Two years after President Barack Obama signed the PatientProtection and Affordable Care Act into law, America's health planis once again at a crossroads.
And as the nation's top judiciary readies to hear challenges tosome of the act's key components, detractors say health care costscontinue to rise for companies and most individuals.
The Congressional Budget Office, meanwhile, says the legislationwill cost $1.76 trillion over a decade, nearly twice earlierfigures, making the Affordable Care Act far less affordable for thenation.
'All we've realized so far is more paperwork and higher costs,'said Lou Basso, president of Farmingdale-based Alcott Group, whichmanages benefits and human resources for more than 300 companies.'One of the points of health care reform was to cover more people.The other was making a more competitive market, so the cost ofhealth care would go down for everyone - businesses, employees.Unfortunately, that hasn't happened.'
While many provisions have yet to take effect, leaving hope thatreform will eventually lower costs, the act is so far taking aneconomic toll on companies and individuals.
'Two years into it, I think employers saw this as setting thestage for increased access, which is a good thing for members andthe population's perspective,' said Steve Logan, president ofAetna's New York market. 'But it has added to their costs.'
Logan said health insurance rates are rising 8 to 12 percent, inpart due to mandates to provide coverage for dependents up to age26, which he said added 2 percent to Long Island premiums.
'That doesn't sound like a lot, but it's significant,' Bassosaid. 'Although that's a young population, even normal health careadds some costs.'
Ignoring the culprits
The big reason for rising costs, however, isn't new mandates.It's the continuing increase in health care procedures, tests andmedications, which cause an annual 10 to 12 percent rise in claimcosts, which the legislation so far hasn't addressed, Logan said.
'The overwhelming driver of premiums is medical costs,' he added.'The act does much in the area of access. But the act has donenothing to address the underlying health care costs up to now.'
North Shore-Long Island Jewish Health System CEO Michael Dowlingpointed to other cost drivers the legislation doesn't address.America's aging population, for instance, drives up demand, as doesobesity and obesity-related diabetes. The generally held belief thatmore care is better also inflates spending.
'The idea that you can have a piece of legislation passed thatwill reduce the cost of health care in the United States isludicrous,' Dowling said, 'unless you change all of the otherstuff.'
In addition to costs related to mandates and health carespending, companies are being hit with compliance costs that aren'tincluded in most calculations.
'There is record keeping and compliance that companies need todo,' Logan said. 'Many are working with vendors, payroll companies.But it's added consulting costs an employer would have to incur.'
Basso is concerned that the hidden cost of compliance will makehealth care more expensive for companies, regardless of the act'soverall impact on care.
'My sense is between administrative and regulatory burden and thecomplication of trying to comply with it, the costs are going to goup, not down,' Basso said.
The mandate about to be reviewed by the U.S. Supreme Court, whichrequires companies with 50 employees or more to provide 'affordable'insurance or pay a $2,000 fine per worker, may also increase somecompanies' costs. There is also the problem that the fine is lessexpensive than the cost of insurance, said Mark Bogen, vicepresident of finance at South Nassau Communities Hospital inOceanside.
Another provision, which would create insurance exchanges, isintended to allow people to compare insurance plans and find cheaperpolicies, but the legislation doesn't specify how states shoulddesign them.
'A lot of the compliance regulations were intentionally vague,'said David Sturdivant, senior executive officer in charge of healthcare at MindSHIFT Technologies, which manages information systems.'There's no magical solution that's going to enforce thesestandards.'
Others said if New York doesn't devise an exchange soon, thefederal government will create one that residents may not like.
'New York state needs to pass legislation related to a stateexchange,' said Dr. Stacey Rosen, vice president of clinicalservices at the Katz Institute for Women's Health. 'If everythingstays intact and New York state does not have an exchange in place,the federal government takes control.'
Incentivizing wellness
The great hope of health care, however, may be a shift frompayments per procedure to paying for the continuing care of thepopulation.
In these models, providers are paid for managing care andprevention and for reducing readmissions and other costs, ratherthan simply for procedures. The idea is to pay for true 'healthcare' rather than 'sick care.'
'Volume-driven health care has a bull's- eye on it,' said Dr.Simon Prince, CEO of Beacon Health Partners. 'It's going to die atsome point.'
Kevin Dahill, CEO of the Nassau-Suffolk Hospital Council, a tradegroup, said shifting from payments for services to value-basedpayments, by incentivizing efficient care as opposed to more care,could lead to big savings.
'The hypothesis came forward,' he said, 'that the only way we'regoing to bring down health care costs in this country is to get awayfrom a fee-for-service system where all the incentives are aroundvolume.'
Some, however, worry that incentivizing providers to do lesscould leave patients vulnerable if providers withhold care to boostprofits.
'You've got to protect against that,' said Thomas McAteer, seniorvice president for the East Region for Aetna Medicaid. 'If you wantto move to thoughtful, rational delivery of care, you need torealign the incentives.'
Meanwhile, some people are seeing benefits from specificprovisions. More than 250,000 senior citizens benefited to the tuneof $160 million when the so-called donut hole, the gap in Medicaidprescription coverage, was closed. An added 150,000 young people nowhave health insurance coverage in New York and 2.5 million have itnationwide.
But others say coverage for many is deteriorating as prices rise,while companies and insurers offer policies with higher co-paymentsand deductibles.
'I've seen them cutting back on the benefit and asking employeesto lay out more of their dollars, Basso said. 'As costs go up,employers are saying it's impossible to pay for this. So thebenefits get less. More and more comes out of pocket.'
