Untangling the AHCA: Asking the wrong question leads to the wrong solution

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Mar 22, 2017

Redesigning our nation’s healthcare system is no small task, but we are destined to fail if we ask the wrong questions from the start. The right question should be, “How can we change the system to make healthcare more affordable?” It should not be, “How can we afford our current healthcare system?”

With that in mind, the American Health Care Act (AHCA)—the GOP drafted replacement of the Affordable Care Act (ACA)—mistakenly attempts to answer the question of how we can afford our current healthcare system. According to the recent score by the Congressional Budget Office, the reconciliation bill cannot do so without covering significantly fewer people (roughly 14 million fewer in the first year) and exposing older members of the individual market to higher premiums. This grim outlook should suggest that more is required than just redrawing the lines between who pays what for access to healthcare. We must, instead, innovate the business models in which we deliver care. Currently our healthcare system is bloated with inefficiencies and waste due in major part to complexity and poor integration between providers and payers, which drives up the overall cost of care. Only by redrawing the processes within our healthcare system can we truly make healthcare affordable for everyone.

How does the AHCA change healthcare?

In terms of the individual insurance market, the AHCA would change how we determine who pays higher health insurance premiums. An individual’s age would have a greater impact on their premium rate, whereas smoking status and geographic location would no longer affect one’s rate. Compared to the ACA, the size of the subsidy to help families afford individual market coverage is to a much lesser extent a product of income, and instead, determined in most part by age.

Starting in 2020, funding from the federal government into state Medicaid programs would be capped on a per-enrollee basis as opposed to funded on an open-ended basis, and states would have to account for a greater proportion of program costs over time. In an unusual move, the bill even goes so far as to detail whether lottery winners qualify for Medicaid (they don’t). For Americans hungry for change, such a focus on changing how our healthcare system is paid for and lowering the federal deficit may feel like a win. However, it only acts as a distraction, since it fails to address why healthcare is so costly in the first place.

How doesn’t the AHCA change healthcare?

Unlike the Affordable Care Act, the AHCA is not likely to directly impact the processes and broken business models that perpetuate higher costs within our healthcare system. The ACA addresses care delivery integration and innovation within our healthcare system with provisions that encourage the formation of Accountable Care Organizations (ACOs) and establishment of the CMS Innovation Center. These two initiatives reconsider how healthcare is delivered, in an effort to improve processes within our system and reduce waste and costs.

The AHCA, as written, does not alter these provisions. However, according to the former Administrator for CMS, Andy Slavitt, it is not likely that the country can focus on furthering healthcare delivery innovation and changing how we pay for our healthcare simultaneously. Thus, on top of exposing older enrollees to higher premiums and leaving millions of people uninsured, the AHCA may also end up distracting from the recent progress of those working to innovate care delivery models within our healthcare system to improve care and reduce costs.

Looking forward

Healthcare reform leaders should re-evaluate how the AHCA is attempting to make healthcare more affordable. The previous administration made some progress in encouraging innovation in care delivery by forging the ACO movement, outlining goals toward value-based care delivery, and passing MACRA. We’ve even seen examples of early success among systems disrupting their aged business models. The new administration would be wise to build on these efforts. While investing in innovation and care delivery integration may not gather the public notoriety of large scale coverage reform, it would address the underlying cause of high healthcare costs. The path to the right solution starts with first asking the right question.

For more, see:
Seize the ACA: The innovator’s guide to the Affordable Care Act

Ryan Marling

As a Research Associate at the Christensen Institute, Ryan works on Jobs-to-Be-Done case research as it pertains to healthcare. He’s also currently co-chair of the HealthIMPACT committee within Boston Young Healthcare Professionals.