The Patient Protection and Affordable Care Act

1. The Patient Protection and Affordable Care Act Chapter 15 Supplement Code Blue Health Science Edition 4

2. History of the Legislation • Numerous attempts (reviewed in the book) were made to legislate national health insurance starting in the early 19th Century. • The first successful one of these was the Patient Protection and Affordable Care Act passed by Congress during the Obama Administration.

3. Provisions of the Bill • The original legislation consisted of over 2,000 pages of law. • There will be probably tens of thousands of pages of regulatory interpretations added over time. • As of the publication of this book, revisions were already taking place. • Updates, as they become available, will be posted on the author’s website: www.traemus-books.com

4. Intended and Possible Non-intended Consequences of the Bill • A detailed examination of the legislation is beyond the scope of this course. • Instead, this presentation will briefly review the intended and possible non-intended consequences of the bill on its stakeholders.

5. Stakeholders • A stakeholder is an individual who has something to gain or lose by this legislation. • For or the purpose of brevity, we classify stakeholders into three categories: • those who provide healthcare services • those who pay for healthcare services • those who receive healthcare services

6. Those Who Provide Healthcare Services

7. Those Who Provide Healthcare Services Include • Physicians, nurses, and other healthcare professionals • Healthcare students who are studying to be a healthcare professional • Hospitals • The pharmaceutical and medical supply and equipment industries

8. Physicians, Nurses and other Healthcare Professionals • A primary objective of the Patient Protection and Affordable Care Act is to change the way that health services are provided through a variety of actions including the formation of the Accountable Care Organization (ACO). • An ACO is group of physicians who come together to provide coordinated care.

9. Physicians, Nurses and other Healthcare Professionals • Payment • Although some fee-for-service may still exist,a primary emphasis will be given to prospective payment designed to influence the doctor to control cost, while providing a high level of care. • Some doctors will be paid on a defined clinical episode, while others may receive capitation payment.

10. Objective of Prospective Payment • The objectives of prospective payment will be to: • Provide incentives for physicians to use resources most effectively, while treating and, hopefully, curing the patient • Encourage physicians to use those treatments that will be most effective in curing specific disease, and • Encourage doctors to provide preventive medicine

11. Monitoring • The Patient Protection and Affordable Care Act provides for extensive monitoring of physician decisions.

12. Monitoring • The act creates a nonprofit Patient Centered Outcomes Research Institute to examine the effectiveness of procedures, drugs, medical devices, and medical treatments. • The act will also seek to identify high-risk providers, those whose practices do not meet a high standard of care.

13. Monitoring • Physicians identified through medical audit as having substandard care will be educated. • Those who still fail to perform will lose their ability to practice medicine.

14. Possible Unintended Consequences for Physicians, Nurses and Other Healthcare Professionals • Opponents of the Patient Protection and Affordable Care Act believe that lower compensation, shrinking independence, greater regulation and increased paperwork will lead to physician shortages. • Some physicians have already announced retirement due to the Patient Protection and Affordable Care Act.

15. Healthcare Students • The legislation will fund scholarships and loan repayment programs for students entering the healthcare field. • It will seek to increase the workforce by funding expanded community health programs.

16. Hospitals • One primary objective of the Patient Protection and Affordable Care Act is to reduce costs -- what some politicians view as hospital inefficiencies. • Whether or not the government has demonstrated a talent to reduce inefficiencies in its own hospitals, (Veterans Administration and Military Hospitals) is open to debate. • The government plans to do this through prospective reimbursement, greater oversight and greater regulation.

17. Hospitals • Payment • Medicare will still reimburse hospitals under Diagnostic Related Group (DRG) payment and, in some cases, through capitation payment, both of which are discussed in this book. • Medicare payments to hospitals will be reduced.

18. Hospitals • Hospitals are mandated to install comprehensive computer information systems.

19. Cost vs. Benefits to Hospitals • Proponents of the Patient Protection and Affordable Care Act believe that the cost of regulation, new information systems, and so on will be made up by a decrease in the uninsured population, who previously paid only a portion of their hospital bill, or paid nothing at all.

20. Cost vs. Benefits to Hospitals • Even after the full implementation of the Patient Protection and Affordable Care Act, there will still be uninsured segments of the population, such as those who will opt for paying a penalty rather than purchasing health insurance, and illegal immigrants who are currently excluded from the program, but receive healthcare, often through more expensive emergency centers.

21. The Pharmaceutical and Medical Device Industry • Support for the Patient Protection and Affordable Care Act from the pharmaceutical and medical device industries has been divided. • Supporters believe that the legislation will bring as many as 50 million people to these industries who cannot afford pharmaceuticals. • Opponents point out that in return for increased volume, the industry has agreed to a $100 billion drug discount upon implementation of the legislation.

22. Those Who Pay for Healthcare Services Blue Cross/Blue Shield Tower in Chicago, Illinois

23. The Insurance Industry • For reasons unknown to the author, the proponents of the Patient Protection and Affordable Care Act demonize the insurance industry, portraying them as a major player in the escalation of healthcare costs the country is currently experiencing. • The thesis is that the insurance industry refuses to control costs in an effort to increase profits. • In reality, there is not a lot that insurance companies can do to control costs. • Most of the cost decisions are made by providers, who, as the book reports, may sometimes have incentives not to act in the best interest of the patients.

24. The Insurance Industry • The insurance industry is a low profit industry. • Profits over the past decade have averaged 4%, as opposed to the 20% profit seen by the pharmaceutical industry.

25. The Insurance Industry • As mentioned above, there were over 50 million people uninsured in 2011. • Some of these were uninsured due to an inability to pay premiums. • Others have the income that would allow them to purchase insurance policies, but elect to use their monies elsewhere.

26. The Insurance Industry • The Patient Protection and Affordable Care Act addresses this problem by mandating insurance for those who can afford premiums and by providing government assistance to those who cannot. • Insurance companies will no longer be able to establish yearly or lifetime caps on healthcare spending, and will not be able deny patients coverage based on current illness or pre-existing conditions.

27. The Insurance Industry—Possible Unintended Consequences • Of all the provisions of the Patient Protection and Affordable Care Act, the mandate prohibiting denial of insurance based on illness is the most problematic. • For this provision to work, well patients, as well as sick patients, must enroll in insurance plans. • Insurance is based on the concept of distributing risk over broad populations.

28. The Insurance Industry—Possible Unintended Consequences • The Patient Protection and Affordable Care Act mandates a penalty for those who do not purchase health insurance. • The problem is that the penalty is significantly lower than the premiums that would be paid by individuals.

29. The Insurance Industry—Possible Unintended Consequences • Beginning in 2014, those without insurance will pay a tax that is the greater of a flat fee, or a percentage of family income. The flat fee will be phased in over several years. • In 2014, the penalty will be $95 per adult in an uninsured household, increasing to $325 in 2015, then to $695 in 2016, after which it will increase annually in line with consumer inflation. • For employers, the fee will be $2,000 per year per employee, excluding the first 30 employees.

30. The Insurance Industry—Possible Unintended Consequences • The concern is that since both the employee and employer penalties are significantly lower than the cost of a health insurance policy, and since pre-existing illnesses cannot be used to deny coverage, many people may opt to pay the penalty, waiting until they are hit with a major illness to enroll in insurance.

31. The Insurance Industry—Possible Unintended Consequences • If this occurs, only the ill will enter the insurance pool, driving the costs higher and possibly bankrupting private insurance companies.

32. Federal State and Local Governments, Agencies and Programs—Medicare and Medicaid • There are, of course, programs that provided insurance coverage to segments of the population prior to the Patient Protection and Affordable Care Act. These include Medicare and Medicaid. • Medicaid is a state administered program, subsidized by the federal government that pays for the health costs of the poor. • Medicareis a federal program for those 65 years of age and older.

33. Federal State and Local Governments, Agencies and Programs—Medicare and Medicaid • The Patient Protection and Affordable Care Act will “extend benefits” for Medicare patients, while cutting funding by approximate $716 billion.

34. Federal State and Local Governments, Agencies and Programs—Medicare and Medicaid • The Medicare program will be regulated by an Independent Payment Advisory Board (IPAB). • The objective of the IPAB will be to recommend programs to reduce Medicare spending “if Congress fails to act.” • The IPAB is given the ability to make significant changes to Medicare and Medicaid without normal political process.

35. Exchanges • The Patient Protection and Affordable Care Act creates Exchanges which are “marketplaces” where Americans can compare and purchase insurance plans. • By 2014, these will be the only places where individuals who receive federal subsidies for insurance can buy their insurance. • Proponents of the legislation feel these exchanges will make it easier for individuals to compare policies and that price competition will drive insurance premiums down.

36. Exchanges • Detractors argue the Patient Protection and Affordable Care Act will cost, rather than save, money, that projected reductions in future federal deficits caused by the implementation of Medicare are flawed, and that increased costs will eventually lead to health care rationing.

37. Employers • Employers will bear a significant burden under provisions of the Patient Protection and Affordable Care Act. • As mentioned before, firms with more than 50 workers will be required to provide coverage for their employees or face a fine of $2,000 for each worker (excluding the first 30 employees)

38. Taxpayers • Under the mandates of this legislation, families will receive tax credits for the purchase of health coverage. • Families who earn more than $250,000 per year will pay an additional .09% hospital insurance tax on unearned income. • There will also be taxes on dividends, annuities, royalties, rents, branded prescriptions, medical devices, insurance companies, and indoor tanning services.

39. Those Who Receive Healthcare Services

40. Patients • One of the largest questions concerning the Patient Protection and Affordable Care Act is what the impact will be on patients. • The objective of the legislation is to increase coverage by mandating that employees and employers purchase insurance coverage or pay a penalty. • It also seeks to improve the quality of healthcare delivered by monitoring physicians and providing incentives for doctors to give more preventive medicine.

41. The Economy

42. The Economy • A discussion on the possible impacts on the economy of the United States, detailing both arguments of those who believe ObamaCarewill reduce costs, and those who believe it will increase total healthcare expenditures is beyond the scope of this textbook/novel. • It is sufficient to say, however, that the legislation will have a profound impact on the United States economy.

43. The End The signing of the Patient Protection and Affordable Care Act March 23, 2010.