Clinical Orthopaedics and Related Research®
Clin Orthop Relat Res (2014) 472:1086–1088 / DOI 10.1007/s11999-013-3384-x
A Publication of The Association of Bone and Joint Surgeons®
Published online: 21 November 2013
Ó The Association of Bone and Joint Surgeons1 2013
Orthopaedic Healthcare Worldwide Where the Rubber Meets the Road: Understanding Key Changes in the Patient Protection and Affordable Care Act Since 2010 Manish K. Sethi MD, Kevin J. Bozic MD, MBA
T
he Patient Protection and Affordable Care Act (PPACA) created dramatic changes in the healthcare payment and delivery
A Note from the Editor-in-Chief: We are pleased to present to readers of Clinical Orthopaedics and Related Research1 the latest Orthopaedic Healthcare Worldwide column. This section explores the political, social, and economic issues associated with delivering musculoskeletal care in the many environments in which our specialty is practiced, both in the United States and around the world. We welcome reader feedback on all of our columns and articles; please send your comments to [email protected]. Each author certifies that he or she, or any member of his or her immediate family, has no commercial associations (eg, consultancies, stock ownership, equity interest, patent/licensing arrangements, etc) that might pose a conflict of interest in connection with the submitted article. All ICMJE Conflict of Interest Forms for authors and Clinical Orthopaedics and Related Research1 editors and board members are on file with the publication and can be viewed on request. The opinions expressed are those of the writers, and do not reflect the opinion or policy of CORR1 or the Association of Bone and Joint Surgeons1.
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systems in the United States. Widely hailed as the largest restructuring of healthcare delivery since the Johnson administration, the PPACA has been reshaping the American healthcare landscape since 2010. While much of the discussion surrounds the original contents of the bill, it is important to consider the changes in the legislation since its enactment 3 years ago. Although these changes can easily be interpreted through a partisan lens, it is critical to consider the evolution of the PPACA as objectively as possible, in order to better understand the potential impact of shifts in policy. The following discussion will attempt to (1) describe the three major changes in
M. K. Sethi MD Vanderbilt Orthopaedic Institute Center for Health Policy, Vanderbilt University, Medical Center East, South Tower, Suite 4200, Nashville, TN 37232, USA e-mail: [email protected] K. J. Bozic MD, MBA (&) Department of Orthopaedic Surgery, University of California San Francisco, 500 Parnassus Ave. MU320 W, San Francisco, CA 94143, USA e-mail: [email protected]
the PPACA since its passage in 2010; and (2) reflect on the implications for the overall American healthcare system and orthopaedic surgeons.
The CLASS Act As part of the PPACA, the Community Living Assistance Services and Supports (CLASS) Act provided a basic lifetime benefit of at least USD 50 a day in the event of the need for longterm care [3]. The Congressional Budget Office’s early calculations of the CLASS Act projected a reduction of the federal deficit by approximately USD 70 billion through the next 10 years [3] due to the influx of additional premiums and reduced Medicaid expenditures. However, on September 21, 2011, the Senate Appropriations Committee removed the entire $120 million from the 2012 U.S. Department of Health and Human Services budget. This money was earmarked for the design and marketing of CLASS Act policies. The White House did not fight the budgetary maneuver by the Senate Appropriations Committee, effectively ending the program.
Volume 472, Number 4, April 2014
Orthopaedic Healthcare Worldwide
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Orthopaedic Healthcare Worldwide
Medicaid Expansion On June 28, 2012, The Supreme Court of the United States, while upholding the individual mandate as a tax within the legal authority of the federal government, ruled that forced expansion of Medicaid was unconstitutional. This paved the way for states to opt out of the Medicaid eligibility expansion while still receiving federal funding for their Medicaid programs. The PPACA’s expansion of Medicaid required states to cover nearly all individuals at or below 133% of the federal poverty line beginning in 2014 [1]. The law also included a ‘‘maintenanceof-effort’’ provision, which barred states from reducing Medicaid coverage until they established the mandated health insurance exchanges. In accordance with this plan, the federal government would cover 100% of the costs of the expansion from 2014 through 2016. Funding would gradually decrease to 90% by 2020, with further reductions planned in the future [1]. The intent of the PPACA was to extend health insurance to approximately 30 million more Americans [1], with the Medicaid expansion contributing 16 million Americans to that total. If that were the case, approximately 90% of the total U.S. population would have health insurance. However, the Supreme Court’s decision, and the states’ reactions to it, will likely reduce the number
of uninsured Americans receiving healthcare coverage under the PPACA [1]. In fact, a recent Kaiser study [6] argued that 5.2 million Americans (33% of the intended coverage population of the Medicaid Expansion) will not receive Medicaid benefits that the expansion could have provided. Additionally, many members of the healthcare industry supported the PPACA and its dramatic reductions in Medicare Part A and Part B reimbursement with the understanding that the Medicaid expansion would offer compensation for those patients who were previously uninsured. The Medicaid expansion would offset the cuts in Medicare with additional revenue from previously uninsured patients who would be covered through Medicaid expansion.
The Employer Mandate Another major shift in policy regarding the PPACA surrounds the delay of the employer mandate that was announced this summer. Initially set to take effect on January 1, 2014, the employer mandate requires large employers (companies with more than 50 employees) to either provide health insurance to their employees or face up to USD 3000 in fines per uncovered employee. A recent RAND study [4] demonstrated that 300,000 employees
would not obtain health insurance in the next year due to more than 1000 large employers delaying coverage. Furthermore, the RAND report argued that the delay would cost the federal government USD 11 billion in revenue. If repealed, the study argued that the federal government would lose approximately USD 149 billion in the next decade due to their inability to offset the costs of the PPACA.
Implications of Change Regardless of one’s political affiliation, it is clear that these modifications in terms of their influence on (1) the number of insured patients across the United States; (2) revenues collected by the federal government; and (3) overall cost savings will lead to substantial changes in the implementation of the PPACA, its overall impact on access to healthcare insurance, and overall healthcare spending. The PPACA clearly will change the American healthcare landscape next year. Given the changes in the current legislation since 2010, healthcare providers must not only prepare for the dramatic changes in policy that will occur as the provisions of the bill are implemented, but must prepare for sudden shifts in those policies as well. With healthcare spending comprising almost USD 3.1 trillion of the U.S.
123
Clinical Orthopaedics and Related Research1
1088 Sethi and Bozic
Orthopaedic Healthcare Worldwide
economy [5], any attempt to change the healthcare delivery infrastructure this dramatically will cause some turbulence, and be met with some resistance. As 2014 approaches and many of the PPACA programs are introduced, orthopaedic surgeons will observe the clear differences between creation of policy and the implementation of passed legislation. This is where the rubber meets the road. Consider the CLASS Act. At first, long-term care insurance seemed to be highly desirable from a legislative standpoint given the potential cost-savings to Medicaid. However, once it was implemented, policymakers realized that not enough Americans would actually buy coverage, leading to potential insolvency of the program down the road. Another clear example of this dichotomy between policy creation and its implementation can be found in the Medicaid expansion. One of the clearest obstacles for hospitals and providers in states where governments have chosen against Medicaid expansion will be cuts in Medicare without the benefits of
123
increased Medicaid revenues [2]. While the goal of the PPACA was to provide universal expansion of Medicaid across all states, 50% of states opted out of the Medicaid expansion. Hospitals in these states will now be faced with declining reimbursements for care provided to a similar volume of uninsured patients, leaving them in an economic lurch. Finally, the Employer Mandate has offered a similar insight into the challenges of the rubber meeting the road. Without a functioning health insurance exchange, employees working for large companies that are not providing insurance options would have nowhere to turn for coverage, despite the enforced penalties. As legislators and regulators continue to struggle with the many challenges associated with implementation of PPACA, orthopaedic surgeons should anticipate major changes in the way healthcare is delivered and financed in the United States.
References 1. Apfeld J, Han A, Stern T, Mir H, Obremskey WT, Jahangir AA, Sethi
2.
3.
4.
5.
6.
MK. Implications of the Supreme Court ruling on Medicaid. AAOS Now. September 2012. Doherty RB. The road to health reform: what can physicians expect over the next 4 years? Ann Intern Med. 2013;158:487–488. Issar NM, Mir HR, Obremskey WT, Jahangir AA, Sethi MK. The demise of the CLASS Act: Implications for the future of long-term care. AAOS Now. March 2012. Price CC, Saltzman E. Delaying the employer mandate: small change in the short term, big cost in the long run. Available at: http://www.rand.org/pubs/research_reports/RR411. Accessed: October 25, 2013. Sethi MK, Frist WH, eds. An Introduction to Health Policy: A Primer for Physicians and Medical Students. New York, New York: Springer; 2013:1–259. The Henry J. Kaiser Family Foundation. The coverage gap: Uninsured poor adults in states that do not expand Medicaid. Available at: http://kff.org/health-reform/issue-brief/ the-coverage-gap-uninsured-pooradults-in-states-that-do-not-expandmedicaid/. Accessed November 4, 2013.
Clin Orthop Relat Res (2014) 472:1086–1088 / DOI 10.1007/s11999-013-3384-x
A Publication of The Association of Bone and Joint Surgeons®
Published online: 21 November 2013
Ó The Association of Bone and Joint Surgeons1 2013
Orthopaedic Healthcare Worldwide Where the Rubber Meets the Road: Understanding Key Changes in the Patient Protection and Affordable Care Act Since 2010 Manish K. Sethi MD, Kevin J. Bozic MD, MBA
T
he Patient Protection and Affordable Care Act (PPACA) created dramatic changes in the healthcare payment and delivery
A Note from the Editor-in-Chief: We are pleased to present to readers of Clinical Orthopaedics and Related Research1 the latest Orthopaedic Healthcare Worldwide column. This section explores the political, social, and economic issues associated with delivering musculoskeletal care in the many environments in which our specialty is practiced, both in the United States and around the world. We welcome reader feedback on all of our columns and articles; please send your comments to [email protected]. Each author certifies that he or she, or any member of his or her immediate family, has no commercial associations (eg, consultancies, stock ownership, equity interest, patent/licensing arrangements, etc) that might pose a conflict of interest in connection with the submitted article. All ICMJE Conflict of Interest Forms for authors and Clinical Orthopaedics and Related Research1 editors and board members are on file with the publication and can be viewed on request. The opinions expressed are those of the writers, and do not reflect the opinion or policy of CORR1 or the Association of Bone and Joint Surgeons1.
123
systems in the United States. Widely hailed as the largest restructuring of healthcare delivery since the Johnson administration, the PPACA has been reshaping the American healthcare landscape since 2010. While much of the discussion surrounds the original contents of the bill, it is important to consider the changes in the legislation since its enactment 3 years ago. Although these changes can easily be interpreted through a partisan lens, it is critical to consider the evolution of the PPACA as objectively as possible, in order to better understand the potential impact of shifts in policy. The following discussion will attempt to (1) describe the three major changes in
M. K. Sethi MD Vanderbilt Orthopaedic Institute Center for Health Policy, Vanderbilt University, Medical Center East, South Tower, Suite 4200, Nashville, TN 37232, USA e-mail: [email protected] K. J. Bozic MD, MBA (&) Department of Orthopaedic Surgery, University of California San Francisco, 500 Parnassus Ave. MU320 W, San Francisco, CA 94143, USA e-mail: [email protected]
the PPACA since its passage in 2010; and (2) reflect on the implications for the overall American healthcare system and orthopaedic surgeons.
The CLASS Act As part of the PPACA, the Community Living Assistance Services and Supports (CLASS) Act provided a basic lifetime benefit of at least USD 50 a day in the event of the need for longterm care [3]. The Congressional Budget Office’s early calculations of the CLASS Act projected a reduction of the federal deficit by approximately USD 70 billion through the next 10 years [3] due to the influx of additional premiums and reduced Medicaid expenditures. However, on September 21, 2011, the Senate Appropriations Committee removed the entire $120 million from the 2012 U.S. Department of Health and Human Services budget. This money was earmarked for the design and marketing of CLASS Act policies. The White House did not fight the budgetary maneuver by the Senate Appropriations Committee, effectively ending the program.
Volume 472, Number 4, April 2014
Orthopaedic Healthcare Worldwide
1087
Orthopaedic Healthcare Worldwide
Medicaid Expansion On June 28, 2012, The Supreme Court of the United States, while upholding the individual mandate as a tax within the legal authority of the federal government, ruled that forced expansion of Medicaid was unconstitutional. This paved the way for states to opt out of the Medicaid eligibility expansion while still receiving federal funding for their Medicaid programs. The PPACA’s expansion of Medicaid required states to cover nearly all individuals at or below 133% of the federal poverty line beginning in 2014 [1]. The law also included a ‘‘maintenanceof-effort’’ provision, which barred states from reducing Medicaid coverage until they established the mandated health insurance exchanges. In accordance with this plan, the federal government would cover 100% of the costs of the expansion from 2014 through 2016. Funding would gradually decrease to 90% by 2020, with further reductions planned in the future [1]. The intent of the PPACA was to extend health insurance to approximately 30 million more Americans [1], with the Medicaid expansion contributing 16 million Americans to that total. If that were the case, approximately 90% of the total U.S. population would have health insurance. However, the Supreme Court’s decision, and the states’ reactions to it, will likely reduce the number
of uninsured Americans receiving healthcare coverage under the PPACA [1]. In fact, a recent Kaiser study [6] argued that 5.2 million Americans (33% of the intended coverage population of the Medicaid Expansion) will not receive Medicaid benefits that the expansion could have provided. Additionally, many members of the healthcare industry supported the PPACA and its dramatic reductions in Medicare Part A and Part B reimbursement with the understanding that the Medicaid expansion would offer compensation for those patients who were previously uninsured. The Medicaid expansion would offset the cuts in Medicare with additional revenue from previously uninsured patients who would be covered through Medicaid expansion.
The Employer Mandate Another major shift in policy regarding the PPACA surrounds the delay of the employer mandate that was announced this summer. Initially set to take effect on January 1, 2014, the employer mandate requires large employers (companies with more than 50 employees) to either provide health insurance to their employees or face up to USD 3000 in fines per uncovered employee. A recent RAND study [4] demonstrated that 300,000 employees
would not obtain health insurance in the next year due to more than 1000 large employers delaying coverage. Furthermore, the RAND report argued that the delay would cost the federal government USD 11 billion in revenue. If repealed, the study argued that the federal government would lose approximately USD 149 billion in the next decade due to their inability to offset the costs of the PPACA.
Implications of Change Regardless of one’s political affiliation, it is clear that these modifications in terms of their influence on (1) the number of insured patients across the United States; (2) revenues collected by the federal government; and (3) overall cost savings will lead to substantial changes in the implementation of the PPACA, its overall impact on access to healthcare insurance, and overall healthcare spending. The PPACA clearly will change the American healthcare landscape next year. Given the changes in the current legislation since 2010, healthcare providers must not only prepare for the dramatic changes in policy that will occur as the provisions of the bill are implemented, but must prepare for sudden shifts in those policies as well. With healthcare spending comprising almost USD 3.1 trillion of the U.S.
123
Clinical Orthopaedics and Related Research1
1088 Sethi and Bozic
Orthopaedic Healthcare Worldwide
economy [5], any attempt to change the healthcare delivery infrastructure this dramatically will cause some turbulence, and be met with some resistance. As 2014 approaches and many of the PPACA programs are introduced, orthopaedic surgeons will observe the clear differences between creation of policy and the implementation of passed legislation. This is where the rubber meets the road. Consider the CLASS Act. At first, long-term care insurance seemed to be highly desirable from a legislative standpoint given the potential cost-savings to Medicaid. However, once it was implemented, policymakers realized that not enough Americans would actually buy coverage, leading to potential insolvency of the program down the road. Another clear example of this dichotomy between policy creation and its implementation can be found in the Medicaid expansion. One of the clearest obstacles for hospitals and providers in states where governments have chosen against Medicaid expansion will be cuts in Medicare without the benefits of
123
increased Medicaid revenues [2]. While the goal of the PPACA was to provide universal expansion of Medicaid across all states, 50% of states opted out of the Medicaid expansion. Hospitals in these states will now be faced with declining reimbursements for care provided to a similar volume of uninsured patients, leaving them in an economic lurch. Finally, the Employer Mandate has offered a similar insight into the challenges of the rubber meeting the road. Without a functioning health insurance exchange, employees working for large companies that are not providing insurance options would have nowhere to turn for coverage, despite the enforced penalties. As legislators and regulators continue to struggle with the many challenges associated with implementation of PPACA, orthopaedic surgeons should anticipate major changes in the way healthcare is delivered and financed in the United States.
References 1. Apfeld J, Han A, Stern T, Mir H, Obremskey WT, Jahangir AA, Sethi
2.
3.
4.
5.
6.
MK. Implications of the Supreme Court ruling on Medicaid. AAOS Now. September 2012. Doherty RB. The road to health reform: what can physicians expect over the next 4 years? Ann Intern Med. 2013;158:487–488. Issar NM, Mir HR, Obremskey WT, Jahangir AA, Sethi MK. The demise of the CLASS Act: Implications for the future of long-term care. AAOS Now. March 2012. Price CC, Saltzman E. Delaying the employer mandate: small change in the short term, big cost in the long run. Available at: http://www.rand.org/pubs/research_reports/RR411. Accessed: October 25, 2013. Sethi MK, Frist WH, eds. An Introduction to Health Policy: A Primer for Physicians and Medical Students. New York, New York: Springer; 2013:1–259. The Henry J. Kaiser Family Foundation. The coverage gap: Uninsured poor adults in states that do not expand Medicaid. Available at: http://kff.org/health-reform/issue-brief/ the-coverage-gap-uninsured-pooradults-in-states-that-do-not-expandmedicaid/. Accessed November 4, 2013.
