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January 30, 2012 8:45 AM The Quiet Triumph of Obama Care

By Harold Pollack and Greg Anrig

We understand why President Obama trumpeted the killing of Osama bin Laden while barely mentioning health reform, his most significant domestic accomplishment in his State of the Union address last week. Ten years after 9/11, the killing of Bin Laden was an indisputable triumph for President Obama, welcomed by almost every American. In contrast, the Patient Protection and Affordable Care Act (ACA), enacted with only Democratic votes by the scarcest of margins in 2010, remains a complex, highly controversial piece of legislation with outcomes and costs that remain to be seen in the years ahead.

Yet surprising even to many advocates of health care reform, evidence is emerging that the ACA is already improving life for millions of average Americans. It is promoting long-overdue fundamental changes in our dysfunctional medical system. Moreover, because those reforms are starting to directly address heightened economic insecurities of average families - the personal financial conditions that will largely determine this year’s election outcomes - President Obama would be wise to more forcefully and more specifically explain how his health care bill is already helping millions of vulnerable families and the country as a whole. Sure, financially-pressured families will celebrate the derring-do of Seal Team Six. They should directly appreciate the immediate impact of improved insurance coverage and reduced medical costs.

Here are five concrete realms in which the Affordable Care Act, which won’t even take full effect until 2014, has already had an impact:

About 2.5 million more young adults are now insured because of the new law. The Affordable Care Act allowed individuals up to age 26 to remain on their parents’ employer-based insurance plans with substantial protections for individuals with preexisting conditions. These young adults can be married, living on their own or in school, and even holding a job. Figure 1 below was produced by experts in the Department of Health and Human Services, tells the basic story. These provisions began to take effect on September 23, 2010, and right around that time health coverage for young adults began to sharply improve, even as coverage for slightly older workers showed no similar break.

The importance of these changes goes beyond the gratifying coverage trends—though it’s hard to recall such dramatic favorable change associated with a specific policy coming into effect. Millions of young adults suffering from cancer, cardiac conditions, diabetes, major depression, autism, intellectual disability can obtain decent and affordable coverage through their parents’ employers, thus avoiding the deeply-troubled market for individual and small-group insurance coverage.

These provisions complement other ACA provisions, which right now provide unprecedented protections for children and adolescents. Insurance plans that cover children can no longer exclude, limit, or deny coverage to children under the age of 19 solely based on a preexisting condition.

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Older Americans have stronger prescription drug and preventive care coverage. The Affordable Care Act requires drug companies to provide seniors with a 50 percent discount on brand-name medications when they face the “donut hole” in the Medicare Part D drug program. As a result, 2.65 million Medicare beneficiaries have saved more than $1.5 billion on their prescriptions - averaging about $569 per individual. The ACA also enabled seniors to receive free preventive care, including a new Annual Wellness Visit. As of the end of November, an estimated 24.2 million people with Medicare took advantage of those free services - which research shows are highly cost-effective in improving health.

Individuals with pre-existing conditions have greater access to coverage. In addition to the above-noted protections for young people, lifetime coverage limits on most essential benefits are now banned, with annual dollar caps phasing out. This year, no insurance plan can set an annual dollar limit lower than $1.25 million. For families dealing with catastrophic illnesses, such provisions are essential to prevent medical bankruptcies or the loss of the family home because of medical bills. Tens of thousands of previously-uninsured Americans suffering from serious illnesses now benefit from the new law’s imperfect but valuable Preexisting Condition Insurance Plans (PCIP), which assist the medically uninsured.

Structural changes are already making the health care system more efficient. A recent survey of companies by the benefits consulting firm Mercer found that “employers are accelerating their efforts to bring health benefit cost under control,” with the anticipated spending per employee expected to increase at its lowest rate since 1997. Beth Umland, Mercer’s director of research for health and benefits, said, “While cost-shifting to employees is still going on, this year we saw more employers adopting strategies that they believe will provide better results over the long haul.” An astonishing 87 percent of large employers said they will add or strengthen programs to encourage more health-conscious behavior. By setting in motion such restructuring, health care reform is already helping to transform a status quo that had become unsustainable.

The ACA cannot yet be credited with the significant slowing in the growth rate in U.S health care spending over the past two years, a pattern which is closely related to the economic downturn. Yet new and impending rules enacted in the ACA have already induced health care providers and insurers to implement a wide array of structural changes to address fundamental waste and inefficiencies associated with our fee-for-service medical system. The act also includes strong measures to detect and punish fraud and abuse. These measures have produced a record number of actions against unethical or criminal abuse of the Medicare program.

Dartmouth College researchers report that almost 100 provider organizations are already working with private health plans toward contracts to create “accountable-care organizations,” which would shift away from the fee-for-service approach that leads toward over-spending to one in which payments are linked to positive patient outcomes. Thirty-two pioneer ACOs have been announced publicly. Across the political spectrum, experts have hailed ACOs as a critical innovation.

Other, readily-overlooked ACA provisions are also producing tangible benefit. These include tax credits to small firms that insure their workers, subsidies for early-retiree coverage, safety-net investments in Federally Qualified Health Centers, and provisions that allow states to extend Medicaid to low-income childless adults.

The Affordable Care Act brings greater fairness, transparency, and integrity to private insurance. The ACA changes the basic business model of private insurance. Firms will no longer prosper by cherry-picking healthy consumers or denying coverage for basic care. The federal government now partners with states in scrutinizing large insurance plan rate increases. Such heightened public exposure and regulatory scrutiny has already induced major plans to moderate or to reverse large rate increases. Patients also are now entitled to greater due process, including external review, when their health plan fails to cover medical therapies. Because of “medical loss ratio” regulations, insurers are now required to devote the lion’s share of their premium dollars to patient care.

President Obama’s health care reform has radically transformed the status quo and provoked such bitter political battles with moneyed interests. His political advisers and pollsters can be forgiven if they feel some skittishness about attracting further controversy related to the ACA. They understandably and rightly wish to focus on issues of jobs and economic security. Yet secure access to affordable health care is intimately related to these latter economic concerns. The ACA’s full benefits won’t be felt until 2014. Yet the measures now in place are proving more important and more valuable than even many ACA supporters realize.

Health reform has already improved the humanity and effectiveness of our health care system. President Obama is entitled, and obliged, to embrace his own signature domestic policy accomplishment.

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Harold Pollack and Greg Anrig collaborated on this piece. Pollack is the Helen Ross Professor of Social Service Administration at the University of Chicago and a Century Foundation fellow. Anrig is vice president of policy and programs at the Century Foundation.

Comments

  • Lou on January 31, 2012 8:45 AM:

    Try being middle-aged and self-employed, and then tell us that HCA is working. My family's health insurance has gone up 20+ percent every year since HCA passed, with no mechanism to control those increases, and no end in sight.

    The only sensible solution -- allowing individuals under 65 to buy into Medicare -- was never really on the table.

  • Tom M. Riddle on January 31, 2012 2:32 PM:

    Lou:

    "The only sensible solution -- allowing individuals under 65 to buy into Medicare -- was never really on the table."

    If you really believe that is the ONLY sensible solution, what is the point of having a dialog with you?

    Do you really believe that the way YOU think is best is the ONLY way?

    What an open mind you have, Lou.

  • moody3 on January 31, 2012 3:24 PM:

    President Obama may be saving his major accomplishment to discuss when the Republicans have their nominee. Imagine the two of them arguing the merits/detriments?

  • Portlander on January 31, 2012 4:05 PM:

    Lou:

    > My family's health insurance has gone up 20+ percent every year since HCA passed.

    I think you are forgetting something. Insurance costs have been going up drastically for some time. Even before Obama was elected president.

  • jakdedert on January 31, 2012 4:58 PM:

    Lou, your insurance cost have gone up 20+%? How much had they been going up before Obama? Experience tells me that they had increased at least that much in (some) previous years, yet the benefits decreased.

    How much have your taxes gone DOWN in the last three years? If you say 'none', then one could only conclude that your income has increased considerably in that time. Either way, you're better off than before.

  • James Wimberley on January 31, 2012 7:09 PM:

    The progress in health IT is also worth noting. Like ACA as a whole, its full impact will only be felt years ahead, but some of the low-hanging fruit has already been picked. Early results include a secure email system for transferring medical data (DIRECT), the Blue Button scheme for easy download of medical and insurance data by patients, and a 93% readiness of pharmacies to accept electronic prescriptions. Unlike in England, the process seems to have avoided a backlash from physicians.

  • MuddyLee on February 01, 2012 8:37 AM:

    I would like to have the "buy into Medicare" option myself. It's very expensive to self-insure. BUT - I'm still a believer in ACA - it must be a positive for most people if almost all the repubs criticize it. The coverage for young people (stay on the parent's insurance) and birth control provisions and the regs regarding pre-existing conditions (along with the individual mandate) all seem to be very positive things. The repubs may come to regret that they ever called this "obamacare" - when they decide the majority of voters like it.

  • Morzer on February 01, 2012 11:53 PM:

    James Wimberley - the healthcare IT disaster in Britain was due to extreme incompetence in design and implementation of the proposed system. It never came together, in large measure because a key software package was chosen, despite being out of date even when selected, and this rendered effective implementation almost impossible. Billions of pounds wasted, trusts and hospitals demanding to implement their own IT systems, and a colossal failure by the Blair government. It wasn't only physicians who hated the Blair IT project - it was pretty much anyone who came into contact with it.

  • Lou on February 02, 2012 6:06 AM:

    Tom Riddle: Before you turn into Voldemort, please tell me what would've been a better solution than offering buy-in to Medicare.

    I spent a couple hours on the phone with my insurance company and insurance broker before I read the Pollack/Anrig article, and I was astounded at the difference between what my broker told me about healthcare cost mechanisms vs. what the article states.

    ACA indeed gives us protection from rescission and a cutoff of benefits during medical catastrophes, and that's huge. But it's also important to control the cost of health insurance, and I don't know of a mechanism that would do that, beyond the single-payer option.

    Portlander: I've been self-employed since 2004, so I can't speak to rising health insurance costs before then. Since 2004, it's gone up almost every year. But the really drastic increases -- the ones that threaten my family's financial health -- have come the past 3 years.

    jakdedert: My taxes indeed have gone down. But that's because I'm self-employed, and my health insurance is tax-deductible.

  • Jin on February 02, 2012 6:26 PM:

    All these changes are long overdue in a system that actually discourages treatment. However, I am wondering if these changes also apply to the employer sponsored health insurance market as well? I have a feeling that they apply only to the existing individual plans and those that would be in the health insurance exchanges. Am I correct?

  • Will on February 03, 2012 3:32 PM:

    Single payor should still be the goal and may be possible in a second Obama term. Thank you for the article as I was just yesterday asking a group working on our health insurance plans to outline the benefits received from Obamacare. (BTW, I'm OK with that reference and glad that Obama Cares!)

  • Patrick Branco on February 03, 2012 5:15 PM:

    As a hospital CEO, I find it disconcerting that you trumpeting mythical successes of the PPACA. This act alone is responsible already for the loss of thousands of jobs in the health care sector due to reduced reimbursement and increased regulatory compliance issues without funding or resources to accomplish. The result will be decreased services, especially those poorly reimbursed. So while you proclaim the early success of more people covered you fail to mention the huge insurance premium impacts and the fact that fewer services will be available and fewer providers willing to provide services at lower reimbursement levels. Great program!!! Conceived by politicians without a clue, imposed on a public that doesn't vote on the measure, and paid for by tax payers.

  • v98max on February 06, 2012 2:59 AM:

    The biggest failure of the ACA is a measure of the conservative influence on it: Too many provisions were grandfathered in too slowly. Insurers have a 5 year free ride to blame every price increase on the dreaded Obamacare, even before most of it takes effect.

  • ChandlerMc on February 11, 2012 4:41 AM:

    @Patrick Branco- facts are not "mythical successes", they are facts. I find it difficult to sympathize with your woe-is-me argument since hospitals are a huge driver of ballooning health care costs. Yes you provide needed services to patients but your primary objectives are profit and shareholder returns, largely at taxpayer expense. The benefits to the public as a whole far outweigh your own "lower reimbursement levels". And many of those jobs lost are just shifted to other areas of the healthcare system. Your talking points are a bit disingenuous. ACA is far from perfect but it's much better than the status quo.

  • Not Patrick Branco on February 18, 2012 6:48 PM:

    Sure, I'm going to believe a hospital CEO (really?) making $.5-$2/mill per annum on other people's misery, the same sorts who lobbied so hard for the election of Florida unnatural disaster Rick Scott. I always hear this screaming of about reimbursements when you don't get your customary 10%-20% annual increase.

    Hospitals are part of the corrupted system, buying multi-million dollar FDA-approved equipment so you can bill insurers $1-10K/imaging session. Odd, because Indian entrepreneurs have figured out how to do the same thing with equipment that costs less than $10K per unit! Medicare, of course, is the hospital's cash cow, the raison d'etre for for-profit hospitals (which, of course, pay their CEO's and top management teams even more generous salaries, plus tax-advantaged profit-sharing, amirite, Patrick?).

    I'm literally crying over all the jobs that may be lost in fields such as medical billing, hospital CEO yacht-waxing, and mistress (or mister) to insurance company execs. Spending premiums on patient care?! Nooooooooooo!