The Affordable Care Act (ACA)’s health insurance exchanges opened for business on Oct. 1, and, despite website glitches and non-stop political fighting, citizens across the U.S. can now comparison shop and pick an insurance plan. Time will tell how well the exchanges will work out for consumers, employers and insurers—as well as what effect they will have on pediatricians and hospitals.
According to Wendy Warring, senior vice president, network development and strategic partnerships at Boston Children’s Hospital, the exchanges may force medical professionals to face changes in patient volume, adjustments in reimbursement rates and shifts in how employers provide benefits to insurers. Right now, she says, “people are very confused about public exchanges versus state exchanges versus private exchanges,” and opinions vary on what impact these changes will have on medical professionals.
The Massachusetts experience
The health care reform experience in Massachusetts could indicate a lot about how the government-run exchanges will work nationally. The state’s health care reform law, passed in 2006, mandated coverage for citizens and created an exchange—the Massachusetts Health Connector—that enabled citizens to shop for coverage. ACA contains many similar provisions, but other states have not had experience with exchanges.
“Because of the Connector, people feel that we’re ahead of the curve in Massachusetts,” says Irene Paresky, chief operating officer at the Pediatric Physicians’ Organization at Boston Children’s (PPOC).
Warring believes that “if more people go into the exchanges, reimbursement rates will likely be lower.” This is because some plans offered on the exchanges may pay lower reimbursement rates than some commercial plans. However, she says, the reduction in rates may be counterbalanced by an increase in patient volume: “More people will have insurance, and kids who were formerly uninsured will have some coverage.”
Further complicating matters is the fact that many states have decided to opt out of the ACA’s Medicaid expansion provision—a decision that could drastically reduce the number of people who would otherwise be covered under the law. Ultimately, Warring believes that the ACA will have little impact on clinicians and hospitals that don’t rely upon out-of-state business.
Changes in employer-based coverage
The more significant impacts on the health care industry may be driven by the decisions made by employers and private insurers. ACA’s provisions have inspired some employers to “drop coverage or steer employees into the exchanges,” says Robert Shuman, director of employer contracting and managed care operations for the PPOC. With an eye on the bottom line, companies also may make changes in deductibles, copays and health savings accounts, which may affect how much care people seek.
In addition, Shuman notes, a number of private health insurance exchanges have been established. Attractive to companies with defined contribution plans—offering employees a set amount of money to buy health insurance—many private exchanges offer plans with limited networks, high deductibles and other features focused on cost. With this approach, “employees, not employers, will be making the decision about how they want to spend their benefit dollars,” says Paresky. This may lead them to “make harder choices.”
How will these harder choices affect hospitals and clinicians? According to Paresky, health care institutions will feel added pressure to reduce unit costs and increase the value of their services. If they don’t, they may be left out of insurance offerings.
“It’s incumbent on us to look at value and convince the insurance plans that we should be in their offerings,” she states. “We are trying to drive the dialogue toward the value we provide, whether this is measured by risk-adjusted total medical expense or our various programs that optimize care for our patients.”
Again, the Massachusetts experience could predict how these changes will play out nationally. Cutting costs has become critical in the Bay State where almost every citizen has health coverage. “Greater access has put a greater focus on cost,” says Warring. “Because states have to cover more people, the pressure to reduce rates will be more intense, and private insurers will try to push rates down to take advantage.”
Still, Paresky believes that Massachusetts is home to many companies and organizations that employ people with unique or specific skills, and that are more likely to offer quality benefits to retain this workforce. In industries with high employee turnover, she says, companies may “go toward limited, more restrictive plans or send employees to the exchanges.” In Massachusetts, this has not happened on a large scale, and employer-based coverage is still strong.
The importance of access
In spite of the questions and controversy around health exchanges, Shuman believes they represent a positive step forward for health care in America. “Public exchanges are great because no one can be denied, and many people can get subsidies,” he states. “There is a lot of choice, a lot of transparency. The winner is the patient, and that’s the way it should be.”
Warring concurs. “The physicians and the administrators here are incredibly mission driven—we believe in access,” she says. “Politics aside, people should have access to health care.”