Understanding the Affordable Care Act
The Affordable Care Act likely affects you and just about everyone you know
By Sheila Mickool
July 24, 2013
Kathryn is in her early 50s and lives on the shore of Lake Washington with her husband, Bill, in an elegant contemporary home filled with sunlight and exquisite art. Bill, a successful entrepreneur, retired in his mid-50s. Bill and Kathryn* are too young for Medicare, but felt well protected since they had purchased one of the best health insurance plans on the market. She thought the Affordable Care Act a good thing—for other people who need help. As politicians argued about the merits and costs of “Obama Care,” Kathryn was aware of the debate raging in Congress, but thought neither she nor Bill would ever need it. She was wrong.
Bill developed a rare and aggressive form of cancer. With surgery, multiple rounds of chemotherapy and radiation treatments, and numerous hospital visits, Bill’s medical expenses totaled more than $1 million in under 12 months. The costs surpassed his policy’s annual cap for expenditures, as well as the lifetime cap. His health insurance was canceled. It was impossible to obtain new insurance. Not eligible for Medicare or Medicaid, Bill and Kathryn were on the brink of bankruptcy.
In a very up-close and personal way, Kathryn gets it now: Without the Affordable Care Act, preexisting conditions mean no access to health insurance—for some of the people who need it most.
Health care reform affects everyone (or will at some point in live) from prominent executives with company-paid medical plans loaded with benefits to employees who lose their insurance along with their jobs. Ditto for seniors, children, adults with preexisting conditions, those with serious illnesses, working moms and young adults. Some of its most important provisions, such as expanded coverage for children and young adults, are already in place, while the most significant changes are coming, beginning with open enrollment in a state-run health insurance exchange this fall and implementation in January of the “individual mandate” requiring everyone who can afford it to have health care insurance.
While other states hesitate to embrace reforms, Washington state is a leader in national reform efforts and has been experimenting with new approaches to health care for years—even before the passage of the Affordable Care Act—making Washington better prepared than most states to meet the challenges of implementing health care reform.
More than 10 years ago, Virginia Mason Medical Center became the first in the nation to adapt the lean principles of the Toyota Production System for health care. Called the Virginia Mason Production System, it enables the medical center to identify and eliminate waste, improve quality of care and patient safety, and lower the cost of care. In 2008, the Virginia Mason Institute was established to teach other hospitals and health organizations how to implement the lean principles. Virginia Mason chair and CEO Gary S. Kaplan, M.D., has testified before Congress and was ranked number six on the 2013 list of the “50 Most Influential Physician Executives in Healthcare” by Modern Physician and Modern Healthcare magazines.
Other local health care executives, such as Group Health Cooperative president and CEO Scott Armstrong and Everett Clinic CEO Rick Cooper also feature prominently in the national discourse on health care reform with their efforts to address challenges in primary care. And under the leadership of its executive director/CEO, Lloyd David, The Polyclinic, Seattle’s largest multispecialty, physician-owned practice, became the state’s first Medicare-approved accountable care organization in July 2012. Accountable care ties provider reimbursements to quality metrics and reductions in the total cost of care. The Polyclinic has experimented with accountable care models with health insurance companies such as Premera Blue Cross for several years.
Washington even “developed its own state-based health insurance marketplace to better meet the unique needs of the uninsured in our state,” says Richard Onizuka, chief executive officer of Washington Healthplanfinder.
At a Glance: Washington Healthplanfinder
Washington was one of the first states to receive conditional approval of its health plan exchange by the U.S. Department of Health and Human Services. “The exchange will be a one-stop shop, allowing consumers to make apples-to-apples comparisons between plans, determine eligibility for tax credits or less expensive copays and deductibles, and receive personal assistance in finding, selecting and enrolling in the right health plan,” says Richard Onizuka, chief executive officer of Washington Healthplanfinder (wahbexchange.org).
Key dates to remember:
September 1, 2013: Washington Healthplanfinder call center opens, providing detailed information about state exchanges to individuals, families and small businesses.
October 1, 2013: Open enrollment begins for coverage that starts January 1, 2014. The plans offered specifically for the exchange will only be available through open enrollment in the fall.
March 31, 2014: Enrollment period for 2014 closes. The next open enrollment period kicks off October 15, 2014. —S.M.
Major changes already implemented since passage of the Affordable Care Act in 2010 include protection from the insurance industry’s worst abuses, the introduction of preventive care and access to health insurance for vulnerable groups.
Health insurance companies can no longer cancel coverage if someone becomes seriously ill. Lifetime medical limits are now illegal. Annual insurance reimbursement caps were increased (and will be phased out entirely in 2014). If insurance companies spend more than 80 percent of the premiums collected on administrative overhead, they are required to issue rebates. All health plans must now use standardized disclosure forms to summarize benefits and project out-of-pocket costs.
Annual checkups and some preventive care, such as immunization, certain cancer screenings and well-woman visits, are no longer subject to copayments or deductibles. Changes to Medicare give seniors better discounts on prescription drugs and free annual checkups. The Everett Clinic’s Cooper says that ongoing “preventative care will not only lead to better outcomes, it can make care more affordable by reducing the need for expensive care, such as emergency room visits or in-patient hospital care.”
Children under the age of 19 with preexisting conditions can no longer be denied coverage. In addition, young adults can remain on their parents’ policies until they turn 26, whether they live at home, are married, attend school or are employed.
As a result of these changes, the U.S. Department of Health and Human Services estimates that more than 2.4 million Washington state residents no longer worry about lifetime limits on health benefits; more than 62,000 young adults gained insurance coverage through their parents’ health plans; and people on Medicare saved more than $94 million on prescription drugs.
In 2014, the focus shifts to making health care available to all, regardless of health history or the ability to pay. As of January 1, most Americans will be required to have health insurance. Individuals who can afford to pay for insurance and don’t comply will be subject to a penalty in 2014 of $95 per adult, as much as $285 for a family or 1 percent of income, whichever is greater, with penalties increasing over the next two years. Other big reforms include the elimination of preexisting condition denials for adults and the creation of an online insurance exchange with plans required to include a defined set of essential benefits, including preventive care, pediatric care and maternity care. Medicaid will be expanded—in states selecting this option—to assist low-income residents and their families to access insurance. Earlier this year, Washington state legislators voted to expand Medicaid to include individuals between the ages of 19 and 65 with incomes up to 138 percent of the federal poverty line—effective January 1, 2014.
“In King County, good health is out of reach for an estimated 280,000 people who do not have health insurance and access to preventive care,” says Chad Horner, chair of the board of directors for HealthPoint and a partner at Curran Law Firm in Kent. HealthPoint runs 17 community health centers in King County.
“The care that many of us take for granted, such as treatment for a sinus infection, provider visits to manage diabetes or exams for breast cancer detection, are luxuries to those without health care coverage,” HealthPoint pediatrician Kimberly McDermott, M.D., says. “These families are one illness away from financial catastrophe.”
Those who already have insurance they like don’t need to make any major changes in 2014 and will have noticed their insurance companies already modifying plans to comply with federal requirements, such as preventive care. According to the Washington State Office of the Insurance Commissioner, companies with more than 50 employees will be required to provide affordable health insurance, but those with fewer than 50 employees will not. Those who don’t have insurance will have new options for purchasing insurance through the Washington Healthplanfinder (wahbexchange.org), “which will allow hundreds of thousands of residents statewide to easily find, compare and enroll in quality health care plans they never have had access to before,” Washington Healthplanfinder’s Onizuka says.
Already, 24 health and dental insurance carriers have notified the state of their intent to participate in the exchange. See our “At a Glance” sidebar for details and important dates for purchasing insurance through Washington Healthplanfinder.
For those with moderate or limited incomes, cost is a big concern. Those who don’t have coverage from their employers who buy through the state exchange may be eligible for help with insurance costs, depending on family size and income level. A family of four with an annual income of less than $93,700 will be eligible for a tax credit to offset the cost of insurance premiums.
What shouldn’t get lost in the conversation about coverage is how reforms will impact the health care experience. With the probable expansion of Medicaid and hundreds of thousands of residents insured for the first time through exchanges, some predict that a shortage of primary care providers could derail some of the hoped-for results. The Washington State Office of Financial Management forecasts that most urban areas will be able to accept the increase in new Medicaid patients with the current primary care physicians, but that rural counties will face challenges.
Providers around the region are already shifting the way care is delivered in ways that anticipate the new order. “We need new models for primary care,” says Group Health Cooperative’s Armstrong, whose organization redefined its primary care with the introduction of the medical home model, a patient-centered approach using teams (doctors, nurses, physician assistants, pharmacists, etc.) to care for patients, the addition of electronic medical records for efficient access to patient information, the introduction of doctor-patient e-mail communication and the redesign of some of its facilities to provide all the services a patient needs in one location. These changes have resulted in happier and healthier patients—and lower overall health system costs for Group Health.
One way of addressing the potential physician shortage is through the use of advanced nurse practitioners, according to Barbara Trehearne, Ph.D., R.N., vice president of Clinical Excellence Quality and Nursing Practice for Group Health. “Here in Washington, laws allow licensed nurse practitioners to diagnose and treat patients in the same way an M.D. would,” Trehearne says. As physician groups and clinics move to a team approach, patients should expect to see more physician assistants and licensed nurse practitioners playing key roles in health care.
For Virginia Mason’s Kaplan, health care reform isn’t just about reducing cost. In 2011, for example, Virginia Mason opened the Floyd and Delores Jones Pavilion, the first-ever facility built using lean principles. Surgical teams operating in the pavilion were able to reduce patient wait times from check-in to surgery by 36 percent. By redesigning workflows in the orthopedic therapy room, walking distance was reduced by 81 percent, resulting in more time for nurses and staff to devote to patient care. These innovations have contributed to Virginia Mason ranking in the top 15 percent nationally for patient satisfaction.
For their part, new patients need to be proactive, especially in selecting a primary care physician, who takes the lead in planning and managing a patient’s care with specialists, hospitals, pharmacists and even nursing facilities. “This type of care management will be especially important as patients come into the market for the first time or after a long absence,” says The Everett Clinic’s Cooper. “Many will have chronic conditions, such as diabetes, asthma, heart disease and hypertension.” Comprehensive and coordinated care will ensure better health at lower costs.
For readers researching Top Doctors, it’s important to see the pediatrician, internist, surgeon as a member of a team—and to recognize that other well-qualified members of that team, including other physicians, may often be more readily available to provide care and have access to the patient information needed to treat basic illness, refill a prescription or handle a referral quickly and efficiently.
Amid all these changes, it’s still too early to tell what will actually be accomplished with health care reform. “In an ideal world, this legislation would increase access to care, improve quality and make health care more affordable,” Cooper says. “Much will depend on how the law is implemented in 2014. Then we will know if the national effort to improve health care qualifies as true reform.”