stethoscope and flag 2

January 20, 2017, the day of Donald Trump’s inauguration marked a new era for the healthcare industry, one that’s filled with uncertainty and confusion. In other words: more of the same.

One of Trump’s first acts after he was sworn in was to sign an executive order directing every agency that has jurisdiction over the Affordable Care Act (ACA) to find ways to delay or waive provisions that would “impose a fiscal burden.” The biggest issue is the individual mandate, which is the rule that requires every American to buy insurance.

“The individual mandate forms the most elemental and fundamental aspect of the insurance industry,” said Kirit Pandit, president and CTO of VitreosHealth. “Prior to the ACA, part of the reason why healthcare costs increased is because young, healthy people did not purchase insurance. This left a sicker, more costly population in the insurance pool, causing premiums to go up. These rising premiums forced healthy patients to opt out, leaving mostly sick patients. This is a death spiral that will eventually leave many people with no affordable insurance. 

“The only way to break this death spiral was to make everyone opt in, thus making healthy people subsidize for sick patients. In order to make the premiums affordable for healthy people, the government provided subsidies. Without these subsidies, many people would not be able to afford insurance.”

While the vast majority of ACA provisions require Congressional approval before they can be overturned, Trump’s executive order is a mandate for agencies to find ways to weaken the law. It’s a way for his administration to unwind as many elements of the ACA as it can on its own.

“If the individual mandate is removed without a sensible alternative in place, this ‘death spiral’ will pick up steam and healthcare costs will continue to rise,” said Pandit. “If that individual mandate is kept in place but subsidies are removed, it will have the same effect. It is imperative for anything that replaces the ACA to support the individual mandate, because without it, the whole system will eventually crash.”

Even before President Trump’s inauguration, several key Republicans, including Senator Lamar Alexander of Tennessee (chairman of the Senate Health, Education, Labor, and Pensions Committee), were asking to slow down the repeal of the ACA and healthcare reform. Their concern is that repealing the law without a replacement strategy could cause more harm than good.

“There are many aspects of the ACA that the healthcare community would like to see repealed,” said Pandit. “Physicians are concerned because the ACA is impacting their revenues and increasing their reporting and IT overheads. Payers are unhappy with the medical-loss-ratio cap of 80 percent. However, both providers and payers recognize that we as a nation have to find a solution to rising healthcare costs, which means everyone needs to make sacrifices. Providers need to get more efficient and accept pay-for-value, payers need to get more efficient, which will help increase their profitability, and consumers need to be smarter about keeping themselves healthy and picking the best providers and plans.”

While there is no formalized strategy to replace the ACA, President Trump has said he wants everyone to have coverage, provide block grants for Medicaid, and retain the ACA’s protections for people with pre-existing conditions. However, it will be tricky to keep only certain aspects of the ACA.

The ACA is in delicate balance. Remove one part, and it’s likely the whole law will crumble. That could cause over 20 million people to lose health insurance, with rural America being hit the hardest.

“How to fund it? This is where the incoming administration has no good answers,” said Pandit. “They are talking about removing subsidies, eliminating the requirement for businesses to offer insurance, and eliminating the income tax surcharges.  However, they have not listed alternate sources of funds to make up for this deficit.

“The good news is that both Democrats and Republicans agree on the less talked about aspects of ACA, and that’s the area of value-based care. Centers for Medicare and Medicaid Services has launched a number of innovative programs that have unleashed a gradual movement away from fee-for-service toward fee-for-value. Most commercial payers have followed suit and launched their own commercial accountable care organizations. These programs contributed to health spending plateauing in 2014-2015. Again, this is success and it can be built upon.”

Even in these uncertain times for the healthcare industry, the shift to value-based care continues. VitreosHealth can help with this transition and improve care while lowering costs. To discover how, click here.

Is the Repeal of Obamacare Good for America?

Leave a Reply

Your email address will not be published. Required fields are marked *