T
he Affordable Care Act (ACA)
has survived a presidential
election, numerous
congressional end runs, and
a Supreme Court challenge. But four
years after the contentious enactment
of what is, arguably, the Obama
administration’s most complex piece
of legislation, sharp divisions remain
about its pros and cons among health
professionals, politicians, pundits,
wonks, and the general public.
In the discourse surrounding
health reform, it is difficult to sort
fact from fiction. Nonetheless, a
number of general observations can
be made concerning key insurance
elements of the law, as well as about
future ACA controversies, changes,
and persistent challenges.
Insurance issues
Health insurance lies at the heart
of the ACA, and the statute and
its accompanying regulations are
directed at reforming and expanding
this sector. While much of the
media focus has been on coverage
expansions, significant effort has also
been directed at maintenance and
reform of health insurance across the
entire spectrum. Certain well-noted
reforms might not extend to large
grandfathered plans, but key measures
such as prohibitions on lifetime
caps and arbitrary rescissions, along
with mandatory coverage for adult
children, apply broadly. Over time, it
seems likely that many of the ACA’s
core insurance provisions will become
industry standards.
A more immediate reaction to
ACA insurance mandates has been
seen in individual markets, where
an estimated 2 million people have
had policies canceled as those
products failed to meet the dictates
of the law. Not surprisingly, the policy
cancellations became an “event”
quickly drawn into the political
vortex, but whatever the merits, the
terminations were rooted in legal
obligations and reflect a vision of
health insurance adequacy that is
fundamental to the reform scheme.
››
FACULTY RESEARCH
Deconstructing
health reform
Loyola expert explains ACA developments, challenges
By
John D. Blum
John Blum
is the John J. Waldron Research Professor at Loyola University Chicago School of Law. He has many years of teaching experience in health law and policy, and
focuses his research on related topics, including legal issues related to medical quality assurance. Blum is also an adjunct professor of medical humanities in Loyola’s Stritch
School of Medicine, Department of Medicine.
The development and opening
of health insurance exchanges and
the expansion of Medicaid are well
chronicled; these developments lie
at the epicenter of controversy. The
administration’s enrollment goal of
7 million has become a political
football, and while aggregate
numbers define the political debate,
of particular importance are the
numbers of new, previously uninsured
enrollees. From an insurance
standpoint, the key issue concerns
demographics of paid enrollees
and the need to sign up adequate
numbers of younger, low-risk
individuals to sustain fiscal viability.
The bureaucratic bungling
of the health insurance rollout is
widely acknowledged. In fairness,
the start wasn’t universally inartful,
but fallout from the rollout haunts
the acceptance and development of
this law. On a more positive note, a
significant number of Americans now
have access to comprehensive health
insurance in the new marketplaces,
many benefiting from subsidies. While
the cost picture for those enrolled
in exchange plans is mixed, it does
appear that, by and large, benchmark
plans are competitively priced and
do yield savings for many.
While Medicaid expansion
establishes a health entitlement
for poor adults, it is caught in the
crosswinds of federalism as 24 states
have rejected expansion. The gap
in state coverage, together with the
exclusion of the undocumented
population, calls into question the
comprehensiveness of Obamacare
for the neediest.
A great deal of attention was
directed to the 2012 Supreme Court
decision (
National Federation of
Independent Business v. Sebelius
)
upholding the individual mandate
under congressional taxing power
and recognizing states’ rights in
Medicaid. More recently, the court
heard the Hobby Lobby case that
capsulizes business and nonprofit
objections to coverage of FDA-
approved contraceptive services and
devices under religious freedom.
Further ACA-related litigation is likely
to occur, particularly as the full force
of the law goes into effect. Matters
concerning coverage will be taken
up by the courts as disputes coalesce
around micro-details of insurance
and questions of public obligations.
One certainty surrounding the
ACA is that of change. Based on
complexity and unfolding operational
realities, the administration has
acknowledged that Obamacare
is very much a starting point.
While details are often elusive,
both Democrats and Republicans
seem united in recognizing that
the ACA will need to be altered.
Interestingly, Republicans have
made the most specific suggestions
for changes, including repeal of the
individual mandate, adoption of
premiums based on health status,
auto-enrollment of individuals
in health exchanges, pullback on
benefit mandates, and, somewhat
predictably, a proposal to block grant
Medicaid. While some of these may
be feasible, there is no support for
cutting core insurance reforms, and
however proposed amendments
are shaped, they will be judged
against the law’s ultimate goal:
coverage expansion.
Challenges ahead
Whatever the face of the ACA and
its underlying details, a large number
of challenges will persist. Of primary
importance will be the ability of
regulators to efficiently control costs
and balance the tradeoffs between
expenditure reduction and quality
control. Wide variations in health
costs exist around the country, and
there is growing awareness that
finances cannot simply be addressed
in the aggregate, but must focus on
individual markets.
There are a number of structural
initiatives in the ACA designed to
leverage payment systems, such as
Accountable Care Organizations and
pay-for-performance options, that
are highly complex and untested,
and that simply may not work. A
key cost issue concerns physician
fees, and there is a critical need to
overcome politics and replace use
of the Sustainable Growth Rate, the
unreliable measure used to calculate
aggregate payment targets in the
medical coverage area. Human
resource matters remain a persistent
challenge. Demands placed on
the system through expanded
access only worsen our shortage of
primary care services, and although
expansion of physician extenders and
telehealth should help, the problem
is not a serious focus of the ACA.
Any health reform, and
particularly one as complex as the
ACA, raises a host of management
challenges. Federal and state
regulators alike are taxed by massive
legislative mandates. It remains
unclear whether government has the
capacity to regulate private insurers
in ways that provide necessary
public oversight of an industry that
has been delegated a primary role
in the structure of the entire reform
initiative. In addition, ability to detect
and respond to persistent problems
of fraud efficiently and equitably will
be an ongoing requirement, as will
flexibility to cope with demand in
cycles of benefit eligibility.
A particular challenge is long-
term care. From an insurance
standpoint, attempts to address this
area have been foiled by lack of fiscal
sustainability. The so-called CLASS
Act, Title VIII of the ACA that created
a public long-term care insurance
program, has been repealed. Much
of long-term care is being shifted to
community-based services, but with
spiking demand on the horizon, the
area will require a real legislative fix.
At the end of the day, the
success or failure of Obamacare
rests with how it will affect the
public’s health. The ACA opens
important pathways for increasing
insurance access and contains
significant initiatives for improving
our delivery system through greater
coordination. These initiatives are a
good beginning, and if nothing else,
the ACA debates have placed health
at the center of our domestic agenda,
where it will stay for years to come.
■
John Blum focuses his research on topics related to health law and policy.
SPRING 2014
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LOYOLA LAW
