The Affordable Care Act (ACA) is one year old today!
Though there has been confusion and hot debate we do have reason to celebrate as the first provisions of the ACA went into effect this past year. Positive acts from which millions are benefiting include: the elimination of insurance exclusions due to pre-existing conditions for children up to age 19; young adults up to age 26 can now remain on their family insurance policy; and annual and lifetime health insurance limits are gone!
To help with the continued confusion about what the ACA and explain a bit about what the law will do I decided to borrow from a Washington Post blogger. Hope this helps for those of you wanting more clarification.
This is the second part of Ezra Klein's blog in the Washington Post today
"the Affordable Care Act, once it kicks in fully in 2014, is expected to do four things: provide coverage; remake a small slice of the private insurance market; pay for itself; and try to control costs. Let’s take them in order.
The law has two main mechanisms for covering people: Medicaid — which is a government insurance program that focuses on the poor — and subsidies to help people afford private insurance. The split is expected to be almost even: Of the 32 million people the law is expected to cover by 2019, 16 million will be on Medicaid and the rest covered by private insurance.
The problem with subsidizing insurance is that the sick rush to sign up and the insurers refuse to cover them. The law escapes this conundrum by telling people who can afford insurance that they have to buy it or face a small fine (the dreaded individual mandate) and by telling insurers that they can’t discriminate based on preexisting conditions. That is to say, healthy people can no longer say no until they get sick and insurers can no longer say yes only when applicants are healthy.
These transactions will happen on the new “exchanges” — a place that will, in effect, be a Web site where people can compare plans and choose the one that will serve them best. But behind the pleasing exterior (you can see it at HealthCare.gov), the exchanges offer another layer of consumer protection: Just as Amazon.com would stop carrying a toaster that routinely exploded when customers plugged it in, if an insurer repeatedly misbehaves, regulators can kick it out of the exchange.
All this will cost money — and in a system that’s already overpriced. Which brings us to offsets and cost controls. It’s important to know the difference: Offsets are the policies that cover the law’s costs. They’re concrete, simple reforms — cutting this much, taxing that much — and as long as we are willing to implement them, they are likely to work. Controls are the policies that try to rein in health-care spending. They’re ambitious attempts to change the way doctors are paid, insurance is bought and Medicare is reformed. If they work, they will, in the long run, save an enormous amount of money — much more than the offsets.
The big offsets in the health-care law slow payment increases to providers who participate in Medicare ($240 billion), cut payments to private insurers that participate in Medicare but cost more than the basic Medicare program does ($140 billion), increase the Medicare tax on high earners ($210 billion) and add a tax on very expensive health-care plans ($20 billion, although much more than that between 2020 and 2029), and so on. All in all, the legislation is expected to save or raise about $100 billion more than it spends in the first 10 years.
The cost controls will occur over a longer period and are more speculative. Medicare, for instance, is going to experiment with paying hospitals a flat sum for all successful care associated with a particular condition. This will mean that doctors make more money when they do less and are successful at it, rather than making more for doing more, as is the case now. The tax on expensive health insurance plans is meant to drive people — and employers — to seek plans that better control costs.
The Independent Payment Advisory Board is a group of stakeholders and experts charged with helping Medicare control costs and empowered to make changes to the system even if Congress is too paralyzed or distracted to act. It will be fed ideas by the new Center for Medicare and Medicaid Innovation, which will test ways to improve care and cut expenses. The exchanges will make it easier to comparison-shop, and the subsidies are linked to the lowest-priced plans in the exchanges to reward cost-efficient insurers. New information about what drugs and treatments work best and for whom will come from trials, and if combined with electronic-medical records, could help doctors make more cost-effective decisions.
Is it a perfect piece of legislation? Not even close. Will everything work as expected? Almost certainly not. But for all its flaws, it’s a good law, which is why Republicans have had so much trouble coming up with state plans that could cover more people at a lower cost. And it’s worth trying.
So happy birthday, Affordable Care Act. Here’s to many more."