The critiques of Affordable Care Act issued by Rick Foster, are the Chief Actuary of Medicare, and his office, are coming to fruition. Here is what he said: “You cannot take close to one trillion dollars away from one group of people and spend it on another group of people and somehow leave those footing the bill better off. You cannot give millions of people large increases in medical care without creating any new doctors, new nurses, or other paramedical personnel. You cannot arbitrarily reduce what you are paying providers by billions of dollars and still expect to get the same quantity and quality of care. You cannot give millions of patients and thousands of doctors’ new incentives to waste medical resources and then expect health care spending to go down.”
- There will be a net drop in employee coverage. TRUE! Today, if you exclude those who are eligible for Medicaid, the number of people who lost their coverage is greater than the number of people who signed up for subsidized coverage under the ACA. Employees of small firms are especially at risk (despite small employer tax credit subsidies). 2 million employees who lose coverage will enroll in Medicaid. A Medicaid insurance card is not a guarantee of care. An estimated 18 million people will be added to Medicaid. However, because there is no corresponding increase in the supply of caregivers, “it is reasonable to expect that a significant portion of the increased demand for Medicaid would be difficult to meet, particularly over the first few years.”
- Healthcare costs have gone up, not down. TRUE! National health expenditures increased from 17 percent of GDP now to 21 percent under the new law and will be higher than without the legislation. Net federal spending on health care will also increase.
- One in ten insured workers will see their health benefits taxed. TRUE! The taxation of benefits that becomes effective in 2018 will effect anyone whose company offers a “rich plan,” which is being interpreted as a high deductible plan which reimburses more than between 60 to 70 percent of costs. Foster believed that by 2019, more than 10% of insured workers will “be in employer plans with benefit values in excess of the thresholds. This is a conservative estimate.
- Higher taxes led to higher premiums. TRUE! The new taxes on medical devices, prescription drugs, and insurance plans have been “generally be passed on through to health consumers in the form of higher drug and device prices and higher insurance premiums.”
- Medicare cuts will impact everyone and significantly impact the type, level and quality of care people over 65 will receive in this country.
- The promise to those with pre-existing conditions is unfunded. TRUE! By 2011 and 2012 the initial $5 billion in Federal funding for [high risk pools] would be exhausted, resulting in substantial premium increases to sustain the program.”
- The law does almost nothing to limit actual fraud and abuse. TRUE! The fraud provisions are ineffective. Enforcement has been placed in the hands of the IRS. They are not equipped to perform the required tasks to ensure providers and insurers are complying with the law. Since the government is responsible for reimbursing the insurers for losses, and there is no ability to audit this, the insurers can provide numbers in any way they choose, costing the taxpayers potentially billions of dollars.
It is critical that we begin to address these issues; every dollar lost in the abiss of ACA reimbursements is a dollar lost to fund Medicare.
It turns out that when you push people too far, they reach a point when they fight back. The doctor revolution is beginning. My doctor is one of 90 physicians who is trying to remain independent. With the most recent cuts to reimbursements, 89 of the 90 decided they are no longer accepting most carriers and, again, 89 of the 90 are not accepting ANY of the policies offered through the exchange. At their next meeting they are holding a discussion about the pros and cons of opting out of Medicare. The AMA estimates that approximately 10 percent of doctors for each of
the next several years will either leave the practice of medicine or decline to accept insurance. At a time when the number of insured is increasing, this is disastrous.
The good news is that 8 million people have signed up for healthcare. California represents three million of those eight million. California says that 1.9 million of the people 3 million who signed up will be getting Medicaid, while 1.3 million people (I know the numbers don’t add up) will be receiving subsidies. If California is any indication of what is happening across the country, then of the 8 million, approximately 60% will be receiving Medicaid. The insurance companies have publically stated that a little less than 20% of the people who signed up have not paid. Since it is not clear if they mean 20% of all sign ups or 20% of those who are required to make payments, the number of people who will actually receive insurance could be between 5 and 7 million, of which approximately 4.8 million will receive Medicaid.
The expansion of the Medicaid program has been a significant benefit; for the people who have healthcare and for the hospitals, who have seen declines in unpaid use of their emergency facilities. The rest…
Last month we had the discussion about how raising the minimum wage without raising the eligibility standard for Medicaid would take away healthcare benefits from people currently making the minimum wage. In certain states, those who have received Medicaid benefits have significantly increased their standard of living and the cost of delivering healthcare to those people has gone down. It is important that if politicians raise the minimum wage, they raise the Medicaid eligibility standard.
Flexible Spending Accounts are a great tool to allow employees to set aside pre-tax dollars to cover eligible Section 213d healthcare and dependent care expenses. The good news is that you don’t need a qualified plan to have an FSA. Employers save in payroll taxes for every dollar an employee elects, which results in a mutually beneficial program. Employers will need to appoint an administrator for the plan. In 2014, employees may elect up to $2500 (per household) of their annual salary for healthcare and $5000 (per household) for dependent care expenses to be placed into an FSA on a pre-tax basis. The number will increase next year.
There are three different types of accounts that can be offered by an employer through this program.
- The Healthcare FSA allows employees to submits eligible healthcare expenses to the plan administrator which are verified and then reimbursed. FSA eligible expenses include doctor visit co-pays, prescription co-pays, vision care, dental expenses and more.
- Dependent Care Spending Account or a Limited Scope FSA is most commonly used to reimburse daycare expenses for children under the age of 13. It can also apply for children of any age that are physically or mentally incapable of self-care. In addition, adult daycare for senior citizen dependents is also eligible as long as they are claimed as a dependent on the employee’s federal tax return.
- Where an employee has a High-Deductible Health Plan (HDHP) and Health Savings Account (HSA), a Limited Scope FSA Healthcare may be established. Like a Healthcare FSA, this account allows employees to pre-tax up to $2,500 (per household) of eligible expenses. However, Limited Scope FSA eligible expenses are “limited” to reimburse dental and vision expenses. At the employer’s discretion, eligible medical expenses incurred after the deductible may also be reimbursable.