Now that the first open enrollment period for health insurance under the Affordable Care Act (ACA) has ended, consumers, insurers and federal officials must now tackle the next phase of challenges that could potentially impact the law’s effectiveness.

 

According to the White House, 7.1 million Americans have signed up for health insurance but, more than numbers, success will hinge on the mix of enrollees – requiring enough healthy people to compensate for the costs of sicker individuals. The law’s impact will vary from state to state, depending on demographics and political stance toward the law.

 

One unknown factor to keep in mind is that millions of the newly insured have gone uncounted because they did not utilize the state or federal exchanges -- but will nevertheless influence the risk pool.

 

Cost Issues

 

Lingering issues related to cost will persist:

 

Premiums -- A number of insurers have stated that they will seek double-digit increases in premiums next year, although certain factors could mitigate this possibility, including:

 

• Competition as more insurers enter the market in some states

• Federal and state officials’ ability to negotiate with insurers in the face of excessive pricing

• ACA mechanisms designed to stabilize premiums, i.e. if one insurer enrolls a disproportionate number of sick people, the government and other insurers will help defray the costs

 

In general, if policy changes encourage fewer younger and healthier people to purchase coverage in the exchange, premiums will increase in the marketplace and lead to fewer options for consumers.

 

Extension -- The grace period extended to those unable to complete enrollment before the March 31 deadline has raised some flags. Moody’s Investor Services states that the extension is “credit negative” for carriers because it increases the risk of anti-selection and will likely lead to higher premiums in 2015, further discouraging enrollment.

 

Tax -- The law’s health insurance tax is slated to increase 40 percent next year, adding almost $400 to an average family’s healthcare costs.

 

ACA Impact on Physicians Act

 

The ACA has shifted greater financial responsibility onto the patient, sparking a higher level of consumer expectation. Health insurance plans include substantial annual deductibles—between $1,500 and $10,000 for a family, and co-payment amounts have increased, particularly for labs test and imaging.

 

In response, many physicians have shifted their revenue model from dependence on insurance reimbursement to aggressively collecting out-of-pocket patient payments, adding greater levels of accountability, operational challenges and reporting requirements.

 

Another issue of concern to physicians, the Senate recently passed the temporary fix to the sustainable growth rate (SGR) that delays (to October 2015) the implementation of ICD-10, the process of converting medical documentation practices, billing procedures, payment structures, and health IT infrastructure to accept ICD-10 codes. This delay will now serve as a major distraction to providers, as well as require massive additional investments of time and money.

 

Possibly the most daunting issue related to ACA centers around its impact on healthcare infrastructure and the physician shortage. Without more graduates from nursing and medical schools and increased innovation in shared roles and responsibilities among doctors, nurses, and other medical professionals, individuals and families will face longer wait times, greater difficulty accessing providers, shortened time with providers, increased costs and growing frustration with care delivery. It’s possible that this issue alone could negatively affect healthcare workers and their ability to provide care, given increased regulatory burdens, heavier workloads and reduced payments.

 

The current U.S. population is more than 315 million and growing. By 2030, 72 million Americans will be 65 or older, a 50 percent shift in age demographics since 2000. The shift is mostly due to aging Baby Boomers. Seniors currently account for 12 percent of the population but will account for 21 percent by 2050. This growing, aging population will ensure more chronic disease and additional stress on the healthcare workforce.

 

Rural populations are poorer and more likely to rely on government assistance, creating the potential for high demand due to the Medicaid expansion in 26 states. As it is, rural Americans face longer wait times, difficulty accessing care, long-distance travel and limited resources.

 

That said, the new law removes some major impediments in insurance coverage for patients, and mandates extra services previously not covered, such as maternity care, mental health services, medications, rehabilitation services, and chronic disease management – potentially leading to better health outcomes overall.

 

Also, health plans will be barred from discriminating against individuals for pre-existing conditions, and they cannot set annual or lifetime limits on coverage. These provisions will be important to patients with chronic conditions who currently can lose coverage when they change jobs and/or have bills that exceed their insurance limits.

 

While more covered lives through the exchanges and Medicaid expansion will enable primary care physicians to have a more financially viable practice, many practices at full volume are likely to refuse to join exchange plans.

 

Key Challenges Ahead

 

It remains unclear as to whether employers will cut employee insurance or not. Under the ACA, large employers are generally required to offer coverage to full-time employees -- defined as those who work at least 30 hours a week -- or pay penalties. The administration has delayed the requirement, but it will hit many employers in 2015 or 2016.

 

Some employers say this mandate incentivizes them to reduce work hours for some employees, but the White House claims there’s no supporting evidence of such a trend, and promises that small businesses will have an opportunity to buy insurance online for their employees through the federal marketplace in the fall.

 

For now, the full impact of the ACA remains a question mark as evidence of its influence continues to emerge and as key mandates kick in over the next couple of years.

 

LAURA CARABELLO

Principal

CPR Strategic Marketing Communications

 

LAURA CARABELLO has been an entrepreneur and a strategy consultant in both domestic and international businesses related to healthcare and technology since 1985. Her fields of experience span from healthcare and healthcare information technology to hard core technology disciplines and related infrastructure. She has a particular interest in medical travel, healthcare/healthcare information technology, telehealth/ telemedicine, managed care and employee benefits, life sciences (pharmaceuticals and medical devices), and other business-to-business and direct-to-consumer healthcare and technology companies. She has been instrumental in the growth and development of companies worldwide and has orchestrated their transition to a Web-centric world.

 

Founder and principal owner of CPR Strategic Marketing and Communications, (www.cpronline.com), Carabello has more than 25 years’ experience in business development, marketing, and corporate positioning. As strategy consultant, she has worked with over 1,000 companies, including public and private organizations. She also serves as a strategic advisor to public, private and not-for-profit entities, and has been invited by the US Federal Trade Commission to testify on healthcare advertising and marketing ethics.