When many people think of the Patient Protection and Affordable Care Act (PPACA or "Obamacare"), they think of a health insurance program designed to expand coverage and care options for Americans. The insurance element of Obamacare is the most prescribed and detailed aspect of the law, which is probably why debate about it is so contentious. Arguments over Obamacare-related insurance issues have escalated to the Supreme Court twice. Disagreements over Medicaid expansion have left many Americans uninsured and angry. The bureaucracy and inefficiency of insurance exchanges have led to a whole lot of finger-pointing. Things could have gone better. Things have gotten better. It depends whom you ask.
It has been over five years since Obamacare was signed into law in 2010, and many individuals who have been critical of the legislation, including me, still harbor some concerns. Yet time gives perspective. There's no question that expanding insurance is the cornerstone of Obamacare. But there are other elements to Obamacare that have yielded, directly or indirectly, a wave of activities--side effects if you will--that are undeniably positive. These side effects are impacting healthcare in ways that the authors of the embattled legislation never quantified, and are at a scale and scope that they probably didn't expect.
Listed below are three of these elements of Obamacare and their associated side effects.
Cost Transparency In layman's terms, cost transparency advocates seek to understand why a hospital will charge a patient $25 for an aspirin. Or why prices for seemingly similar insurance plans may have markedly different rates between companies. The objective is to ensure that healthcare consumers and purchasers--patients and employers--can gain a clear understanding of why things cost what they do.
The fact that the American healthcare industry has a bloated expense structure is not news. The Commonwealth Fund has been providing this data for years. The most recent report, which compares the U.S. to 10 other industrialized nations, ranked the U.S. highest in per capita spending for healthcare and the lowest in many health delivery outcomes.
But it took the implementation of Obamacare to get everyone fired up to do something about it. A quick review of some of the "Key Features of the Affordable Care Act by Year" from the Department of Health & Human Services (HHS) website indicates that as part of Obamacare, healthcare costs must come down. But the real catalyst driving interest in cost transparency might be the cost shifting shuffle between insurance companies, employers and employees over the financial burden of providing care for many previously uninsured Americans. There is incredible uncertainty over how rates should be set and how much healthcare will cost.
The Side Effects? Addressing issues related to cost transparency has practically created a cottage industry for healthcare professionals specializing in financial analysis. Leading industry publication Healthcare Financial Management has devoted a section of its website to the topic. Even insurer Blue Cross Blue Shield of North Carolina started a cost transparency initiative. Industry group Catalyst for Payment Reform, in conjunction with the Health Care Incentives Improvement Institute, has begun to publish regularly on the topic of cost transparency. Their publications are helping to lead the charge in giving purchasers and consumers more information about healthcare pricing.
Medicare Scrutiny With all the debate about one healthcare program, Obamacare, it was only a matter of time before the federal government was pressured to release more comprehensive data about another major health program, Medicare. Last year, for the first time, detailed reports about charges and payments in the 2012 Medicare program went public. Last week, data for $62 billion in Medicare payments was released. To be sure, aspects of the PPACA legislation do acknowledge that improvements should be made to the Medicare program. But the data release is at least in part a result of legal action, and by requests submitted as part of the Freedom of Information Act.
The Side Effects? Not surprisingly with a program of Medicare's magnitude ($529 billion for 2015 as projected in the 2016 Budget of the U.S. Government), there's a lot of fraud. The federal government has initiated numerous lawsuits against providers who are accused of substantial financial abuse related to Medicare billing. One Florida cardiologist received $16 million in Medicare payments in 2013. That's right--$16 million paid to one doctor in just one year.
The data is also providing incredible value for cost transparency initiatives. Numerous media outlets are creating interactive graphics to compare case rates by hospital, state and/or provider around the country. There's so much information to analyze that, according to Dr. Bob Kocher, a partner at the venture capital firm Venrock and a former Obama administration health care policy official, the data is "already spurring entrepreneurship in health analytics, helping to create consumer tools, rooting out fraud and enabling new research." Which brings us to another side effect of Obamacare.
Tech Investment One of the key non-insurance aspects of PPACA is that the current pay-per-event reimbursement model is being phased out in lieu of awarding fixed payments to providers for achieving patient outcomes. This change in approach can have positive effects (like fewer unnecessary tests) and negative ones (like increases in drug prescriptions and surgeries to ensure results). Is the new model better, or will it just usher in more confusion without improving the healthcare of Americans? No one can be sure. But when an industry is in flux, innovators and investors see opportunities for improvement.
The Side Effects? Healthcare tech companies raised a record $3.9 billion in venture capital in the first quarter of 2015. The previous record for quarterly growth was $3.4 billion, raised in the second quarter of 2014. Major tech players are riding the healthcare investment wave. In 2014, Google Ventures, Google's investment arm, put over one third of its money into healthcare and life sciences start-ups, up from 9% in 2013. Established tech companies like Apple, Google, Facebook and Samsung have or are planning apps and platforms to engage users in their personal healthcare experience in new ways.
To use a medical device analogy, healthcare tech is the defibrillator that is hopefully going to shock the life into an industry in need of a radical transformation. So remember, at some point in the near future, when your physiological data is transmitted to your doctor via the shirt on your back, you'll have Obamacare to thank. And who knows? Maybe the public will be clamoring for data transparency not from hospitals, insurers and Medicare, but from Facebook. That may, in turn, may trigger another round of side effects, this time related to patient privacy. Stay tuned America!
How will Donald Trump’s first 100 days impact YOU? Subscribe, choose the community that you most identify with or want to learn more about and we’ll send you the news that matters most once a week throughout Trump’s first 100 days in office. Learn more