The passage of the Affordable Care Act (ACA) more than five years ago shook up the U.S. healthcare system as we know it:
- making coverage more affordable
- prohibiting denial of coverage for those with pre-existing conditions
- outlawing rescinding coverage for sick patients
- and more
As we explored in our OOMPH ACA blog post, despite myriad challenges in rollout and implementation, the number of uninsured Americans has decreased dramatically since the ACA’s inception. Says Brent Fulton—Ph.D., M.B.A., a health economist and professor for the Health Policy and Management course—“It’s true that the ACA Health Insurance Marketplaces are not operating perfectly, but the individual market prior to the ACA was not functioning well, meaning consumers had difficulty comparing plans because of the lack of standardization. Plus, consumers with pre-existing conditions could often not find a plan willing to enroll them.”
With the ACA continuing to create ripple effects and changes to health programs and policy, we decided to explore some of these public health issues in more detail.
The rise in insured Americans stemmed from new healthcare marketplaces and increasing enrollment in Medicaid. Although not all states have elected to expand Medicaid (see image, above) the ACA’s focus on expanding Medicaid coverage for low-income families, simplified application procedures and increased outreach campaigns highlighting Medicaid benefits have proven effective. The Kaiser Family Foundation article also cites a staggering statistic: “In the states expanding Medicaid…enrollment grew by 4.2 million. In states that are not expanding Medicaid…enrollment grew by just over 643,000 people.” In terms of expansion costs, studies—including one from UC Berkeley on Medicaid expansion in California—have shown that “spending directly related to [Medicaid] expansion is likely to be largely offset by savings from reduced expenses in other state health programs, mental health services and state prisons.”
ACA and the Battle for Affordability
More people enrolling in health insurance means that more people must now navigate out-of-pocket deductibles and the high price of prescription drugs. On the heels of news that a drug company raised the price of a life-saving drug 5,000%, the scandal exposing the skyrocketing costs of EpiPens is just the most recent in an ongoing saga of big pharmaceutical companies vying to provide high returns to their shareholders and recoup investments, with the consumer forced to choose between forgoing medication or paying for increasingly unaffordable drugs.
What about insurance companies? They say that they are feeling the pinch, as well. UnitedHealth, Humana and Aetna announced they will pull back from health insurance exchanges, citing financial losses. This New York Times article cited Mark T. Bertolini, the chairman and chief executive of Aetna, who discussed the insurer’s financial woes, explaining, “Individuals in need of high-cost care’s account for a disproportionate share of the enrollment in Aetna’s marketplace plans, and the federal government does not adequately adjust its payments to account for these costs.”
Despite challenges, innovative ways of making health insurance more affordable have emerged. Take reference pricing, explained in a Kaiser Health News article: Insurers or employers survey provider costs for a specific treatment, then set a cap—or “reference price –to designate the maximum amount they will pay for that service. This is in hopes of encouraging consumers to choose less-expensive providers or treatments. Reference pricing is meant to save employers and employees money, and despite potential downsides, a Berkeley School of Public Health study on reference pricing reported a 31.9% cost savings for lab tests alone during the course of a single year.
Building Skills in Health Policy and Management
More Americans today have health insurance than ever before. With 90% of people now insured comes an increasing demand for professionals with the skills to make the public healthcare system more efficient and affordable—and easy to navigate, understand the policies and their implications. Myriad policies, programs and challenges also mean that there is much to understand and to be improved upon. Says Fulton of the Health Policy and Management course, “Students learn about the economic, political and social factors that affect health insurance coverage in the United States. With health insurance premiums and drug prices rising more rapidly than wages, insurance is becoming more unaffordable. The Affordable Care Act’s subsidies to buy health insurance improve affordability, but an insurance pool relies upon healthy individuals enrolling. Understanding these nuances and how to analyze complex healthcare and payment systems are the skills we aim to cultivate in UC Berkeley’s Health Policy and Management concentration.”