Friday, November 14, 2014

Affordable Care Act and Strains on the System

This has been an interesting week for issues surrounding health insurance for me.  I was surprised by the amount of the increase in my out-of-pocket premium each pay period for health insurance for 2015.  The explanation was not that all of my employer's health insurance premiums were going up so substantially.  Rather, the main issue was that with my raise, I passed a threshold that led to a higher out-of-pocket premium expectation.  Not completely unreasonable.  Just there.

Then, today, I saw an article in the Wall Street Journal.  The article talks about the link between the Affordable Care Act, expansion of Medicaid, and strains on the health care system.

This is not a completely unexpected result.  There may be other data that I have not seen that counter what I read in the article.  If so, I'd like to see them.

However, the key here is that the Affordable Care Act was designed primarily to do one thing--get more people insured.  At least that was my read of the act.  But I did not read every word, and apparently, at least some involved in designing it thought that the lack of transparency was a distinct political advantage.  (You can see a quote from a fellow health economist here.  The fact that anyone in my profession would make such a statement makes me sad.)

When more people get insured, it takes care of only one part of access--the affordability of care.  And the article in the WSJ even points out that in one state to make sure that new enrollees could be covered by Medicaid, it was necessary to tighten up the management of care for existing enrollees.  That leads to an interesting question about sustainability and the "social utility function."  Is it better to give excellent coverage to a smaller number or moderate coverage with lots of controls to a smaller number.

Additionally, the fact that only affordability changed is showing up in how long it takes people to get care sometimes.  And the waiting list is growing for others to get care as more people who were previously not using anything other than the ER engage in the system.  Predictable--totally.

What does this mean?  Was the Affordable Care Act bad?  That, I believe, still remains to be seen.  Was the law put in place without a holistic view of how to solve the problem of access to health care under budget constraints?  Yes.  Could the United States ever implement a holistic reform?  Not likely given the political environment.

So, while the Affordable Care Act may have solved some problems it has created others.  Does that mean it was worse than no legislation at all?  Hard to say.  Does it suggest there is room for improvement?  Yes.  Where will that improvement come from?  Likely from private sector innovation that finds a way to provide affordable access to care to keep a population healthier while making a profit.  The best way to have a healthy bottom line is to run a business in a healthy community.  This wraps all the incentives together nicely if someone or some organization can figure it out.