The Good the Bad and the Ugly of the ACA

The ACA has extended affordable medical coverage to tens of millions of Americans for the first time.

It’s almost six years since the passage of the Patient Protection Affordable Care Act (ACA, commonly known as Obamacare). I’m often asked what I think about the ACA. Overall, I believe it’s a good thing. However, like most legislation, there’s room for improvement. The following is a brief summary of what I call “The good, the bad and the ugly of the ACA.”

The good

Guaranteed Issue. Perhaps the best aspect of the ACA is that everyone is guaranteed health insurance from the insurance company (carrier) he or she chooses. We’re no longer at the mercy of the carriers to accept or decline our application.

Elimination of pre-existing limitations. No longer can carriers decline to pay for health conditions deemed pre-existing.

Premium cost controls. Also called Medical Loss Ratio, carriers can no longer charge whatever premiums the market would bear. Carriers must now spend 80 to 85 percent of the premiums they collect on actual medical benefits. If they don’t, they must reimburse the difference to their members.

Affordability. Premium subsidies to qualified individuals and small employer groups obtaining coverage in a state exchange is one example of affordable coverage. Based on income (or payroll), these subsidies can be quite significant.

ACOs. Elimination of itemized, fee-for-service charges when accessing care is another example of cost controls. The new model, called ACOs, pays a medical team consisting of one’s primary doctor and specialists a “packaged payment” for positive treatment outcomes.

TeleMedicine. Leading providers are encouraged to share proven treatments and “best medical practices” to affect the best patient outcomes. This makes cutting-edge care available no matter where we reside and from the best and the brightest within the medical field.

The bad

Credibility I. The President famously said, “If you like your plan, you can keep it”— so, coverage in place prior to March 23, 2010 was deemed a “grandfathered plan” and, you could keep it as long as the carrier continued to make it available. Unfortunately, many of those plans have since been eliminated. Bye-bye “my plan” and hello egg-on-your-face, Mr. President.

Credibility II. Changes to ACA implementation timeframes, the mess with setting up state exchange websites and, changing compliance requirements all contributed to valid criticisms of the ACA, making it seem poorly thought out and poorly administered.

Community pooled rates. Replacing health-based criteria, these are used to determine premiums for individuals and small employer groups. Economists calculate that 75 percent of health care costs are due to lifestyle choices (such as poor diet, lack of exercise and over-indulgence). So folks who are diligent about their health will pay the same premium as those who live an unhealthy lifestyle. This seems counterproductive in reigning in costs.

Administrative costs to employers. Additional documentation in tracking employee’s coverage and hefty fines for noncompliance certainly didn’t endear employers to the ACA.

The ugly

Pharmaceutical industry abuses. The ACA doesn’t address price gouging by drug companies. Americans pay 40 percent more than Canadians for the same medications—and even more compared to other countries. One company recently increased the cost of a medication from $13.50 per pill to $750 per pill despite it costing pennies per pill to produce.

Fraud. Despite stepped up efforts to punish those who defraud insurance companies, medical fraud is a multibillion dollar industry. The Obama administration has recovered billions and prosecuted many, but much still needs to be done.

Opposition to expanding Medicaid. To the detriment of their own citizenry, many states refused federally funded expansion to express opposition to the President and expansion of coverage to those who could least afford it and, in many cases, those in greatest need.

Politics. Millions of taxpayer dollars have been spent in attempting to repeal the ACA without offering viable options or improvements to the law. The Speaker of the House declared his primary objective is to repeal “every single word” of the ACA. Is that responsible representation? The ACA has extended affordable medical coverage to tens of millions of Americans for the first time. Care to explain repeal to them?

Is the ACA/Obamacare the ultimate solution? No. There is definitely room for improvement. However, it’s far better than when the insurance companies were in charge. The ACA is revolutionary and, given time, the various components will address many if not most of the ills in America’s medical delivery system. Political posturing, gouging of the public and defrauding insurance companies only serve to thwart the good the ACA is designed to do—and harm us citizens in the process.

Bob Aita is a principal in the benefits consulting firm of Aita and Associates, Inc. He’s been a licensed agent for more than 20 years and has served the interests of fields as diverse as legal firms, builders exchanges, members of the Western region of the North American Home Furnishings Association, nonprofits and many retail businesses. Contact him at (707) 829-8606 or bob@aitaandassociates.com.