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Is the US fully prepared for major changes under Obamacare in 2014?

29 December 2013 Margaret Labban

The US healthcare system is going through one of the biggest overhauls in its history. Provisions mandating healthcare insurance to all Americans under President Obama's flagship initiative comes into effect. And while the Affordable Care Act (ACA) promises expanded and affordable healthcare coverage to approximately 15% of the population that has long gone uninsured, concerns over how this may impact healthcare access have started to rise.

  • Can the current number of physicians and healthcare professionals accommodate 16 million new patients across the country in such a short period of time?
  • Can patients keep their preferred doctors and hospitals under cost-containment efforts by plan providers?
  • How will chronically ill patients cope with high deductibles and co-payments as cost-sharing initiatives take priority?

    Background on ACA challenges Healthcare reform under the current US administration has been a contested issue since the beginning, and Republicans have attempted to repeal the law multiple times since its enactment in 2010. The administration has dedicated a lot of its time addressing Obamacare opponents' concerns, and countering the resistance with large campaigns to boost support and enrollment in the new plans under ACA. More recently, the launch of the online marketplaces has been met with significant challenges - software glitches with the federal website and the unexpected cancellation of millions of existing plans - that have considerably preoccupied the government's attention and focus at a critical time in the law's gradual roll-out. There are still many questions regarding whether the administration is, in fact, fully prepared to handle the large influx of newly covered patients in the what is already the world's largest healthcare market.

    Keeping premiums low by keeping costs down Under ACA, plans will have to meet certain requirements that may ultimately require plan providers to implement cost-containment initiatives to ensure sustainability. As insurance companies are prohibited from denying anyone coverage, particularly those with pre-existing medical conditions, payors are looking for ways to cut costs. According to a report by the National Institute for Health Care Management, over 50% of US healthcare expenditure - nearly USD623 billion in 2009 - came from 5% of the population with serious chronic conditions (NIHCM, July 2012). The insurance market could become significantly unstable and unsustainable if a delicate balance between costs and premium rates is not established. Since there is very little that can be done regarding raising premium rates if plans are to remain "affordable", payors will have to look for alternative ways to cut costs.

    Limited physician access: Contract terminations and demand for specialists According to a recent Congressional Budget Office (CBO) report, an estimated 9 million individuals are anticipated to sign up for insurance on the marketplaces in 2014. Another 7 million low-income individuals may gain access to Medicaid coverage mostly in states expanding their Medicaid programme under ACA. In addition, our recent Healthcare Demand Micro-simulation Model study published in Health Affairs in November has highlighted the overall significant increase in demand for specialists in the US between 2013 and 2025, mostly driven by an aging population and expanded coverage under ACA.

    Many Medicaid physicians, particularly specialists, are not too keen on accepting new patients under the programme due to lower reimbursement rates and the administrative burden associated with it, resulting in long wait times for patients according to the New York Times. As such, adding millions of new beneficiaries in a short period of time may temporarily overwhelm the system. Medicaid payments for primary care physicians have been temporarily increased for 2013 and 2014, to encourage doctors to take on more patients; however, specialists remain hard to come by and the temporary pay raise may not be enough.

    Medicare will also likely continue to face challenges, as budget cuts to the Medicare Advantage Programme under ACA, amounting to USD156 billion over ten years, may significantly narrow physician networks impacting healthcare access to about 14 million beneficiaries. According to Kaiser Health News, UnitedHealthcare will be terminating thousands of primary and specialist physician contracts across the country. States impacted include Ohio, New York, Florida, and Connecticut--where medical associations have already filed a lawsuit to prevent the cancellations.

    Restricted drug coverage under new plans As new plans have made their debut on the online insurance marketplaces, some patients and advocate groups have started to raise concerns regarding restricted drug coverage. According to the Washington Post, some plans on the marketplace don't cover key HIV medications or require a 50% co-payment that could reach USD1,000 a month. The executive vice-president of the National Health Council, Marc Boutin, has stated that patients with cancer, multiple sclerosis, rheumatoid arthritis, and other autoimmune diseases have also started to raise concerns regarding treatment access. Marked reductions in drug benefits for the new plans were noted by health advocates and patients, including shorter formularies, limited quantities, authorisation requirements for certain treatments, as well as the establishment of "step therapy" protocols.

    While it may not be surprising that payors are implementing cost-sharing initiatives to keep costs low - substituting expensive drugs for more affordable alternatives on their formularies and using co-payments - some chronically ill patients may be unfavourably affected by restricted coverage. Out-of-pocket expenditure on drugs is capped under ACA, however drugs excluded from formulary lists may not count towards the cap.

    Establishing a balance between cost-containment and healthcare access There is no doubt that 2014 will be a critical year for US healthcare reform. It is imperative that the administration preempt any major changes that will be taking place with the roll-out of Obamacare in order to fully prepare stakeholders including: healthcare professionals, hospitals, patients, insurers, and drug manufacturers. Although some turbulence at the onset of such a large undertaking might not be so surprising, with certain adjustments and a little patience a balance between cost-containment and healthcare access will likely be established and sustained.

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