Healthcare in America
American College of Pediatricians – October 2012
The family is foundational for the health of children. Access to medical care is also a factor that affects the overall health and well-being of the child, but it can never replace the physical and mental health benefits of an intact family, sexual exclusivity within marriage, and ethical life choices.
The populace expects our healthcare system to produce high quality treatment for medical and surgical conditions. However, it also expects the healthcare system to take primary responsibility for a wide array of emotional, psychological, and social ills, which quickly brings costs to an unsustainable level.There are major shortcomings in the U.S. healthcare system, including waste and fraud, disincentives to control spending, cost-shifting, and high administrative burdens. Many of these problems are rooted in governmental health programs and policies, and unfortunately the Patient Protection and Affordable Care Act [ACA] will not rectify any of these critical issues.
Under ACA, the government will take control of private and public health plans, mandating benefit coverage (what will be paid for) and enacting price restrictions. The government will monitor compliance to thousands of new regulations, and use the IRS to collect penalties and give subsidies. The government will receive ongoing access to individually identifiable health records of almost every citizen. And, by various means, the government will be further empowered to ration healthcare.
ACA gives no allowances for protection of conscience for healthcare providers, patients, or employers. ACA creates a structure that makes it nearly impossible for small physician practices to survive. This will result in limiting physicians’ autonomy and ability to practice according to their values and conscience.
ACA is an extraordinarily complex and exorbitantly expensive law, which has already caused and will continue to cause endless debate, litigation, waivers, and revisions. It is extremely concerning that we already have seen ACA provisions used to reward sociopolitical allies and punish sociopolitical opponents. The benefits ACA delivers are being and will continue to be determined politically, sparking division and animosity between groups with different needs and social views.
The College supports any excellent ideas and commonsense policies which will bring about healthcare reform in a way that would help families and children thrive. ACA does not rise to this standard. Therefore, the College is opposed to the enactment of the ACA.
Affordable Care Act—A Poor Solution
The American College of Pediatricians (“The College”) affirms the family as foundational for the physical and mental health of children. The family is responsible for providing nurturance and discipline, teaching values, and modeling healthy emotional and physical lifestyles. Based on each family’s unique circumstances, parents make decisions regarding allocation of resources for the health and well-being of their children, including medical and dental care, housing, education, nutrition, and recreation.
Medical care is just one factor contributing to the overall health and well-being of children. As physicians, we understand this well as we struggle daily to treat the “new morbidity” in pediatrics, a term that includes the current major health issues of U.S. children and adolescents such as ADHD, anxiety, depression, eating disorders, obesity, sexually transmitted infections, and substance abuse.
Families need reliable access to trusted medical professionals at reasonable market-based prices, as well as protection from catastrophic expenses related to severe or ongoing medical conditions. Unfortunately, current government medical programs and the private employer-based health insurance system have significant shortcomings, leaving children with increased risk for illness, inadequately treated chronic conditions, and family financial instability.
Medicaid is the primary federal/state health insurance program for children. While well-intentioned, the unintended consequences of this system are numerous. They include:
- Overutilization, as there is little patient/parent incentive to curb overuse of Emergency Room visits, diagnostic testing, or prescription of pharmaceuticals, medical equipment, supplies, therapies, or home services. This has caused ballooning costs to federal and state budgets.
- Predictable government response in attempt to moderate expense, such as unsustainably low and non-negotiable provider reimbursements, along with burdensome paperwork. Out of economic necessity, many pediatricians and other primary care physicians have restricted the number of children on Medicaid for whom they will provide care. Thus many children have “coverage” on paper, but limited access to basic primary and specialty medical care.
- Fraud by enrollees and health providers. GAO reports consistently note Medicaid’s inherent “high-risk” for fraud, as well as system-wide poor data collection, missing data, duplication of payments, inefficiencies, etc. 1 Complexities of the system often also lead to non-fraudulent billing errors by providers, which the government sometimes prosecutes as criminal.
- Requirements for enrollees to recertify frequently, causing lapses in coverage.
- Disincentives for parents to marry, or to become employed, due to potential loss of benefits. These disincentives are especially devastating to families with disabled children, who may stay in perpetual poverty in order to obtain or continue needed medical coverage for their child(ren).
Many families with a full-time employed parent obtain medical insurance coverage through an employer. Problems in this system are also many, including:
- Linkage of insurance to employment gives families few or no choices of insurance plans, and often causes loss of coverage with loss or change of job.
- Difficulty in obtaining affordable coverage for persons with pre-existing conditions, particularly for small business group policies
- High deductible policies, a good choice for many families, can be financially burdensome to families with disabled children, as they must meet the high deductible and pay maximum out- of- pocket expenses every year for their child
Families who are not eligible for means-tested government health programs, or who are not offered or who cannot afford employer-based coverage, often have no health insurance coverage. Private individually purchased policies are usually expensive and non-tax-deductible.
Medical cost, rather than availability, is the primary factor that currently limits access in the US healthcare system. Why are medical costs so high?
- Major advances in pharmaceuticals and medical technology
- High demand for services in a system where a majority of consumers receive services at either zero cost or at an out-of- pocket expense far below actual cost of those services. There are no incentives to control costs unless the patient is uninsured, has not met a deductible, or has a health savings plan.
- “Medicalization” of behavioral and social problems, so that the medical system takes on expenses of screening, therapy, and treatment for issues related to family fragmentation, substance use, obesity, anxiety, violence, unhealthy sexual behaviors, personality disorders, high-risk recreational activities, etc.
- Hospital emergency departments are required to provide initial evaluation and emergency care to all comers, including the uninsured, the indigent and undocumented immigrants. “Cost-shifting” from uncompensated care and low-reimbursement Medicaid/Medicare programs increases prices for all others.
- High consumer expectations, with threat of lawsuits against physicians when an unusual diagnosis is missed or an outcome is not perfect, leading to “defensive medicine”, which is defined as unnecessary tests and procedures primarily ordered to shield physicians from malpractice claims. Some estimate the cost of defensive medicine at 10-30% of total U.S. medical costs. High medical liability insurance rates (more than $100,000/year for some high-risk specialties) and high legal defense expenses add even more costs which are passed on to patients.
- High overhead costs, due to an ever-increasing burden of rules, regulations, and documentation requirements. As the number of patients covered by government insurance increases (nearly 50% of all medical services are funded through Medicaid and Medicare), federal control of medical care increases correspondingly. The government (through an AMA-recommended committee), determines the numerical codes for reporting illnesses, injuries, and medical conditions; it writes, and frequently revises, the regulations on documenting and charging for services (the pending 2012 version of diagnostic and procedural codes will list over 140,000 codes for physicians to navigate in order to charge for office and hospital services); it also sets “relative value units” for all chargeable services. Recently, the federal government has mandated electronic medical records, with detailed requirements for how they are used, including setting up the systems to be able to upload individual health information to a national database. These systems have very high costs to implement and maintain, and costs will rise more as system vendors change or go out of business—thereby requiring providers to purchase and implement new systems– yet any medical practice that “opts out” faces punishment by yearly decreases in reimbursement rates.
Medical costs continue to rise, yet as reimbursements fall relative to those costs most physicians must work longer hours and do more paperwork for less monetary reward. The present reimbursement system favors procedures (e.g. radiology services, surgery) over cognitive services (e.g. history and exam, patient education/counseling, coordination of care). For primary care physicians, the system incentivizes seeing as many patients as possible in brief office visits, and avoiding patients who have complex needs. Many physicians who value relationship with patients are leaving medicine altogether, and an increasing shortage of physicians is forecast.
In 2010, Congress passed and President Obama signed, the “Patient Protection and Affordable Care Act” most often called simply the Affordable Care Act [ACA]. President Obama has promised higher quality health care for more people at lower cost under the provisions of this legislation. How does ACA address the problems of the U.S. health care system?
To date, ACA has primarily “insured” previously un/underinsured children by placing them into state Medicaid programs. All the same Medicaid problems remain, now with even higher enrollment and higher demand for services. Initially, increases in state Medicaid enrollments were federally subsidized through the 2009 Economic Stimulus Act. Now under ACA, states are able to receive federal subsidies to expand Medicaid enrollment to persons/families who report income up to 133% of the federal poverty level. However, the 2012 Supreme Court decision2 allows states to opt out of this Medicaid expansion, and several states have already declared their refusal to participate due to concerns about eventual costs to state budgets.
Employer-based health insurance under ACA will be governed by complex new regulations based on the business’s number of employees, average wages of employees as a group, “total household income” of employees as individual households, and percentage of premiums paid by the employer. ACA decrees that “affordable” coverage must cost the employee less than 9.5% of total household income. “Total household income” is not the same as the employee’s wages or taxable income, and it is not clear in regulations yet as to how the employer is to determine and verify this. (Who will count as a household member? What types of income must be reported and how often?) In addition, ACA does not define whether affordable coverage refers to individual employee coverage or to the significantly more expensive family coverage. If the decision [which will probably be made by the Secretary of Health and Human Services] is that ACA rules requires family coverage, many more employers are likely to drop health coverage completely. If the decision is that employers can comply by providing only individual employee coverage, the employee’s family will either need to purchase a high-priced family policy (with the ACA- mandated benefits), or have no insurance. Under the current terms of ACA , that employee’s family would not be eligible to buy subsidized insurance through the ACA exchanges.
Some employers will receive federal subsidies for their workers, but most will not. Many employers are considering the savings they might accrue by dropping health benefits altogether, since the fines (so far) for not providing health insurance are less than the usual cost of premiums. By not providing health benefits, businesses will avoid the overhead expenses of constant recalculations of their health insurance position each time they hire or promote an employee, or an employee has a change in household income. They can also avoid the financial risk of federal penalties if their plan were to be found “non-compliant”, “inadequate”, or “unaffordable”.
Individuals who lose their workplace insurance will effectively be forced to purchase coverage through ACA-mandated state “health insurance exchanges”, or pay an individual tax penalty (which will increase each year, up to the cost of a typical “bronze-level” health insurance policy as defined by the government). State health exchanges are intended to offer various federally-approved insurance plans. Approved plans must offer “free” preventive care and screenings, “free” contraceptives and sterilization, and no denials of coverage for pre-existing conditions. Plans must also meet certain administrative requirements. One such requirement is a high medical loss ratio (payout rate to administrative expenses). This rule will make it difficult for newer or smaller insurance companies to enter the market. Even more importantly, this little-discussed provision will effectively eliminate most Health Savings Account [HSA] plans, as money contributed to, or saved in, an HSA is not counted as money the plan has expended for care.3 Exchange plans will also have strict guidelines regarding age-based premium adjustments. All of these federally-mandated provisions will significantly inflate exchange plan rates, especially for younger persons.
To address the issue of the high cost of exchange plans, ACA provides premium subsidies for persons/families making less than four times the current poverty level ($92,200/year for a family of four in 2012). It is estimated that 25 million people will be eligible for subsidies that will pay up to 91% of the premium cost. The projected cost of administering these exchanges and the cost of premium subsidies has continued to rise steeply even before they are implemented. [The estimated cost for simply administering the Minnesota state exchange: $40 to 60 million yearly.] The individual mandate, upheld by the 2012 Supreme Court decision, was meant to add healthy persons to the insurance pool. However, many insurance analysts believe a substantial number of healthy young adults will still elect to forgo exchange plans as they will be more expensive—even with tax subsidies– than the tax penalty. Healthy persons will have minimal financial risk for not being insured, for when they do need coverage the ACA guarantees them issuance of health insurance despite any pre-existing conditions.
When there are more beneficiaries in Medicaid (with nearly unlimited medical services available at zero cost to enrollees), more families in government regulated insurance plans with comprehensive benefits, and few incentives to limit expenses (without Health Savings Accounts, all plans will be “use it or lose it”), the demand for services and the total costs will escalate rapidly. How does the federal government intend to provide these benefits while containing costs? It appears that some persons will be shifted from the “uncompensated care” to the “poorly compensated care” category (i.e. from uninsured to Medicaid) with the hope that some will seek out less-expensive office-based care instead of ER care. This may not be the reality, as primary care offices may not have capacity for many new patients, and there is no incentive for patients in Medicaid to limit ER use. In Massachusetts, under the Romney healthcare reform plan, newly insured patients overwhelmed primary care offices (increasing wait times for appointments to up to 90 days) and increased ER visit volume. 4
ACA proponents frequently state that there will be cost savings due to “free” preventive health care. Existing data suggests that this will not be the case as no study has shown long-term end cost savings from any preventive health service other than immunizations, newborn screening for a few treatable genetic diseases, and some prenatal services for low-income women.5 Preventive care, when accessed by motivated patients and delivered by knowledgeable health professionals, is a societal good– it can save and prolong life–but “up-front” costs are high before any benefits may be realized. In any case, providing all the recommended preventive services to the entire U.S. population is not possible based on the current health care system capacity.
ACA does not adequately address the crisis of health professional scarcity. The Association of American Medical Colleges [AAMC] stated in 2010 that the projected physician shortage numbers were “50% worse than anticipated prior to healthcare reform [ACA passage].” 6 In that 2010 report AAMC estimated shortages of 63,000 physicians by 2015; 92,000 by 2020; and 130,000 by 2025—and this was before recent surveys which indicate that thousands of physicians (especially those in private primary care practices) plan to retire early or change careers when ACA is fully implemented.7
ACA’s only response was to allot $168 million to increase physician residency slots in primary care by 500 positions by 2015.8 However, there are already many primary care residency slots which are unfilled. In the 2012 Match for example, of 2764 positions offered in family medicine fewer than 50% were filled with US medical school graduates, and 4.5% went unfilled by anyone—so simply adding more slots will not be a viable solution. (Even if 500 more physicians were able to be trained yearly for the next 8 years that would only reduce the current estimated shortage by 6%.) ACA seems to have more interest in increasing mid-level providers–it funds training for 600 new physician assistants and 600 new nurse practitioners by 2015. (If this goal is met, and these new practitioners all enter primary care, and are considered equivalent to physicians, that would still only address an additional 2% of the need.) ACA also plans to shepherd primary care providers into government-run clinics. ACA allots $1.5 Billion to expand the National Health Service Corps, promises to forgive student loans after 10 years of practice in a public sector clinic, and provides $7 Billion in funding to expand community health clinics, including new nurse-practitioner-led clinics.
Under ACA, the federal Centers for Medicare and Medicaid Services [CMS] will launch new efforts to prevent provider fraud. These include regulations for “which providers will be required to post surety bonds…”, “fingerprint-based criminal background checks”, “additional provider disclosures of information”, and the “establishment of core elements of provider compliance programs”.9 ACA will certainly increase paperwork and expenses for both government and providers. The massive 2700+ page law establishes over 150 new governmental commissions and boards to interpret the law, write associated regulations, and administer the programs. Already, government agencies have produced more than 13,000 pages of new healthcare rules. The Internal Revenue Service has been tasked with gathering household income and individual insurance coverage information, in order to collect penalties and pay subsidies. The IRS has initially been allotted funding for 16,000 new agents to monitor ACA compliance. CMS will be in charge of the national health records database, compiling “individually identifiable” but “confidential” health information on every person in the US and delivering this to the Independent Practice Advisory Board for analysis.
ACA is front loaded with entitlements10, and back loaded with taxes, price controls, and rationing mechanisms. ACA produces revenue by
- Fines on employers, up to $3000/yr per employee (if not providing “adequate” employee health insurance)
- Taxes on uninsured persons, eventually up to 2.5% of income (if remaining uninsured)
- Taxes on U.S. manufacturers of medical devices, 2.3% on gross sales
- New limits on family flexible spending accounts
- Taxes on “excessive benefit” health insurance plans, 40% tax on premiums (beginning 2018)
- Decreased tax deductibility of medical expenses
- Surtax on investment income, bringing capital gains taxes up to a top rate of 43.4%
- Medicare surtax of 3.8% on persons making more than $200,000/yr or $250,000/yr for couples
- Increased Medicare payroll tax for employers
- And many others, including the tax targeting tanning salons, 10% on services
The public generally does not yet realize that ACA also contains provisions for cost control and reduction, such as
- The federal government will determine the “adequacy” (benefits) and “affordability” (price) of employer –based insurance.
- The federal government will mandate the benefits in exchange plans, but also enact price controls (no increases in premiums without government approval )
- ACA makes provision for “productivity adjustments”, which are cuts in Medicare reimbursement to doctors (so while beneficiaries are promised their benefits will not be cut, payments to their providers can be cut, which will impact availability of services)
- Hospitals will be evaluated and rewarded for “efficiency measures”, such as Medicare spending per beneficiary (that is rewards for less spending per patient)
- The Independent Practice Advisory Board will determine “best practices” which will eventually determine which medical services, procedures and medications will be/will not be covered
- ACA promotes formation of large “accountable care organizations” which will receive lump-sum payments/budgets for patient care (a form of large-scale capitation)
- ACA has provisions for “patient-centered medical homes” targeted to complex, high cost patients, with the goal of improving quality and decreasing costs. Providers are told they will receive increased reimbursements if they qualify as a medical home, but in order to receive these promised payments, they must first be certified as meeting government requirements and continue to meet ongoing “performance measures”.
ACA positions government to take credit for benefits while giving responsibility for rationing care to physicians, insurance companies, hospitals, and “independent” unelected boards. Physicians, even if they follow government guidelines and requirements, will still be personally at-risk for poor medical outcomes, because ACA has no provisions for tort reform.
ACA is an extraordinarily complex law which will affect every person and business in the country. Its myriads of provisions will be endlessly debated, litigated, postponed, waivered, repealed, and revised. The benefits it delivers will be forever politicized, sparking division between groups with different needs and social views. Historically, when government controls medical care, there is a strong tendency towards providing popular benefits—such as free office visits and low-cost medications– to the largest number of people (i.e. healthy voters) and to reduce expenses for sicker patients—such as hospitalization, surgery, access to specialists, cancer treatments, and new drug development for chronic conditions. There is also a tendency to use benefits and regulatory power for ideological and political gain. There is evidence of this path currently:
- Waivers of ACA insurance requirements given overwhelmingly to union groups which support the current administration in fundraising and election efforts11
- The frequent touting to young adult voters of their “new right” to stay on parental health insurance policies until age 26
- The recent federal order (through the Secretary of Health and Human Services) that all insurance plans (not just government or state exchange plans) provide “free” contraceptive services being extensively proclaimed as a “pro-woman” policy. Those families, institutions, and political candidates who object to being forced to pay for medical care to which they are ethically or doctrinally opposed (contraception, sterilization, and potentially abortifacient medications) are accused of conducting a “war against women”.
- Aggressively promoting expansion of community health centers, where ACA-funded primary care services may be able to circumvent the Nelson-Reid agreement that ACA will not pay for abortions or abortion counseling. ACA also provides funding ($95 million in 2011) for expansion of school-based health clinics where students can be treated and counseled without parental involvement.
ACA thus presents formidable ethical challenges involving politics and power. ACA avoids addressing health care programs in the context of national long-term economic stability and budgeting for other national needs. (Current estimates of the cost of ACA provisions are up to $2.7 trillion in the next 10 years.) Instead it seems to be focused on encouraging dependency, punishing innovation, and expanding control over individual patients and health care providers in a far-reaching and fundamental new way.
The most alarming aspect of ACA is its potential to abrogate freedom of religion and liberty of conscience in healthcare issues. Many citizens, with only narrowly-defined current exceptions, will be forced to purchase insurance policies covering services to which they are ethically or religiously opposed. Under ACA, it will be nearly impossible for small group medical practices to survive, thereby limiting physicians’ autonomy and ability to practice according to their values and conscience. In the future, under federal regulation, faith-based physicians could easily be denied participation in health plans if they refuse to refer for abortion, refuse to abide by government rationing edicts, or refuse to be involved in physician-assisted suicide. Abortifacient medications are already mandated to be covered, and abortion could be mandated coverage at any time by “executive order”. Under federal “non-discrimination” laws, gender reassignment surgery will likely be mandated coverage, and artificial reproductive technologies such as IVF and surrogacy will be a “civil right” to all persons without regard to sexual orientation or marital status.
ACA is not good for families, and therefore is not good for children. Health insurance premiums have already increased, employers are holding back on expanding their workforces, and the national debt threatens economic opportunity for future generations. Most parents don’t want their children’s healthcare decisions prescribed by a government agency. They don’t want more of their family’s financial resources taken in order to pay for “free” benefits for others. There are better options for healthcare reforms. Many ideas worthy of further discussion and development will be brought forward if the ACA is totally, or in part, repealed.
The College believes families should be able to buy personally held health insurance policies that are portable between jobs (just as they now purchase home or auto insurance) and across state lines (as with life insurance). They should be allowed to buy policies for coverage that fit their family’s needs and values, and should be able to change insurance plans (within reasonable limits) as needs change. Policies should include the option of health savings accounts, and health savings accounts should be encouraged in order to enhance responsibility, accountability, and reduction of costs. Whether a health policy is personally held, or through an employer, the same tax preferences should be applied. Government should be involved primarily to vigorously enforce fair contract law.
States should have freedom to develop and pilot innovations in healthcare delivery and reform. State insurance exchanges (without federal mandates) could be helpful for families buying non-employer based policies. States could also use exchanges to facilitate moving government program enrollees to private policies, using sliding scale subsidies. This may be more cost efficient, and better for long term upward mobility than the “everything-or-nothing” Medicaid coverage. There should be no incentives for parents to be single or to decrease employment hours in order to maintain coverage.
Community and state funds could be used to purchase insurance riders for initial enrollment of those with chronic medical conditions, so that they are covered under private insurance. States could also assist families with chronically disabled members by covering certain disability-specific benefits without means-testing (as states currently do for many educational needs), thereby reducing family burdens of chronic medical needs. In any case where families need additional help in providing for medical needs of a child/children, the source of the help given should be provided by the one nearest to the situation who is able to meet that need. This traditional principle of subsidiarity promotes community and connectedness, efficiency and effectiveness.
Physicians should be free to set their own rates, with transparent fee schedules, and be able to give discount or charity care without violating governmental regulations. Some organizations have recommended that health professionals be allowed tax deductions for charity care, and this option should be explored further. Medical liability reform should be a high priority.
In summary, the goal of health care reform should be a system that provides a safety net without entangling the poor, that encourages innovations to improve access and decrease costs, and that fosters patient responsibility to make good health choices. Families should be able to choose physicians who meet their needs and share their values. Families and medical professionals must have freedom of conscience and association. If we keep these parameters in mind as we work to better our healthcare system, we will also promote those other factors that are absolutely vital to the health and well-being of children—intact families, parental involvement, religious liberty, community connectedness, and economic vitality.
Author: Leah Willson, MD, MA (Bioethics), FCP
A PDF version of this statement is available here.
The American College of Pediatricians is a national medical association of licensed physicians and healthcare professionals who specialize in the care of infants, children, and adolescents. The mission of the College is to enable all children to reach their optimal, physical and emotional health and well-being. More information is available at www.Best4Children.org.
1 Medicaid: Federal Oversight of Payments and Program Integrity Needs Improvement. GAO-12-674T, April 25, 2012. Available at GAO website www.gao.gov
2 National Federation of Business et al. v Sebelius, Secretary of Health and Human Services et al.
3 Personal communication with John R. Graham, Pacific Research Institute, 5/16/12.
5 Discussion of cost effectiveness analysis, cost benefit analysis, and cost utility analysis is beyond the scope of this statement, except to note that most preventive services have a cost incurred relative to measured benefits, while extremely few services can be shown to have a net negative cost (i.e. savings).
7 www.humanevents.com/2012/07/12/83-of-doctors-consider-quitting-because-of-obamacare/ also seewww.forbes.com/sites/marcsiegel/2012/08/12/will-your-doctor-quit-obamacare-foretells-mass-exodus-from-patient-care/
8 There is $168 million for post-graduate primary care funding, but ACA also allots $40 billion (almost 250 times more funds) for general undergraduate Pell grants
9 Important Steps Have Been Taken, but More Could be Done to Deter Fraud. GAO-12-671T, April 24,2012. Available at GAO website www.gao.gov
10 mention of taxes, penalties, employer requirements, budgeting, rationing, or any other concerns. In pictures and videos, people rejoice in their new entitlements.