Download Chapter 15 Supplement Obamacare

THE PATIENT PROTECTION
AND AFFORDABLE CARE ACT
CHAPTER 15 SUPPLEMENT
Code Blue Health Science Edition 4
History of the Legislation
• Numerous attempts (reviewed in the book) were made to legislate
national health insurance starting in the early 19th Century.
• The first successful one of these was the Patient Protection and
Affordable Care Act passed by Congress during the Obama
Administration.
Provisions of the Bill
• The original legislation consisted of over 2,000 pages of law.
• There will be probably tens of thousands of pages of regulatory
interpretations added over time.
• As of the publication of this book, revisions were already taking
place.
• Updates, as they become available, will be posted on the author’s
website: www.traemus-books.com
Intended and Possible Non-intended
Consequences of the Bill
• A detailed examination of the legislation is beyond the scope of
this course.
• Instead, this presentation will briefly review the intended and
possible non-intended consequences of the bill on its
stakeholders.
Stakeholders
• A stakeholder is an individual who has something to gain or lose
by this legislation.
• For or the purpose of brevity, we classify stakeholders into three
categories:
– those who provide healthcare services
– those who pay for healthcare services
– those who receive healthcare services
Those Who Provide Healthcare
Services
Those Who Provide Healthcare
Services Include
• Physicians, nurses, and other healthcare professionals
• Healthcare students who are studying to be a healthcare
professional
• Hospitals
• The pharmaceutical and medical supply and equipment industries
Physicians, Nurses and other
Healthcare Professionals
• A primary objective of the Patient Protection and Affordable Care
Act is to change the way that health services are provided through
a variety of actions including the formation of the Accountable
Care Organization (ACO).
– An ACO is group of physicians who come together to provide
coordinated care.
Physicians, Nurses and other
Healthcare Professionals
• Payment
– Although some fee-for-service may still exist, a primary
emphasis will be given to prospective payment designed to
influence the doctor to control cost, while providing a high level
of care.
– Some doctors will be paid on a defined clinical episode, while
others may receive capitation payment.
Objective of Prospective Payment
• The objectives of prospective payment will be to:
– Provide incentives for physicians to use resources most
effectively, while treating and, hopefully, curing the patient
– Encourage physicians to use those treatments that will be
most effective in curing specific disease, and
– Encourage doctors to provide preventive medicine
Monitoring
• The Patient Protection and Affordable Care Act provides for
extensive monitoring of physician decisions.
Monitoring
• The act creates a nonprofit Patient Centered Outcomes
Research Institute to examine the effectiveness of procedures,
drugs, medical devices, and medical treatments.
– The act will also seek to identify high-risk providers, those
whose practices do not meet a high standard of care.
Monitoring
• Physicians identified through medical audit as having substandard
care will be educated.
– Those who still fail to perform will lose their ability to practice
medicine.
Possible Unintended Consequences for
Physicians, Nurses and Other Healthcare
Professionals
• Opponents of the Patient Protection and Affordable Care Act
believe that lower compensation, shrinking independence, greater
regulation and increased paperwork will lead to physician
shortages.
• Some physicians have already announced retirement due to the
Patient Protection and Affordable Care Act.
Healthcare Students
• The legislation will fund scholarships and loan repayment
programs for students entering the healthcare field.
• It will seek to increase the workforce by funding expanded
community health programs.
Hospitals
• One primary objective of the Patient Protection and Affordable
Care Act is to reduce costs -- what some politicians view as
hospital inefficiencies.
– Whether or not the government has demonstrated a talent to
reduce inefficiencies in its own hospitals, (Veterans
Administration and Military Hospitals) is open to debate.
• The government plans to do this through prospective
reimbursement, greater oversight and greater regulation.
Hospitals
• Payment
– Medicare will still reimburse hospitals under Diagnostic
Related Group (DRG) payment and, in some cases, through
capitation payment, both of which are discussed in this book.
– Medicare payments to hospitals will be reduced.
Hospitals
• Hospitals are mandated to install comprehensive computer
information systems.
Cost vs. Benefits to Hospitals
• Proponents of the Patient Protection and Affordable Care Act
believe that the cost of regulation, new information systems, and
so on will be made up by a decrease in the uninsured population,
who previously paid only a portion of their hospital bill, or paid
nothing at all.
Cost vs. Benefits to Hospitals
• Even after the full implementation of the Patient Protection and
Affordable Care Act, there will still be uninsured segments of the
population, such as those who will opt for paying a penalty rather
than purchasing health insurance, and illegal immigrants who are
currently excluded from the program, but receive healthcare, often
through more expensive emergency centers.
The Pharmaceutical and Medical
Device Industry
• Support for the Patient Protection and Affordable Care Act from
the pharmaceutical and medical device industries has been
divided.
– Supporters believe that the legislation will bring as many as 50
million people to these industries who cannot afford
pharmaceuticals.
– Opponents point out that in return for increased volume, the
industry has agreed to a $100 billion drug discount upon
implementation of the legislation.
Those Who Pay for Healthcare
Services
Blue Cross/Blue
Shield Tower in
Chicago, Illinois
The Insurance Industry
• For reasons unknown to the author, the proponents of the Patient
Protection and Affordable Care Act demonize the insurance
industry, portraying them as a major player in the escalation of
healthcare costs the country is currently experiencing.
• The thesis is that the insurance industry refuses to control costs in
an effort to increase profits.
• In reality, there is not a lot that insurance companies can do to
control costs.
• Most of the cost decisions are made by providers, who, as the
book reports, may sometimes have incentives not to act in the
best interest of the patients.
The Insurance Industry
• The insurance industry is a low profit industry.
• Profits over the past decade have averaged 4%, as opposed to
the 20% profit seen by the pharmaceutical industry.
The Insurance Industry
• As mentioned above, there were over 50 million people uninsured
in 2011.
• Some of these were uninsured due to an inability to pay
premiums.
• Others have the income that would allow them to purchase
insurance policies, but elect to use their monies elsewhere.
The Insurance Industry
• The Patient Protection and Affordable Care Act addresses this
problem by mandating insurance for those who can afford
premiums and by providing government assistance to those who
cannot.
• Insurance companies will no longer be able to establish yearly or
lifetime caps on healthcare spending, and will not be able deny
patients coverage based on current illness or pre-existing
conditions.
The Insurance Industry—Possible
Unintended Consequences
• Of all the provisions of the Patient Protection and Affordable Care
Act, the mandate prohibiting denial of insurance based on illness
is the most problematic.
• For this provision to work, well patients, as well as sick patients,
must enroll in insurance plans.
• Insurance is based on the concept of distributing risk over broad
populations.
The Insurance Industry—Possible
Unintended Consequences
• The Patient Protection and Affordable Care Act mandates a
penalty for those who do not purchase health insurance.
• The problem is that the penalty is significantly lower than the
premiums that would be paid by individuals.
The Insurance Industry—Possible
Unintended Consequences
• Beginning in 2014, those without insurance will pay a tax that is
the greater of a flat fee, or a percentage of family income. The flat
fee will be phased in over several years.
• In 2014, the penalty will be $95 per adult in an uninsured
household, increasing to $325 in 2015, then to $695 in 2016, after
which it will increase annually in line with consumer inflation.
• For employers, the fee will be $2,000 per year per employee,
excluding the first 30 employees.
The Insurance Industry—Possible
Unintended Consequences
• The concern is that since both the employee and employer
penalties are significantly lower than the cost of a health
insurance policy, and since pre-existing illnesses cannot be used
to deny coverage, many people may opt to pay the penalty,
waiting until they are hit with a major illness to enroll in insurance.
The Insurance Industry—Possible
Unintended Consequences
• If this occurs, only the ill will enter the insurance pool, driving the
costs higher and possibly bankrupting private insurance
companies.
Federal State and Local Governments, Agencies
and Programs—Medicare and Medicaid
• There are, of course, programs that provided insurance coverage
to segments of the population prior to the Patient Protection and
Affordable Care Act. These include Medicare and Medicaid.
– Medicaid is a state administered program, subsidized by the
federal government that pays for the health costs of the poor.
– Medicare is a federal program for those 65 years of age and
older.
Federal State and Local Governments, Agencies
and Programs—Medicare and Medicaid
• The Patient Protection and Affordable Care Act will “extend
benefits” for Medicare patients, while cutting funding by
approximate $716 billion.
Federal State and Local Governments, Agencies
and Programs—Medicare and Medicaid
• The Medicare program will be regulated by an Independent
Payment Advisory Board (IPAB).
– The objective of the IPAB will be to recommend programs to
reduce Medicare spending “if Congress fails to act.”
– The IPAB is given the ability to make significant changes to
Medicare and Medicaid without normal political process.
Exchanges
• The Patient Protection and Affordable Care Act creates
Exchanges which are “marketplaces” where Americans can
compare and purchase insurance plans.
– By 2014, these will be the only places where individuals who
receive federal subsidies for insurance can buy their
insurance.
– Proponents of the legislation feel these exchanges will make it
easier for individuals to compare policies and that price
competition will drive insurance premiums down.
Exchanges
• Detractors argue the Patient Protection and Affordable Care Act
will cost, rather than save, money, that projected reductions in
future federal deficits caused by the implementation of Medicare
are flawed, and that increased costs will eventually lead to health
care rationing.
Employers
• Employers will bear a significant burden under provisions of the
Patient Protection and Affordable Care Act.
• As mentioned before, firms with more than 50 workers will be
required to provide coverage for their employees or face a fine of
$2,000 for each worker (excluding the first 30 employees)
Taxpayers
• Under the mandates of this legislation, families will receive tax
credits for the purchase of health coverage.
• Families who earn more than $250,000 per year will pay an
additional .09% hospital insurance tax on unearned income.
• There will also be taxes on dividends, annuities, royalties, rents,
branded prescriptions, medical devices, insurance companies,
and indoor tanning services.
Those Who Receive Healthcare
Services
Patients
• One of the largest questions concerning the Patient Protection
and Affordable Care Act is what the impact will be on patients.
• The objective of the legislation is to increase coverage by
mandating that employees and employers purchase insurance
coverage or pay a penalty.
• It also seeks to improve the quality of healthcare delivered by
monitoring physicians and providing incentives for doctors to give
more preventive medicine.
The Economy
The Economy
• A discussion on the possible impacts on the economy of the
United States, detailing both arguments of those who believe
ObamaCare will reduce costs, and those who believe it will
increase total healthcare expenditures is beyond the scope of this
textbook/novel.
• It is sufficient to say, however, that the legislation will have a
profound impact on the United States economy.
The End
The signing of the Patient Protection
and Affordable Care Act
March 23, 2010.