SalemNews.com, Salem, MA

November 14, 2013

Watson: Health care law aims for cost savings

Brian T. Watson
The Salem News

---- — This is a column about how the Affordable Care Act (ACA) — eventually — is likely to accomplish two worthy things: extend medical insurance coverage to almost everybody in the nation now without it and help the entire medical care industry — in all its many facets — continue to focus harder and harder on the task of reining in ever-escalating medical costs.

But first, we need to acknowledge and lament two lousy realities. Most obviously, the federal website — on which citizens are meant to shop and sign up for medical insurance — is a mess. The site’s computer software programs, its intended logic and links, and its data sharing, coordination and management functions had not been sufficiently sorted and readied before the site went active.

On top of those problems, the sheer number of visitors to the site overloaded and made worse the technical deficiencies there.

There are non-sinister reasons for those shortcomings. And I don’t doubt that they’ll be fixed — although it may take weeks to complete the full troubleshooting. But even so, it is just plain exasperating that a website introduction with such a long-known launch date could be so botched.

The other aspect of the ACA’s introduction that has surprised and aggravated citizens — rightly so — is learning of the number of existing medical insurance policies that do not comply with the new law. Because noncomplying policies are being canceled by the insurance companies, a large number of people who had selected very limited and bare-bones coverage are now being required to purchase new, more comprehensive coverage. They will still have a private insurer, but they may have to pay more for their policies.

It doesn’t help that President Obama had repeatedly told the nation that those with insurance would see no change. Even if only a relatively small percentage of the population is affected, that absolute number is still significant.

It may be small consolation to those citizens who ultimately will have to pay more for their insurance, but it is the pooling of risk — of all citizens, presently healthy or presently sick — that makes any insurance viable.

With everybody participating, we can insure everybody. That will be a wonderful accomplishment. No longer will some sick people face financial ruin or – even worse – be unable to seek treatment for serious ailments.

The other goal of the ACA is to lower the cost of medical care. Although the cost of implementing all of the provisions of the act is an estimated $1 trillion over the course of 10 years, those same provisions may save well more than a trillion dollars.

There is no way in this 800-word column to describe all of the mechanisms in the new law that are designed to elicit savings. But the law’s language provides for strictly monitoring and regulating much in the medical industry that is presently unchecked. Policy rates, rate increases, coverage adequacy, termination clauses, sickness exclusions and annual payout maximums all will be regulated.

Employers and businesses of differing sizes will have differing requirements to provide health insurance. And insurers will have new requirements regarding the percentage of collected premiums that must be allocated to actual medical care (as opposed to, say, advertising and CEO bonuses).

Payouts to doctors and hospitals will become increasingly more outcome-based, and consumers will be able to become more aware of medical costs.

Abuse and fraud detection efforts will be increased, especially in the Medicare, Medicaid, and CHIP (Children’s Health Insurance) programs. Falsified claims by dishonest, private health care suppliers will be more quickly caught.

There are also many provisions in the law to enhance the general health and encourage preventive medicine. Incentives to citizens to stay fit, have checkups, and thereby avoid serious illness will reap cost benefits (to all of us) in avoided diabetes, heart disease, strokes, cancer and infections. And there are actual, direct revenue increases in the law.

The health care business is huge. Its transactions comprise roughly 18 percent of our economy. If we don’t get its rapidly escalating costs under control, they will eat us alive.

With so much attention being paid — rightly — to the ACA online-rollout woes and the reality that some people are indeed losing their old coverage, let’s not lose sight of why Obamacare was created. It was and is a response to a crisis.

The ACA is here to stay. The website problems will get repaired. The hospitals, doctors, pharmaceutical companies and insurance companies that together form the medical industry are well along in designing compliance plans for the law. After all, the law is built predominantly on the private system that already exists.

It is in the interest of all Americans to work toward the goal of medical cost control. Let’s get busy implementing the ACA — the only comprehensive cost control experiment that we’ve got in front of us — and let’s work for its success.

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Brian T. Watson is a Salem News columnist. Contact him at btwatson20@gmail.com.