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Year-End 2011 Status Report & Forecast on PPACA

December 2011


The status & forecast of the Health Reform law (for which we use the full initials PPACA) reminds me of the Washington National Cathedral after our earthquake this August.  The Cathedral is a huge complex gothic structure.  It has many parts which are never seen.  The earthquake caused a main spire to come down.  It weakened, destroyed, or will require repairs, replacement or re-building for all sorts of other parts.  There are also some major structural support problems which will have to be addressed.  Of course, the pre-earthquake operating budget for the building is now hopelessly insufficient and timing is unclear.

That same description could be made about PPACA.  The “earthquake” for PPACA was the triple-whammy of the credit rating downgrade of the US government which was a scary wake-up call for the nation + widespread unpopularity of the law as more and more implications came to light or specifics evolved + the Nov. 10th elections.

A couple of major pieces of the legislation have fallen or are uncertain if/how they will survive and/or will some key players (such as insurers & states) decide to fill the active roles the law envisions and needs.  Many small pieces will need repairs, replacement or rebuilding.  And, the much-ballyhooed and seemingly precisely-crafted financial structure (“It won’t cost a dime more”) now looks like it will be a river of red ink.  Also like the Cathedral, major parts of the structural support, need to be addressed in court decisions and elections, and may face major restructuring.

However, we must be realistic and realize that there is virtually no chance that the Washington National Cathedral will be deconstructed or torn down….and that is also true about PPACA.  It will not simply disappear, and no assumptions or assurances about court cases or elections should be considered realistic.

Why?  Expectations have been set.  People have determined “What’s in it for me?”  The support for one or more parts of the law are bi-partisan, conservative & liberal, and widespread, such as “child” coverage on a parent’s plan to age 26 + guaranteed issue + shrinking the Medicare Part D “donut hole” + “free” (no cost-sharing) preventive services + tax credits to small businesses + decision appeals + easy-to-read benefits descriptions + controlling insurance company costs & practices + etc. etc. etc.  Plus, there is still the idealistic perception that health costs will somehow decrease.  So, this is one of those public opinion anomalies like disapproval rates for Congress overall are extremely high…..but people tend to like their own Congressman or Senator.  So, poll numbers about support or opposition to PPACA tend to be misleading.

On the eve of 2012, we are in sort of a waiting period.  Many of the big items do not take effect until 2014.  In the meantime, what will the US Supreme Court decide, how far will it extend, and how will it play out in actual fact?  How will PPACA be treated in the 2012 elections? (Politicians are savvy and will factor-in the paragraph above.)  What will be the Congressional & Presidential outcome of the elections?  What could or would a new President who promised to remove the law or dramatically change it actually do?  Will states, who worry about the impact of Exchanges and expanded Medicaid on their already-over-stretched budgets find ways to slow down or avoid proceeding?  Will insurers withdraw from the US health insurance market or the PPACA programs because of  the many punitive aspects of the law? (They can afford to withdraw because of new world markets & products. Or, they might only decline to participate in Exchanges or other functions on which PPACA depends?

One future question does have strong indication of the outcome.  Will employers, unions, and employee benefit plans decide to bail-out and tell their workers & families to go to a state Exchange?  The answer is no.  There is no question that employers and benefit plans have been fed-up with the ever-growing red tape & responsibilities of sponsoring health plans for their workers.  However, PPACA has been an earthquake itself in shifting employer thinking.  Employee health coverage & benefits were often viewed as “fringe” benefits…even though studies in recent years had found that existence & quality of an employee health plan was rated by prospective employees as more important than salary.

Now, as employers envision the health system that they and their workers would be in under PPACA, they have a whole new respect for their custom-design efficient employee benefit plans & TPAs.  Without worries & delays of bureaucracy, especially employers & plans using self-funding, see employee health benefits as a business survival item….much like having an instant-service contract on key IT & machinery.  Employers need workers to get medical attention as soon as possible and back on the job.  Similarly, self-funding allows employers to customize the coverage to the wants & needs of that particular workforce…not a menu of benefits decided by government.  So, surveys show over and over that employers plan to retain their employee benefit plans, and both employers & workers have a greater appreciation for what they have.