Politics. For health care reporters and denizens of Capitol Hill, the SCOTUS decision on the ACA was big news. For everyone else it was Thursday. Eleven years in, the ACA has failed miserably to meet its authors’ and supporter’s lofty expectations, most of them laudable. The law is largely irrelevant for a significant part of the county.
The credit for the ACA’ shortcomings probably rests with its partisan roots and its crafters’ intolerance for the slow pace of monumental legislative initiatives. Both conspired to produce a bill with self-destructive flaws.
With a bit more time – and by that I mean years, not months - and bipartisanship, there may have been an opportunity for someone to point out that mandated MLRs would lead to insurers shifting risk elsewhere in bad times or burning it on the great pyre of provider subsidiaries in good.
The generous and politically oriented benefit design, even the Institute of Medicine in its report to the Department of Labor struggled to define, proved wildly expensive and for many consumers, unnecessary.
More than anything, the big middle finger the last gasp of the postwar generation gave to their demographic competition with a 3:1 age band in premium pricing left ownership of the law and its success in the hands of people enrolled or aging into Medicare.
These flaws may also have been fixed had debate occurred without the usual and now nearly meaningless accusations that Republicans wanted to kill their constituents and Democrats wanted to socialize medicine.
What happens next will be interesting. Those ascendant to power are young which generally means healthy. Increasingly so too will be their constituents. How much longer will health care as a mobilizing issue keep its grasp of American politics? The yawns over the SCOTUS decision seem to suggest not for long.
Policy. While a little chunk of Washington is still mesmerized by health policy crafted by sleepless octogenarians, the market marches on to reveal another flaw of the ACA: policymakers have and continue to confuse health care and health insurance.
Under the guise of “value-based purchasing” insurers with sufficient market power have insisted health care service providers, especially PCPs, accept a monthly capitated payment for either primary/chronic care or total cost of care. The beauty for insurers is that they shift the MLR risk to others. If cost of care turns out to be too high, the provider takes the hit and shareholders are happy. If the cost of care is too low, providers get a little bonus and the insurer doesn’t need to mail money back to members.
As insurers have shifted big chunks of the risk they purportedly assume when they cash your premium check, the providers on the receiving end have started to wonder what, exactly, are HUM and others doing all day.
For insurers, their moat has always been their ability to manage risk. They do so with sound actuarial practices supported by long histories of claims adjudication and the data left in its wake. Policies that began under Obama and expanded under Trump made data more liquid which means that moat is getting quickly filled.
To be sure, insurers are trying to protect the moat and the castle. Through its CareMore Aspire subsidiary, ANTM is entering the direct contracting program. HUM, itself, is also getting involved via its “payor agnostic” subsidiaries.
Tomorrow, we are going present on the three models filling that moat: Center-based, Medicare Advantage and Physicians’ Practice Management models of direct contracting. Please join us.
Power. The ACA notwithstanding, the center of power for insurers is not in Washington so much as the state capitols. Plans, most especially the Blues, have purchased untold volumes of brown liquor to keep their contracts with state and local governments. They have also been influential in determining who becomes state insurance commissioner.
In recent years, they have been uncharacteristically inept. Certain states like Ohio and Mississippi figured out that their Medicaid plans were taking them for million using spread pricing. Other states have asked precisely how much they spend on certain services and where and been told to pound sand, resulting in more lawsuits.
If in fact health care becomes more important than health insurance as solutions like direct contracting expand, the influence of the insurers will begin its ebb in state capitols also.
Emily Evans
Managing Director – Health Policy
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