October 22, 2013
This is #16 in a series of Obamacare Reports. (See also postings by Mitchell Law Office)
The Affordable Care Act (ACA) is designed to produce financial winners and losers. It is hoped by advocates of the Act that the result will be to “bend the cost curve” and reduce the rate of growth in health care costs. In turn, critics of the Act say that the result will be more government intervention in the Health Care System, with minimal impact on costs.
Both viewpoints fail to take a systematic look at how the ACA is likely to produce both winners and losers, and how complex it is going to be to decide which organizations fall into each category.
The results will help determine when groups choose to seek legal remedies associated with new activities, and thus will affect attorney practices.
At first look, the financial winners may include insurance companies with more customers, providers with more patients, some individuals who buy insurance, and individuals who sign up for expanded Medicaid.
But the situation is not this simple.
Insurance companies that end up with more customers are financial winners only if they make a profit on the new policies that they sell. Some companies may end up winners, while others may conclude that they are losers.
Providers with more patients will win only if their new income exceeds their new costs. Some providers may conclude that, in the longer term, the added patients and other program requirements have not improved their situations.
Individuals who are required to buy insurance may come out financial winners if payments made under their insurance policies exceed the out-of-pocket premium costs (after any subsidies). Individuals with major health problems will “win”, while those who stay well will “lose”. This is the typical gamble that is taken whenever insurance is purchased.
However, whether individuals are financial winners or losers (even over a period of time) is not the whole story; the backup protection and “risk management” that result from being insured can make such policies “a good investment” for all outcomes.
Retroactively, some individuals will be pleased that they purchased insurance, while others will regret the payments made without any specifically-observed benefits.
This win-or-lose situation is now facing some providers that have not been included in the new insurance company networks, and thus run the risk of losing both existing and future patients. Particularly, hospitals that have been somewhat “left out” of the new insurance policies sold through the Health Exchanges have to decide what to do about the situation.
Some will choose to mount marketing and branding efforts to maintain demand and to encourage insurance companies to expand their networks. Some will choose to re-size operations to match the patient demand that they experience, while others may seek to introduce new cost controls.
And some will decide to sue over being left out of new networks, although such actions will raise a range of unresolved legal issues.
Attorneys may find themselves being asked to help individuals and organizations assess how they are being affected by ACA implementation, and to discuss alternative remedies. It will be important to think through all of the positive and negative aspects of the situation when such requests arise.
More on these and related ACA topics may be found in a recent book by the authors that describes implementation of the ACA, and in a new Practice Guide by the authors that addresses funding and access issues in health care.
Previous installments of “Obamacare Reports” address the various ways in which implementation of the ACA is affecting legal practices: