The major policies of the 2010 Affordable Care Act begin in January, from state Medicaid expansion to offering federally subsidized health care coverage through insurance exchanges. The law's overall goal is to expand health care coverage to nearly all Americans while reducing costs. However, some health industry experts say that whether the ACA meets that goal will depend on whether more states like Alabama agree to expand Medicaid, whether more currently uninsured residents buy into the insurance exchanges and whether those exchanges offer lower-cost coverage than was available before the reforms.
Like a surgeon watching a patient’s heart rate and blood pressure during a risky new procedure, the nation will be watching those indicators to see whether the Affordable Care Act is working as intended.
Starting in January, the federal government will fully fund Medicaid expansions in every state for the next three years to provide more health coverage to the poorest Americans. Medicaid is a federal health program that traditionally provides coverage to low-income pregnant women, children, the disabled and nursing-home residents.
However, while the federal money will be available to every state, 25 states, including Alabama, have so far refused to expand their Medicaid programs. In Alabama's case, the state has instead opted to first reform its program and possibly return to the option of expansion at a later date.
The Congressional Budget Office estimates that approximately 9 million Americans will gain health care coverage through the Medicaid expansion next year. However, according to a study by the Kaiser Family Foundation, 4.8 million Americans will remain uninsured next year in the states that have not agreed to Medicaid expansion since they will be too poor to afford health care in the insurance exchanges. Kaiser is a nonprofit health policy analysis organization.
Karen Pollitz, policy analyst with Kaiser, said that for her to say that the ACA is working as intended, more states must expand their Medicaid programs.
"The primary goal of the ACA has to do with reducing the number of uninsured and that's a factor of Medicaid expansion," Pollitz said.
When the ACA first passed, it required that all states expand their Medicaid programs. However, a U.S. Supreme Court decision in June struck down that requirement, making the expansion optional for states.
Sara Rosenbaum, professor at George Washington University's School of Public Health and Health Services, agreed that Medicaid must continue to expand before the ACA is truly successful.
"The biggest problem right now is we have people so poor in 25 states who are unable to get anything," Rosenbaum said regarding health coverage. "Getting all the states to opt in will be extremely important."
Gov. Robert Bentley in a December interview with The Star again rejected the idea of expanding Medicaid, suggesting that a better way to help more patients would be repealing the Affordable Care Act.
Jim Carnes, spokesman for Alabama Arise, a non-partisan group that advocates for poor residents, said the ACA will not help Alabamians as intended until the state expands Medcaid. In early December, Arise and other organizations, such as the Alabama Primary Health Care Association and the Alabama Hospital Association, formed a coalition called Alabama's Better Economy Starts Today to support Medicaid expansion in the state. The coalition launched a website, www.alabamasbest.org. which touts the economic benefits of expanding Medicaid in the state.
"It would bring millions of dollars into the Alabama economy," Carnes said of Medicaid expansion. "Expanding coverage in Alabama would create the need for more health services and that would create jobs."
According to a study by the Center for Business and Economic Research at the University of Alabama released in September, Medicaid expansion would have a significant impact on the state's economy. If Alabama were to expand Medicaid coverage in January, by 2020 the expansion would increase overall business activity by about $22 billion and the state's gross domestic product by about $14 billion. Also, workers’ earnings would increase by about $8 billion and the state would gain nearly 27,000 jobs in the health care, retail, scientific, food, finance and insurance services, the report states.
"Expanding that coverage would not just be good for the poor, it would be good for everyone," Carnes said.
The insurance exchanges are designed to offer health insurance to Americans who have incomes too high to qualify for Medicaid but still cannot afford coverage on their own. Open enrollment for Alabama's federally managed insurance exchange began Oct. 1, with coverage set to start Jan.1. The exchange offers various health plans from private insurers, the costs of which will be supplemented by tax credits for people with incomes 100 percent to 400 percent of the federal poverty level.
According to a report from Kaiser, approximately 198,000 Alabamians are eligible to participate in the insurance exchange.
Since open enrollment began, the exchanges have faced criticism, mainly due to technical problems with the federal government's enrollment website, Healthcare.gov. For months, heavy traffic and glitches bogged down the site, keeping many people from enrolling and shifting public opinion against the exchanges. Updates to the site in early December fixed many of the issues, but public opinion is still tepid about the exchanges and the ACA. A Kaiser tracking poll released Dec. 20 indicates about 34 percent of the public has a favorable view of the ACA, while 48 percent view the law unfavorably.
Pollitz said part of the success of the ACA will depend on how many people buy into it and the exchanges. Pollitz said while enrollment in the exchanges has been slow, she expects it to pick up and eventually meet federal estimates. The CBO has estimated about 7 million Americans will enroll in the exchanges through 2014 and 22 million will be enrolled by 2016.
According to a report the U.S. Department of Health and Human Services released Dec. 11, about 365,000 Americans had selected plans from the insurance exchanges by the end of November. In November alone, more than a quarter of a million people enrolled — more than four times the number of people who enrolled in October.
"Anything new takes time to get used to and started," Pollitz said.
Rosenbaum agreed that more residents must buy into the exchanges for the ACA to be effective and expects that will happen in the coming months.
"I think things will calm down over time," Rosenbaum said.
Rosenbaum noted that the 2005 launch of Medicare Part D, which helps low-income elderly residents pay for prescription drugs, had problems and criticisms similar to those the insurance exchanges now face. Today, however, Medicare Part D is a widely used and accepted program, she said.
"If the opponents of the ACA law give it the same period to start working, people will find the results will be similar to Medicare Part D ... that things will be working in a year or two," Rosenbaum said.
Pollitz said that to be successful, the ACA must not only offer insurance through the exchanges, it must offer coverage that is more affordable than what was previously available.
"Are the plans from the participating insurers, are they offering the required benefits and are they offering affordable subsidies for low-income people," Pollitz asked. "There will be cost-sharing even under the most generous plans ... so once people get insured, do they feel they can afford to go to the doctor when they get sick? There could still be an insurmountable cost barrier for some."
Where residents live in their states, their income, family size, age and whether they use tobacco will all affect the exchange plan prices and the amount of tax credits an enrollee can receive to supplement costs. However, according to a report from HHS, despite the different variables involved, the average costs for the plans in Alabama will be comparable to or below national averages. For example, for Alabama residents younger than 65, the cheapest plan in the exchange will cost $247 per month, before tax credits. The national average, however, will be $249 per month.
Alabama's exchange will offer plans comparable in price to those in other states, even though it has just three private insurers participating. Part of the idea behind the exchanges was to create a market where private insurers would have to compete more for customers, thereby lowering the cost of insurance. Only Blue Cross Blue Shield, Humana and United Healthcare are offering plans in the Alabama exchange and only Blue Cross is doing so for all 67 counties in the state.
Rosenbaum said competition does not play a huge role in lowering insurance costs. She noted that employers don't offer 50 insurance plans to their workers, just one or two, and yet costs are still kept relatively affordable.
"I'm not a believer in insurance premium competition," Rosenbaum said. "I'm more for regulation of health care costs."
For Anniston's two hospitals, Regional Medical Center and Stringfellow Memorial Hospital, the expansion of Medicaid and enrollment of patients in the insurance exchanges must occur for the ACA to be successful and for each facility to thrive.
David McCormack, CEO of RMC, said his hospital needs the expansions in Medicaid and insurance coverage to make up for revenue losses elsewhere. To help pay for the Medicaid expansion, the federal government will reduce the reimbursements it gives to hospitals for charity care to uninsured patients, called Disproportionate Share Hospital payments.
Last year, RMC provided approximately $55 million in DSH care. McCormack said patient visits are unlikely to drop, meaning that if more people aren't insured in the coming years, RMC's bottom line could suffer.
"The feds are taking our money away," McCormack said. "Medicaid only pays 60 percent of the cost of care, but 60 percent is way better than 0 percent."
McCormack said RMC has been working to reduce costs to make up for the expected loss in revenue, including lowering readmission rates. He said RMC is working with area nursing homes to better educate and treat patients to avoid more costly hospital visits.
Bryan McCauley, CEO of Stringfellow, agreed with McCormack that increased insurance coverage must occur for the ACA to be beneficial to his hospital. According to Stringfellow's latest figures, the hospital provided $27.7 million in uncompensated care last year.
"A lot of these people are without financial means and even when we set up a payment method, they still can't pay," McCauley said. "Without seeing that money changing hands from Disproportionate Share to Medicaid, we do stand to lose reimbursement money."
McCauley added that these uninsured residents are mainly using Stringfellow's emergency room for care.
"What many often fail to see is that many uninsured are getting care by accessing emergency rooms, which drives up the cost of health care," McCauley said.
Increased coverage through Medicaid and the insurance exchanges would help reduce those emergency room costs by allowing those previously uninsured to make regular doctor visits and use more preventative care, McCauley said.
Staff writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star.