of comparative-effectiveness research.”
- “Encouraging healthcare providers to band together in accountable care organizations (ACOs) to better coordinate services.”
- “Provisions to reduce waste, fraud and abuse such as expanding Recovery Audit Contractors (RACs).”
The “dual” approach
Another area of savings will be “The dual eligible demonstration we are pursuing here in Massachusetts, to provide integrated and coordinated care for those eligible for both Medicare and Medicaid,” Gens said.
“This population is currently managed separately. The ACA created a Center for Medicare & Medicaid Innovation (CMMI), which is helping to lead this initiative with states like Massachusetts. This effort will bring savings through care management of a population with high medical and behavioral health needs,” according to Gens.
Early impacts in 2013
Initial impacts of The Affordable Care Act will be felt before the January 1, 2014 date.
The open enrollment period
“The open enrollment process that will begin this fall for coverage effective in January will allow millions of people to enroll into affordable and comprehensive health insurance coverage,” Gens said.