“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” wrote Chief Justice Roberts on June 25, 2015, the day the Supreme Court of the United States (SCOTUS) ruled 6-3 in favor of upholding the Affordable Care Act. [Here’s a link to the Court’s decision].
Moments later, the President asserted in the Rose Garden, “After multiple challenges before the Supreme Court, the Affordable Care Act is here to stay.” [Here’s a link to the President’s statement].
Keeping subsidies allows newly-insured to keep coverage in all 50 states
With this ruling of Scott vs. Burwell, millions of people in the 34 states where newly insured people purchased plans on federal exchanges can keep the tax credits that enabled them to afford to buy health insurance in the first place.
Had SCOTUS ruled the other way, these millions of newly-insureds would have lost their subsidies and be treated quite differently from health citizens living in states with state exchanges. According to the Kaiser Family Foundation, the loss of subsidies would hit at least 7.5 million people, most of whom would not be able to afford health insurance.
On the very day of the SCOTUS decision, the New York Times reported, the ACA had reduced the ranks of uninsured Americans, falling from nearly 45 million people in 2013 to 36 million in 2014 – a 20% decline, according to the National Center for Health Statistics. The ACA helped move nearly six in 10 people without insurance to exchanges for purchasing health plans, and to ultimately become insured.
A survey from The Commonwealth Fund found that once people gained health insurance coverage, more people were able to get necessary health care: among adults with new coverage who used their new health plan to go to the doctor or a hospital, or fill a prescription, over six in 10 said they would not have been able to get this care before.
Following the SCOTUS decision, The American Medical Association’s statement supported the Court’s ruling. Dr. Steven Stack, the President of the AMA, said the organization was, “relieved that today’s Supreme Court decision will allow millions of patients to continue accessing the health care they need and deserve,” reinforcing The Commonwealth Fund’s finding and impact on patient care in doctors’ offices. “The subsidies upheld today help patients afford health insurance so they can see a doctor when they need one and not have to wait until a small health problem becomes a crisis,” Dr. Stack noted.
Room for improving the ACA
“This is not an abstract thing anymore,” President Obama described. “This is reality. In many ways, this law is working better than it’s supposed to,” he qualified.
Thus, even with the ACA being settled in terms of the SCOTUS ruling, the President admits there is room for improvement in the law to ensure that health consumers optimally benefit from insurance coverage.
Top-of-mind, and a bottom-line for health consumers, is that deductibles can still be very expensive for people to cover. Furthermore, increases in health care costs, while moderating at 6.5% from 2014 to 2015, still outpace the rise of the Consumer Price Index and average U.S. wage growth. PwC’s Healthcare Research Institute’s 2015 report on health care spending illustrates this leveling-off in the chart.
For some people, the adjective “Affordable” preceding the words “Care Act” can feel ironic and just wrong. Furthermore, looking forward to health plan purchasing for 2015, health insurance premiums could increase between 15% and 25%
Consumers must continue to grow health shopping muscles
A new statistic developed by Alegeus Technologies, a consumer-directed health care company, found that U.S. consumers spend much more time shopping for TVs, cars, cell phones, and booking travel than they do purchasing healthcare.
I interviewed John Park, Chief Strategy Officer of Alegeus, on June 26, 2015, in light of the SCOTUS decision, to learn more about the 2015 Alegeus Healthcare Consumerism Index.
The company surveyed over 5,000 U.S. consumers, exploring many dimensions of health “shopping” behavior across two orientations: first, a cost-value orientation, exploring awareness of health care costs and ways to reduce costs and increase value for their health care spending; and second, actual purchasing behavior, assessing the extent to which consumers research and make active decisions in health care for getting medical tests (like MRIs), choosing between prescription drug brands versus generics, and selecting from health plan benefit types.
Alegeus has amassed consumer data from 2014 and 2015 enabling researchers to index “how consumeristic” Americans are in relation to health shopping. On an index of 100 points, the company found an increase in the index from 40 to 48 between 2014 and 2015 – a 20% increase, and a move in the right direction in terms of health care shopping.
But compared with shopping for other consumer goods, that 48 data point is relatively low versus 79 for electronics, 78 for cars, 76 for cell phones, and 73 for travel.
Based on Alegeus’ definition, they also determined that only 50% of consumers want to play an active role in health care shopping.
Health shopping pays off
Knowing health care cost numbers can pay off, literally. The National Bureau of Economic Research (NBER) found that lower income workers, older workers, and were more likely to choose lower-deductible plans that ultimately led to “excess spending” – that is, poor choices leading to unnecessary spending in the amount of $373 a year, on average. These health members’ deductibles were lower than what they would have spent on a higher premium.
On the other hand, health consumers who bought into the highest deductible plan at $1,000 made up their cost from paying lower premiums.
Transparency enables people to better estimate their anticipated costs for the next year. 80% of Americans say the opportunity to review cost estimates before undergoing treatment is just as important as bedside manner when selecting a healthcare provider, the 2015 TransUnion Healthcare Costs Survey found.
One-half of patients would also have sought new health care providers that offered more transparent costs had the SCOTUS ruled against the ACA subsidies, TransUnion’s survey learned. Six in 10 insured consumers told TransUnion they are surprised by their out-of-pocket healthcare costs. One in 2 is confused by their health care bills.
With SCOTUS settling the question of Americans’ ability to take advantage of health insurance subsidies across the 50 states regardless of where they live, people can get on with their new job of becoming health care consumers in the increasingly consumer-driven health care environment. With high-deductible health plans becoming the predominant form of health insurance design, health plans, providers and plan sponsors must surround plans and health care with price transparency and well-designed, streamlined decision support to enable consumers to take on that role – currently a heavy lift, as TransUnion describes, in the forms of undecipherable explanations-of-benefit, after-the-fact sticker-shock pricing, and overall health financial confusion.