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Examining the Affordable Care Act

Thomas Daschle (left) and William Frist</br>Photo credit: AP Photo/Charles Dharapak (Daschle);</br>AP Photo/Susan Walsh (Frist)

“Will the implementation of the Affordable Care Act solve the health care crisis this country faces?”

Thomas Daschle

If one defines a health system as an entity with a central decision-making and administrative authority, the United States has never had one. Instead, we have had a health marketplace made up of a collage of public and private subsystems. This has been a strength—and a weakness. The challenge has long been to determine the proper role of government in bringing greater access, efficiency, and value to health care while continuing to encourage innovation.

Enacting the Affordable Care Act to meet that challenge is the most transformational health policy achievement in our nation’s history. The unprecedented scope of the law has been remarkably catalytic in bringing meaningful change to both the private and public health sectors, exceeding in importance even the creation of Medicare and Medicaid. Already the law is responsible for building a new health infrastructure that aims to support a high-performance, high-value national health care system delivering greater access, better quality, and lower costs.

That said, the Affordable Care Act cannot, nor is it intended to, solve the entire health care crisis in America. As with any major legislative effort, the law remains a work in progress.

In its first two years, the most tangible benefits of the law can be found in the insurance industry. Two and a half million young adults now have health insurance through their parents’ plans. And more than five million seniors and people with disabilities have saved billions of dollars on prescription drugs, while millions more have taken advantage of preventive health care services.

Insurance companies are now required to spend at least $0.80 of every premium dollar on health care–related activities, and are prohibited from setting annual or lifetime limits on insurance plans. Beginning in 2014, individuals will no longer be denied coverage because of pre-existing conditions in any of the 50 new affordable insurance exchange marketplaces. And these markets will be available to tens of millions of Americans who have no coverage today.

This law has begun to move the health sector away from volume-driven payment mechanisms to payments based on outcomes. With incentives from the U.S. Department of Health and Human Services, health stakeholders are exploring new globalized, bundled, and capitated approaches. Doctors increasingly are getting out of the business—and back into the practice—of health care.

Finally, the act has already made a lasting impact on our health care infrastructure. Accountable care organizations, for example, are bringing health stakeholders together in constructive efforts to improve the coordination and quality of health care delivery.

There has never been a more promising moment for health care in America. The Affordable Care Act won’t end the health care crisis. But it presents the best hope we’ve had in history to do so.

Thomas Daschle, former U.S. Senator from South Dakota and former U.S. Senate Majority Leader, is a senior policy advisor in government affairs in the law firm of DLA Piper in Washington, DC. In 2010, Daschle published Getting It Done: How Obama and Congress Finally Broke the Stalemate to Make Way for Health Care Reform.

William Frist

At the time Barack Obama was elected President, a poll of registered voters showed that they unequivocally identified cost, not expanded insurance, as the most important health care crisis. Fifty percent of respondents identified “making health care and health insurance more affordable” as their top health issue while only 23 percent named “expanding health insurance coverage for the uninsured.”

In interviews, candidate Obama also identified cost as the root crisis: “My view is the reason people don’t have health care … is they can’t afford health care, and so I emphasize reducing costs.”

Thus, if the primary crisis is indeed cost, and, if we are to judge the success of the Affordable Care Act by how well it addresses this issue, the law will fail miserably.

That is not to say that expanded coverage for 25 million people is not a significant accomplishment. It is. Nor is it to say that, if proven effective, the tiny demonstration projects like episode-based reimbursements may not one day have some impact.

But with this law, health care spending will increase by more than $1 trillion. New mandates and new coverage for an additional 25 million people cost new money. Expect more costs. In April 2010, the Centers for Medicare & Medicaid Services estimated that the law’s coverage provisions would cost taxpayers $828 billion over ten years. In July 2012, the Congressional Budget Office increased that estimate to $1.168 trillion.

And there are the hidden costs. Chief Medicare Actuary Richard Foster has warned that the law could drive 15 percent of Medicare service providers into the red and that Congress would likely need to act to prevent the loss of these providers and the resulting steep loss of access among beneficiaries.

Do Americans think “Obamacare” is a success? No.

Most want to repeal it. According to Real Clear Politics, an averaging of the largest 22 polls conducted over the past six months reveals that more than 50 percent of respondents favor a repeal of the law, with only 40 percent opposing.

No one can accurately predict the full impact of the new law on total costs. But we do know that so far in the implementation process, of those who say they have been negatively affected by the law, 53 percent mentioned cost as the reason for their response.

The health care crisis is real. At the core of the crisis is a sector that encourages higher and higher costs. “Obamacare” is insurance expansion, not system reform. You can’t honestly and responsibly promise everybody everything in tough economic times without reforming the machine that is generating the exploding costs. That is the task ahead.

William Frist ’78, former U.S. Senator from Tennessee,  former U.S. Senate Majority Leader, and Chairman of the Board of Fellows at Harvard Medical School, is a partner in Cressey & Company, a private equity firm in Nashville that focuses on the health care industry. Among his many affiliations, Frist is the chair of Hope Through Healing Hands, which aims to promote health as an avenue to peace worldwide.

The opinions presented are those of the contributors and do not necessarily reflect those of the President and Fellows of Harvard University or the publishers of Harvard Medicine magazine.



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