Despite Positive ACA News, Problems Are Brewing for Medical Practices

The good thing about living in Texas, and elsewhere in the South, lies in the fact that it has been 80 degrees outside for about two months now. There is one bad thing that arrives with this warmth and sunshine: deadly Tornados, like the ones that ravaged a wide area of the South this week. 

I thought of this while reading articles on the Kaiser Health News website.  It is easy to see the benefits of the Affordable Care Act (ACA) and the improvements it makes over the old system. Headlines heap praise such as, “Some Obamacare Enrollees Emboldened To Leave Jobs, Start Businesses.” Another, “Once Opposed To The Health Law, Now A Convert,” tells the story of man who signed up just in time to have his plan pay for costly heart surgery. A third story focuses on the protection of patients from evil insurance companies: "Emanuel: Although 'Not A Perfect Law,' ACA Is Protecting Patients."

Reading these articles, the shift under the ACA seems not unlike moving from Minnesota to Texas during winter. It is warmer; the sun shines a little brighter. Flowers bloom in meadows year round; and tornados are the price we pay for warmth.

Without choosing sides in the debate, the free-market has dictated what we, as a society, can afford to enjoy, given a limited budget. The things we don’t like about the old system could have easily been addressed, but only at a much higher cost.

Take the guy with the heart problem who was thankfully able to survive the old system long enough to obtain a policy to pay for his condition. His lifesaving behavior is what the free market terms “adverse selection.” Meaning, the people most likely buying into the system are those who have been waiting for a chance to obtain much needed care for pennies on the dollar.

At least there is the article about the new enrollee who was able to quit his job and start his own company because he was no longer tied to his old employer. But there is a systemic insurance benefit to being an employee. Premiums are deducted regularly before the employee sees his paycheck. Trouble with self-employed people lies in the fact that they are not paid regularly. They often must choose between paying premiums and paying the mortgage.

The protection against disqualification for pre-existing conditions also comes at a cost. In fact, all of these warm, happy stories carry the seeds of potential destruction. Insurance purchased on the exchanges is still “insurance.” Utilization affects premium rates in future years. Anything that upsets the balance struck by the insurance market will create instability. We simply cannot order everything we like from an expensive menu, then expect to pay bargain prices for it. The ACA solution seems to be that the government can step in and fix that. I am sorry, but we can’t afford that either. Not without paying for it. That means raising taxes.

Buried in the happy ACA news is the really important story about the price we are about to pay for the things we love about the ACA: “Health Plans Scramble To Calculate 2015 Rates.” The story describes a report entitled “First Look: Health Exchange Medication Utilization.” In the report, look closely at the box entitled, “Key Insights.”

It notes that exchange participants were four times more likely to require HIV medication than participants in commercial plans. Pain medication prescriptions were 35 percent higher in exchange plans. Anti-seizure medication prescriptions were 27 percent higher. Contraceptive use was 31 percent lower.

Pharmaceutical usage is considered a harbinger of future healthcare utilization and cost, because claims for prescriptions are the first wave, or earliest indicator, of how healthy or sick an insured population may be. And that is the point, we really don’t have any idea how healthy or sick the 8 million people who signed up for the ACA exchanges really are.

This sets up conditions for a “perfect storm.” The free market is similar to a sausage maker, with a hopper on top. Put everything you have available into the hopper, in keeping with your budget, and it will give you the best product for the price. But it cannot do the impossible. Pre-existing condition exclusions are one example. These bitter terms exist, because we can’t afford this luxury at the price we are willing to pay.

Higher utilization drives up premiums for everyone. Those who do not dearly need coverage won’t pay for it, and will drop out. This leaves only the sickest Americans paying into a system. The spiral builds upon its own destructive energy, until it crashes into the ground, or the government takes over. Bankrupt plans don’t pay bills; or they pay and then snatch back. We learned this, if nothing else, from declining Medicare reimbursements and ZPIC audits.

All of this adds more headaches and uncertainty for physicians' practices, with no clear horizon in sight.