THE FUTURE OF HEALTH CARE IN AMERICA

1/12/2015 THE FUTURE OF HEALTH CARE IN AMERICA ACA and Beyond Lisa McNeil BS, CFSS (M)

Summary Since 1965 America hasn't seen radical changes in health care until the 2010 house and senate passage of Patient Protection and Affordable Care Act. With the greater access to health policies and new health care legislation, America is beginning to see a strain on health resources. Physician and nursing burnout has been on the rise and attributed, in part, to the following: larger workloads, increased paperwork decreased reimbursement schedules wait times for appointments and therapies are increasing referral restrictions being placed on policies deductibles and co-pays increasing, sometimes doubling, for consumers This paper examines the 20-year trend in the UK and other countries with a similar health care model trying to forecast what America will be facing in the next 10 years and solutions being offered to consumers who desire to take more control over their health dollar. Introduction The Patient Protection and Affordable Care Act (PPACA), commonly called the Affordable Care Act (ACA) or "ObamaCare", is a United States federal statute signed into law by President Barack Obama on March 23, 2010. This statute was a historic milestone in our fight for a more equitable and cost-effective health care system. As has been noted by many authorities, both scholarly and popular, the US pays about twice what the next most expensive country pays for health care per capita and has worse results in terms of life expectancy. Limited access to medical services and reactive approaches to disease and dysfunction have played a role in our out of control expense rates. This paper looks at the pros and cons of the ACA, the European model the US adapted, while looking at the European model, forecast what America needs to be bracing for over the next 10 years, and some innovative ideas that will once again change the landscape of health care. 2

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(Economist.com, 2013) It is important to note that there is an enormous range in the health care costs individuals bear as a result of illness, a fact of which the general public is unaware and health policy makers have had little success in taking into account. The figure below illustrates this. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Top 1% of health spenders Top 5% Top 10% Top 15% Top 20% Top 50% Lower 50% (Peterson-Kaiser Health System Tracker, 2014) The Affordable Care Act The ACA was intended to provide near-universal coverage through a set of individual and employer mandates, create a universal marketplace for health care plans while requiring minimal requirements on those plans, and an expansion of Medicaid. The Supreme Court decision which found that the ACA's requirements for Medicaid expansion were unconstitutionally coercive of the states led to 16 states (as of 04/06/2015) to not expand the Medicaid program, leaving tens of millions of people without coverage. Even so, the ACA has dramatically reduced the number and percent of people without health insurance. The Post-ACA Structure of the Health Care Marketplace To talk about the health care "marketplace" is misleading. With per capita costs now around $8,000, with the average family premiums in the range of $14,000 a year, while the 4

median family income of around $64,000 per year, very few can afford to pay for health care. That market, prior to the ACA, primarily provided affordable insurance only to the very young and the very healthy. (Health Research Institute, 2015) Those with pre-existing conditions were excluded entirely or had their pre-existing conditions excluded. (Hamel, 2014) Employer-Provided Insurance In addition to requiring individuals to carry health insurance if they do not have any other source of coverage (e.g., Medicare, Medicaid, employer-provided coverage, coverage under a parent's plan, etc.), the ACA mandates that employers above a certain size provide health insurance or pay a penalty. There are some indications that the combination of pay levels, premium subsidies under the ACA, and hours of work are reducing the amount of employerprovided insurance. The percentage of employers providing health insurance was shrinking before the ACA, and it is difficult to disentangle ACA effects from that long-term trend. (Blahouse, 2012) Costs There are early indications that the ACA will cost much more than was initially expected. Since the system is in the first year of penalties for not having insurance and influx of individuals seeking care, it will take several more years of evolution before the cost impact is clearly understood. The Future of US Health Care: Upside The ACA has dramatically reduced the number of uninsured Americans and is on track to achieve one of its goals: bending the cost curve by reducing the annual rate of increase in health care premiums. While some groups benefit more than others, all Americans will benefit from the new rights and protections like guaranteed coverage of pre-existing conditions and the elimination of gender discrimination. The ACA ensures that you can t be dropped from coverage when you get sick or make an honest mistake on your application. You also can t be denied coverage or treatment for being sick or get charged more for being sick. Additionally, you can t be charged more for being a woman. Other protections ensure that you have the right to a rapid appeal, that health insurance companies can t make unjustified rate hikes, and that these 5

companies must spend the majority of premium dollars on care. All major medical coverage must count as minimum essential coverage. Generally, this means that coverage must offer ACA protections, cover essential health benefits such as free preventative services. While electronic medical records (EMRs) are controversial, the ACA's requirements and substantial penalties and rewards for not using them, or for using them, means a faster transition from the era of paper charts. Most experts feel that this is long overdue. 6 The Future of US Health Care: Downside Benefits come with a few trade ins not realize; to fund the low income subsidies new taxes have been levied against high earners and the healthcare industry. As noted, the ACA has probably accelerated an already existing trend of employers dropping health insurance for their employees. In anticipation of the employer mandate, some businesses have cut employee hours. This adds extra operation costs to businesses that did not provide health insurance. Many lower wage employees will find health insurance to be unaffordable and end up with no viable options due to having been offered coverage through work. Many policy holders whose plans were impacted by the ACA's minimal coverage requirements have seen their premiums go up, co-pays increase, and deductibles, in some cases, double. This simply reflects that the non-standardized plans sold before the ACA were a crazy quilt that often had coverage gaps that made only economic, not medical, sense. Due to decreased reimbursement schedules, we are also seeing a greater influx of fraud. "Almost every estimate is that 30% of US medical spending is unnecessary, including fraud," says Elliot Fisher, a Dartmouth College medical professor and director of the Dartmouth Atlas on medical disparities. And a federal report published and reported in the Wall Street Journal claims that hundreds of nursing homes had billed the taxpayer for skilled services that weren't performed. "They're billing for therapy they don't provide or which the patient doesn't need" says Jodi Nudelman, a New York state official.(us Health, 2014) Perhaps the darkest cloud on the horizon concerns the supply of medical personnel. (Rabin, 2014) Between the start of Medicare/Medicaid in 1965 and now, doctors have gradually lost power in the field of health care and patient management. With the increase of paperwork, web of bureaucracy, and decreased reimbursement schedules physicians are being treated as

"units of production" and given productivity targets. Burnout is becoming common. In particular, with the amount of standardization imposed by the ACA, insurers' requirements for payment approval and pre-authorization are a web of beaucracy that has everything to do with money and little to do with health care. Many physicians are reporting about one sixth of their day being consumed with new paperwork requirements, impinging the ability to spend time with patients. A new study led by Harvard Medical School researchers found that the average doctor spends 16.6 percent of his or her working hours on non-patient-related paperwork. In a report on the study, published in the International Journal of Health Services, the researcher said the trend is likely to continue, increasing doctors' paperwork burdens, cutting into time spent with patients, and decreasing career satisfaction among those in the medical profession. Among the researchers key findings: The average doctor spent 8.7 hours per week, or 16.6 percent of their working time, on administration. This excludes patient-related tasks such as writing chart notes, communicating with other doctors, and ordering lab tests. It includes tasks such as billing, obtaining insurance approvals, financial and personnel management, and negotiating contracts. In total, patient-care physicians spent 168.4 million hours on such administrative tasks in 2008. The authors estimate that the total cost of physician time spent on administration in 2014 will amount to $102 billion. Physicians who used electronic health records spent more time (17.2 percent for those using entirely electronic records, 18 percent for those using a mix of paper and electronic) on administration than those who used only paper records (15.5 percent). "Although proponents of electronic medical records have long promised a reduction in doctors' paperwork," they write, "we found the reverse is true." 7 As the population ages, physicians are experiencing an influx of patients who have multiple chronic conditions that can only be managed, not cured. The reward of a cure is thus

denied them, and replaced by a treadmill of decline and frustration. Only geriatricians and palliative care specialists are trained to deal with this and to seek, and accept, maintaining the status quo or engineering a slow decline as a triumph of medicine. Only a small minority of physicians enter the specialties of palliative or geriatric care. Some 62% of physicians are considering early retirement or changing careers. (The Physicians Foundation, 2010) The use of physician extenders such as nurse practitioners and physicians' assistants is a partial solution, but not a complete one. (De Milt, 2009) They can handle perhaps 90% of what a family physician sees, but they too are "units of production", they, too, can be told to treat patients in eleven minutes, and they, too, can burn out. Early predictors tell us there will be a shortage of over 89,000 to 200,000 physicians and with average wait times for most medical specialties likely to increase dramatically beyond the current range of two to six weeks by year 2022. Various factors, including the downfall of managed care, the aging of the population, change with practice patterns, increasing regulation and paperwork are some of the reasons cited for the impending shortage. In 2013/2014 we see the beginnings of the forecasted trend with the average wait time to see a physician being 18.5 days. 8

Locally, Wisconsin faces a 20% physician deficit by 2030. If 100 additional physicians are not added each year, the state's economy will be as much as $5 billion smaller than it could be. The report outlines various strategies for reaching the goal and gives time and cost estimates for each strategy. (Wisconsin, 2011) Market Failure Economists use the term "market failure" to indicate a situation in which a market fails to produce enough goods and services to meet demand at a price that consumers are willing to pay. (Morrgan Stanley alphawise, 2014) With the structure of the ACA, we have already begun to see the medical community struggling to keep up with the demands of the influx of new consumers of medical services. While, as Americans, we are eager for every citizen to have access to medical coverage and care, the new climate of health care is creating a strain on medical facilities and personnel. 9

Looking to Other Countries As Americans we see the current health events as 'new', when, in fact, much of our current policies were adapted from countries like Britain. Most news agencies and government officials claim we adapted a Swiss form of health care, but further reading and unraveling the rhetoric reveals a closer replication of England's single payer system. When looking to Britain, we see hospital emergency room visits are rising, from 18 million in 2005 to 22 million in 2012. That's an increase of 22 percent in 7 years, far above the population increase of 4 percent. Higher emergency room use is relevant to America, because supporters of the Affordable Care Act often justify its passage because it will reduce the number of emergency room/urgent care visits, thereby lowering the national costs of health care. (RealClear, 2013) Not so in Britain. Jeremy Hunt, the U.K.'s Health Secretary, warned that the increase in emergency room visits posed the "biggest operational challenge" to the National Health Service (NHS). The reality is that with a single-payer, Britain's long waits for non-emergency visits are common, and even scheduled surgeries, arranged months in advance. Medical procedures can be postponed without warning for lack of medical equipment. It has become increasingly difficult scheduling a regular visit with a General Practitioner (GP) in Britain. Many GPs are booked weeks in advance. Patients can manipulate and request to see their doctor more timely if they call early in the day and say their problem is an emergency. This manipulation of the system entitles them to be seen in one of a limited number of emergency appointments on the same day. GPs are also gatekeepers to specialist services: no GP referral, no specialist appointment. Last week London's Daily Telegraph published an article about Becky Ryder who was refused a cervical cancer screening test at age 24 despite showing symptoms of the disease. The NHS only allows tests for those 25 and older. Ryder died of cervical cancer when she was 26. (RealClear, 2013) In Britain, some escape the NHS waiting periods through private insurance, private hospitals, and private practices, with no waits and a choice of top-quality specialists. Britian's largest private insurance company is BUPA. 10

11 BUPA offers "self-pay" physician services to those whom it does not insure, but who want to escape the predictable long waits of the NHS. Prices for a "self-pay" GP appointment range from $105 for a 15-minute consultation to $350 for an hour. (Preview, nd). Concierge medicine began two decades ago in the UK with a steady increase of physicians leaving the NHS or legally manipulating the system and operating with both models. Medical Memberships and Concierge Medicine In 2010 we saw the rise in the United States of 'medical memberships' and concierge medical practices, allowing consumers to maximize their health dollars. California, Oregon, Vermont, Florida, Arizona, Pennsylvania, and Virginia have seen a rapid increase of concierge medical providers, while Hawaii, Idaho, Iowa, Mississippi, Maine, New Hampshire, South Dakota, North Dakota, Louisiana, and Alaska have far more consumer requests than the number of providers. (Tetreault, 2014) The lure of direct pay has captivated the medical profession. Mary Pat Whaley, a North Carolina business consultant who has been helping physicians set up these practices, says physicians are interested because they have been getting hammered in their traditional practices, and direct pay helps them get back control of medical care. A 2012 survey of more than 13,500 physicians by Merritt Hawkins for the Physicians Foundation found that almost 7% of respondents planned to switch to the new model in the next three years. (Physician, 2012) That statistic included 6.4% of specialists, even though direct pay is basically a primary care phenomenon. With a clause in the healthcare law that "allows direct primary-care to count as ACAcompliant insurance, as long as it is bundled with a wraparound' catastrophic medical policy to cover emergencies" (Wieczner, 2013, para. 6). Therefore, the emergence of concierge medicine has encouraged some health insurance plans, such as Cigna, to create employee health plans that incorporate concierge services (Wieczner, 2013). Under the medical membership and concierge models consumers have choices, less wait times, more control, and better results. The cost of concierge physicians ranges widely depending on if the patient is paying a monthly recurring fee or annual retainer fee, what services are included (i.e. if it is a VIP facility), the demand in that area for concierge physicians, and

whether or not the doctor also takes insurance since not taking insurance reduces overhead costs. For example, a VIP facility may charge as much as $4,000 per year and the physician will be limited to 300 patients in order to have more time per patient. Other physicians may only charge $660 per year and be limited to 800 patients. This is still substantially less than the 2,000-2,500 patients that a typical primary care physician sees (Carnahan, 2007). This limitation in patients allows a concierge doctor to see an average of six to eight patients per day (CMT, 2014a; Press, 2011) compared to the typical primary care physician who sees 20-24 patients per day (Press, 2011). Conclusion Just like Britain, our Affordable Care Act will not entirely alleviate the pressure on emergency room. Under the Affordable Care Act, visits for preventive care will be free of charge, likely leading to the same kinds of rationing we see in Britain. Britain's experience suggests that the Affordable Care Act may result in the development of parallel private initiatives. America already has concierge medical services for those who can afford it and walk-in clinics in drugstores such as CVS and Walgreen's. Americans are likely to seek a way out of lengthy waits for doctors, specialists, and services. The free market will come to the rescue, just as it has in the UK. While the fate of the ACA is subject to politics and there is at least one more potentially devastating Supreme Court case to be decided, the best guess right now is that it is here to stay substantially in its current form. The big questions are how we will take control of our health care and providers. Who will dictate care and treatment schedules? It is likely that the biggest pressure for actual innovation that rationalizes and improves the American health care "system" will come in the form of pressure from consumers and the medical personnel drowning in paperwork and dissatisfaction with their work environment. There are a number of solutions suggested and being tested, like those private medical providers. Momentum Movement Clinic is Wisconsin's first concierge rehabilitation and movement facility. 12

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