The ACA: Preparing for the Great Unknown

by Bill Shock
Unland Companies

Changes to the Affordable Care Act are on the horizon… though their timing and nature is unknown.

Intended to increase the number of people covered by health insurance, the Affordable Care Act (ACA) has had a significant impact on every aspect of the healthcare and healthcare financing sectors of the economy. Now, with a new administration in place, even more changes are anticipated. Preparation is key—though the timing and nature of the changes is unknown.

Challenges to Come
In the wake of the ACA, a wave of mergers, acquisitions and consolidation of health insurance companies resulted in reduced competition. Increased regulatory compliance and reporting increased costs to group health plan sponsors, while out-of-pocket expenses and higher premiums increased costs for those covered by ACA-compliant plans.

According to an article published by S&P Global, “repeal and replace” may reduce the size of the ACA individual market and limit future growth in the Medicaid market. This is more likely to be a 2018 event instead of 2017. Long term, the impact will depend on the details of the “replace” initiative, but the greatest impact will probably hit the individual and Medicaid markets. With the 2017 open enrollment period essentially complete, any reduction in subsidy provided for this market will reduce enrollment in 2018.

With the increase of individual health insurance premiums in 2017, employer-sponsored health plans have never been more valuable. The tax benefits enjoyed by both employer and employee are viewed as a subsidy by the Congressional Budget Office. Estimated at $155 billion, this subsidy, if reduced, could have a dramatic effect on the 30 percent of the population that receives its benefits through an employer-sponsored plan.

Many of the mandates included in the ACA have been delayed or reduced. The notable exception is the individual mandate. While “fair share” and “pay or play” rules have been significantly delayed, the requirement that individuals be covered by an ACA-compliant plan has not.

The three most popular changes in the ACA are:

  • Guaranteed issue: all applicants accepted;
  • All pre-existing conditions covered; and
  • Children covered to age 26.

For employer plan sponsors, the challenge will be to continue these highly valued benefits without the price increases that have been seen in the individual market. History would suggest that the party in the majority favors the Health (HSA) or Medical Savings Account (MSA) strategy. High-deductible or “catastrophic” health plans, coupled with tax-advantaged accounts similar to IRAs, would in theory provide more affordable premiums and promote consumer engagement in the purchasing of healthcare services because of the individual’s ownership of the dollars in the accounts.

The Consumer-Driven Model
Central Illinois is blessed with enviable access to the highest quality of medical care. The challenge will be helping individuals find the information required to be good stewards of healthcare dollars. Truven Health Analytics provides the average allowable cost for services for a five-state area that includes Illinois. The average cost reflects both health plan and employee cost. For example, while the office visit co-pay may be $20 for the employee, the plan’s total cost is:

  • Primary care physician visit: $151.80;
  • Specialist visit: $197.95;
  • Routine exam: $148.63; and
  • Well-baby visit: $262.43.

Total cost for other common services include:

  • Inpatient admission: $26,076.38;
  • Outpatient surgery: $2,718.42;
  • ER visit: $921.77;
  • MRI: $1,249.93; and
  • Chest X-ray: $123.22.

And for retail prescription drugs:

  • Brand name: $448.36; and
  • Generic: $29.19.

The consumer-driven model relies on the ability of the insured to access information like this when planning to purchase healthcare services. To get a cost estimate of Peoria-area healthcare services, call OSF at (309) 683-6750 and select option three to find out what a test or procedure will cost. UnityPoint is also a resource—call (309) 683-6294 to receive price quotes for high-dollar testing and outpatient surgical procedures. In addition, the price estimator on the UnityPoint Peoria website pertains to hospital billing including emergency room services, diagnostic testing and inpatient admissions; it can be accessed at unitypoint.org/peoria/price-estimator.

Many employers have adopted plans that allow employees to choose plans that fit their budget or better fit their healthcare consumption patterns. Some have adopted a “defined contribution” model that allows them to budget their health plan costs. All in all, the employer-based model of healthcare financing is likely to increase market share as we proceed through the next administration. It will benefit us all as employers to set our strategy for the next five years to accommodate the changes that will inevitably come. iBi

Bill Shock, CBC is Executive Vice President at The Unland Companies. For more information, visit unland.com.

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