Editor's corner: Stop discussion of ACA's imminent demise

Pile of newspapers

Picture of Ron Shinkman, editor of FierceHealthFinance

Now in its seventh year of life, the Affordable Care is still being discussed in terms that suggest it may yet not survive.

The most recent example is a new study by the Robert Wood Johnson Foundation entitled “The Cost of ACA Repeal,” an examination of what would happen should a Republican take the White House in 2016 and Congress stayed within the GOP.

Was any think tank issuing such papers about the demise of the Medicare or Medicaid programs in 1971?

A lot of this anxiety over the ACA began because of the unrelenting rhetoric damning the legislation. It had receded in the past year or two, primarily because the ACA had survived a variety of legal challenges and the political returns from damning the healthcare reform had diminished.

However, two events have occurred in recent months to restoke anxieties. After Republican Matt Bevin was elected last fall as governor of Kentucky, he moved swiftly to dismantle the Kynect health insurance exchange (he backed off on ending Medicaid expansion in that state because it was not politically feasible).

But another anxiety has stemmed from the exchanges: The apparent exit of UnitedHealth from all but a few state exchanges as of next year. The company may have lost as much as $500 million from its exchange book of business in the past year.

“The smaller overall market size and shorter term, higher-risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustained basis,” UnitedHealth CEO Stephen Hemsley said during an earnings call in April.

A recent article by The Motley Fool suggested that the increases in premiums on the exchange meant that the ACA was “failing” and that UnitedHealth specifically was “struggling.” It made no mention of the fact that premiums for coverage outside of the exchange have been rising even faster, according to Fortune. 

United itself has consistently downplayed the fact that that business is really irrelevant to its overall enterprise. For the first quarter this year, United netted $1.6 billion, up more than 15 percent from the $1.4 billion in net income from the first quarter of 2015. Revenues were up 25 percent, to nearly $45 billion.  It also bumped its earnings and revenue guidance upward, and increased its shareholder dividend by 25 percent. The company is expected to have total cash flow of $10 billion this year.

The exchanges aren't holding United back; they are merely keeping the company from posting ever more grossly spectacular numbers that would drive its stock price up even further.

The ACA's biggest flaw is that it contains virtually no cost controls, the result of intense lobbying by insurers and other interested parties to ensure that did not occur. But as the number of Americans with health coverage as a result of the ACA has grown, insurers, big pharma and many other deliverers of care and services have been clamoring to clean up.

This creates a bizarre double-negative feedback loop, wherein the financial health of the ACA-related businesses becomes healthier on the back of consumers (many of whom suffer due to cost-shifting), while the collateral effect of that (higher premiums) is trumpeted as a reason healthcare reform is failing. And that is leveraged by the right-of-center politicians and think tanks as a reason the ACA should be repealed rather than tweaked (a public option on the exchange or an expansion of Medicare eligibility down to age 55 would bring a lot of religion to insurers very quickly).

Which brings me back to the Robert Wood Johnson Foundation report. It estimated that if the ACA is repealed, 24.3 million Americans would lose their insurance coverage, virtually wiping out all of the gains from the law in the first place.

Should that occur, hospitals will be placed into an abysmal financial position. That would be exacerbated by insurers likely benefiting from the Republican proposal of being allowed to sell policies across state lines (the linchpin of their replacement for ACA). Payers would clean up by offering weak coverage, and hospitals would be hit hard treating even patients with commercial policies.

The best way to move forward from this is to finally admit that the ACA is the law of the land and is not going anywhere. But no one apparently wants to make that admission. That makes the ACA--and a lot of providers--vulnerable. – Ron (@FierceHealth)

 

 

 

 

 

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