Chicago, IL, February 20, 2017 – Paracon Group, Inc., a business transformation firm that uses knowledge automation and advanced analytics powered by Expertool, comments on the early proposals for changes to the Affordable Care Act.
For millions of insured today under the Affordable Care Act (ACA or Obamacare), the repeal or replacement looks to put them in harm’s way. The lawmakers have begun formulating legislation and we at Paracon Group are going to give you some indicators of what this early impact might mean.
Last week Health and Human Services Secretary Tom Price, House Ways and Means Chairman Kevin Brady (R-TX), and House Energy and Commerce Committee Chairman Greg Walden (R-OR) joined speaker Ryan in reaffirming their commitment to repealing and replacing Obamacare. House Ways and Means Chairman Kevin Brady (R-TX) said, “We’re going to continue to work through this through the district work period next week. And as we come back in the weeks ahead we’re going to be moving forward with legislation.”
This is what we know so far about what the replacement proposal would include:
- Health Savings Accounts: While positive as a before tax measure for individuals, this puts more out of pocket responsibility on the patient.
- High-risk pools for sick people, The effect of this is that it 'segregates' sick and well populations. Obamacare “tried” to have good 'risk pooling' to spread the cost across a larger population. It wasn’t always successful, as demonstrated by the several insurers that pulled out of the exchange markets. This new proposal may allow insurers to avoid sick applicants or charge them more, hence making it extremely costly for those in this new pool.
- States receiving greater control over health care. Unfortunately the states are ill prepared to accept this new burden. Nearly half of the states do not have money now.
- Tax credits for individuals to buy health insurance dependent on age and family size rather than Obamacare’s income basis. First, a 'tax credit' means the patient must pay 'up front' each month in hopes of getting a credit at tax time. Many in the lower income brackets will struggle from a cash flow perspective to pay for the coverage that they need. Second, this clearly means less subsidy than previously. That will cause many go to without coverage - again.
- Lowers Medicaid back to each states’ traditional match rate. The proposal says, “This ensures continuity of care and coverage for low-income adults, but does not reward states that expanded Medicaid under Obamacare and allows individuals to cycle off the program into other coverage sources naturally.” As said above, half of the states do not have money and have nothing to contribute therefore, the 'matching funds' will likewise be inadequate. This will especially hurt hospital emergency rooms but many physicians as well).
- States that did not elect to expand Medicaid would receive additional resources to make states more equal. This exacerbates the problem in overall less funding for Medicaid.
- Limit per capita spending on Medicaid; however, states can elect to choose a block grant. The block grant does not include Obamacare’s expanded Medicaid funding and presumes that individuals find coverage outside of the Medicaid program. When a 'block grant' runs out, that's it, the program is over for that year, irrespective of the month. So, if the block grant is used up in say, September, there is no more healthcare for those people in that program until January. Unlike an 'entitlement' where once a person meets the test, they are entitled to the service and it's the government’s responsibility to fully fund the cost).
There is no new thinking here from past proposals. It essentially 'caps' the federal exposure and puts the shortfall back on the States and the individuals. If you back up ten years, that is how we got to 20 million uninsured Americans previously. These proposals, if enacted as is, individuals, doctors and hospitals will all be dramatically negatively affected. This is 'back to the future', the one where tens of millions had no coverage at all leading doctors to 'drop out' of programs and hospitals to go bankrupt.
In our opinion, the fix to healthcare must come from other efficiency. Nearly 70% of the claims processed in the United States comes from Self-Funded health plans. Since the companies are acting at the “insurance” company – taking on the risk, what most Americans think of as insurers are really claims processing companies. This added layer of burden could be dramatically improved. The large intermediaries, mostly insurance companies acting in the role of third party administrators, have the means to affect the cost of coverage and improve the accuracy of the billing processing. The American Medical Association estimates that there is a 20% error rate in the bills. Shouldn’t these processors have the means and technology to improve that number?
We will monitor the proposals as they change and post information as it becomes available.
Paracon Group, Inc., founded in 2010 and headquartered in New York with additional offices in Illinois, Florida and Connecticut, provides next generation business intelligence, technology and expertise to numerous industries and consultancies across the United States. Knowledge Engineering services are powered by Expertool, an in memory analytics and universal modeling platform coupled with innovative knowledge automation mapping methodology and technology. Forensic Audit services focus on traditional forensic accounting services and specialized health plan audits using the full power of ERISA and the ACA. Project management staffing and consulting expertise services provide co-sourcing or outsourcing for temporary or full-time staffing needs. See more information at www.paracongroup.com