Ten Questions on Health Care Reform

Hello readers!

Knowing what a brilliant and well-informed bunch you all are, I'm hoping you can help with something. Is there somewhere out there a good critical assessment of the specific provisions of the Affordable Care Act?

I don't mean an explanation of why single payer would be better. It would be better, much better, I know! But we also need to be able to talk to people about the law that passed. What is our best guess about how, concretely, it will affect access to health care, and the distribution of costs?

For just-the-facts, you can't do better than the Kaiser Family Foundation -- their comprehensive summary of the ACA is here. And of course there's the Congressional Budget Office's reports, which include estimates of the impact on insurance status. But there are lots of more specific issues it would be nice to have an informed opinion on.

Here are some questions I'd like to see answers to:

1. What happens to people who still don't have insurance? According to the CBO, even when fully implemented the ACA will leave over 20 million people -- 8 percent of the population; 5 percent excluding undocumented immigrants -- without health insurance. (Universal coverage, it ain't.) What about these people's access to health care? What happens when they show up at the emergency room? 

2. How will health insurance costs change? The exchange subsidies cover any premium costs above a certain fraction of income, which ranges from 2 percent for households at the poverty line up to 9.5 percent of income for households at 400% of the poverty line. Above that, no subsidies. There are additional subsidies to reduce out of pocket costs, again phasing out at 400% of poverty. It looks like enough to reduce the costs of insurance for everyone eligible for subsidies, but for people above the 400% FPL line, it all depends on what happens to premiums. There is some language in the law about limits on premium increases, but since that is supposed to happen at the state level, one is entitled to doubts. Anyway, I would like to see numbers -- this would seem like a good way to make the public case for the law, though since the biggest benefits go to low-income people, maybe not.

3. How much will safety-net hospitals be hurt by the cuts in their funding? One of the less-discussed provisions of the law is its deep cuts in support for hospitals serving large numbers of uninsured patients, mainly Disproportionate Share Hospital (DSH) Medicaid and Medicare funding and Graduate Medical Education (GME) Medicare funding (which in practice goes mainly to hospitals with lots of poor patients). Medicaid DSH payments fall by about half under the law and Medicare DSH falls by 75 percent; it appears that cuts to GME will further reduce total Medicare payments by close to 10 percent for big-city hospitals. In theory, this will be compensated by many of these hospitals' currently uninsured patients becoming insured, but it's not clear that this will fully make up for the cuts, especially for hospitals that serve large numbers of undocumented immigrants. Which leads to...

4. How will undocumented immigrants be affected? As far as I can tell, documented immigrants will get the same benefits as citizens. Undocumented immigrants will of course get nothing. Since there will be less funding for health care for the uninsured, and since some employers will reduce health benefits, it seems likely that undocumented people will be worse off as a result of the law. 

5. How will employer-provided health insurance change as a result of the law? Since low- and moderate-income workers will have access to subsidized insurance through the exchanges, and since the penalty for employers who don't offer coverage are trivial, it seems likely that many employers will reduce or eliminate health benefits as a result of the ACA. On the other hand, there are subsidies for small employers and a temporary reinsurance program to reduce costs for insuring older workers, which push the other way. Of course even if employer coverage does fall as a result of the ACA (the CBO guesses it will, but just slightly; some people think it will, by a lot; in Massachusetts it hasn't at all), that's not necessarily a bad thing.

6. Will better insurance mean better access to care? Massachusetts' 97 percent coverage is one of the more hopeful signs for the future of the ACA. But living there, I often heard stories about people who got subsidized insurance but couldn't find doctors who accepted it; this is a long-standing problem for people with Medicaid as well. Plans on exchanges are required to have an "adequate provider network," but what will this mean in practice? Is there any way of quantifying how big the gap could be between the number of people who gain insurance, and the number who gain reliable access to care?

7. Was the individual mandate really needed? Liberal conventional wisom is that without the mandate the whole thing falls apart. I've never bought the conventional "adverse selection death spiral" argument, both because when states have implemented community rating (the same price for health insurance for everyone) it has not led to the collapse of their individual health insurance markets, contrary to the death-spiral theory; and because the theory hinges on people who don't buy insurance having lower expected health costs than people who do, which I doubt. Then there's the other argument, that it's not about adverse selection, but about people delaying getting insurance until they have health problems. This is more plausible but I'm skeptical of that one too. Anecdotally, the one time I've been to a hospital in recent years (I was hit by a car while biking to work), the first thing the paramedics asked me in the ambulance was whether I had insurance, presumably to decide where to take me; in that situation the right to buy insurance would not have been a good substitute for already having it. And of course may people want insurance to pay for routine care. But maybe I'm wrong about this. I'd love to see a good case for the need for the mandate that doesn't -- as they all seem to -- just argue deductively from first principles.


8. How do the limits on medical loss ratios compare with the status quo? I recall people arguing that a big sleeper provision in the ACA was the requirement that medical loss ratios (the share of premiums paid to providers) be at least 85 percent for large-group plans and 80 percent for small-group and individual plans. This is already supposed to be in effect; is it binding?


9. Are state level single payer plans (or public options) feasible? Another sleeper provision is Section 1332, which allows states to devise their own plans for using the total subsidies available under ACA to achieve a higher level of coverage. In principle, this opens the way to pass state-level single-payer plans, as in Vermont. Are there non-obvious obstacles to pursuing this elsewhere?

10. What happens to insurance outcomes if states opt out of the Medicaid expansion? Half the ACA's reduction in the numbers of uninsured comes from the Medicaid expansion, and presumably a large part of that is in states where opt-out is likely.

I'm sure there are a lot of other important issues I'm missing -- this isn't my area and I haven't been paying careful attention. What I'd like to see is a good critical assessment of what the ACA is actually likely to achieve, for better or worse. Ideally from a left/progressive viewpoint, skeptical but not implacably hostile. Unfortunately debate on our side has become so polarized that that may be hard to find -- all the people one would normally turn to seem to be either denouncing or defending the law in its entirety. Still, there's got to be something out there, right?