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Obamacare Architect Estimates Three-Year Delay in Accurately Understanding Affordable Care Act Impact on Workers’ Compensation

March 20, 2014 (7 min read)

The statement of economist Jonathan Gruber, Ph.D., of the Massachusetts Institute of Technology in Cambridge, Massachusetts that a three-year news blackout regarding the Affordable Care Act (ACA) would have had merit was arguably the most memorable moment during the 2014 Annual Issues and Research Conference that Workers Compensation Research Institute of Cambridge held on March 12-13, 2014 in Boston.

Gruber observed that accurately determining the impact of ACA on the American healthcare system would require approximately three years, this according to his presentation “Health Care Reform: What Will the Health Care System Look Like in 5 Years?” Gruber says the fact that the proverbial man on the street evaluated Obamacare based on what he believed was a stronger understanding of that complex law than what he actually possessed, further illustrates that no one currently knows enough about this wide-spread reform to judge how it will impact the general healthcare system and workers’ compensation with any significant degree of accuracy.

Gruber, who contributed his expertise to drafting both the Massachusetts legislation known as Romneycare and to writing the ACA (better known as Obamacare), related to the uncertainty regarding the extent of the impact of the ACA as it affects the medical care that workers’ compensation claimants receive for compensable harm, namely:

> Physician shortages;

> Costs of care; and

> Cost and/or claim shifting between the general healthcare system and workers’ compensation

Summing up political attitudes regarding both Romneycare and Obamacare, Gruber noted that liberals supported a government-run single-payor health insurance system in response to perceived problems related to a primarily privately run and operated $85 billion a year insurance system, while conservatives countered that the privately run system worked adequately well and had enough public support to justify not implementing the wide-scale changes that Romneycare and Obamacare required.

Examples of flaws under a primarily private health insurance system included:

> Pre-existing illness provided a basis for denying an application for insurance;

> Becoming sick while insured could lead to having that coverage cancelled; and

> Other insurers denying applications for coverage after another insurance policy is dropped because of an illness.

The Romneycare Trade-off

Briefly discussing elements of Romneycare in the presentation provided a good basis for better understanding Obamacare and the issues related to the impact of that legislation on workers’ compensation. General comments regarding the success of Romneycare were that it had broad support and provided the model for both comparable California legislation and the ACA.

Gruber described the Massachusetts legislation as “Incremental Universalism” in that it allowed people to keep the health insurance they had before Romneycare was implemented, and it made health insurance available to everyone. Another cited element of that law included requiring a community rating component that precluded considering the health of an applicant in establishing his or her insurance premium. Criticism of that aspect of the law was the sense that premiums for  healthier people unfairly subsidized people who required more frequent medical treatment.

Gruber further commented that the individual mandate that required everyone have health insurance created a mandatory volume of business that compensated the Massachusetts insurance industry regarding the aforementioned requirement of providing everyone health insurance regardless of his or her health and not basing premiums on the level of that health. As Gruber described that trade-off, the individual mandate was the “spinach” that was the price of “dessert” in the form of universal coverage.

ACA Impact on Costs

Gruber noted that not controlling healthcare costs in Massachusetts was not a failure of Romneycare because doing so was not an objective of that law. Conversely, that savings was a stated goal of the ACA.

Gruber added that America did not how to control healthcare costs without endangering the health of Americans. Noting that efforts to reform the American healthcare system began 100 years ago underscored that point.

Gruber’s presentation provided the related statistic that approximately 1/3 of healthcare expenditures did not improve the health of people but that the benefits from the other 2/3 that achieved that goal more than compensated for those expenses. Gruber remained optimistic that we could learn to control healthcare costs without sacrificing the quality of the related services and that health insurance exchanges increased competition among private insurers in a manner that lowered premiums. He noted as well that the ACA provided for reducing health insurance premiums as much as 15 percent for people who participated in preventative care programs.

Broader advice included that our political leaders needed the humility required to admit that our country did not know how to effectively manage healthcare costs, and that the American public must have patience regarding the time required to improve this situation.

Moreover, the public needs to separate the aspects of the ACA related to how it impacts the amount and quality of insurance coverage that people receive from the other elements of the law related to the above discussion of healthcare costs. To illustrate, the ACA promoted choice regarding insurance and other aspects of obtaining healthcare.

ACA Impact on Workers’ Compensation

The background information on Romneycare and Obamacare provided the foundation for analyzing the impact of the changes related to the ACA on the workers’ compensation system. These topics included how the increased demand for healthcare associated with greatly (and rapidly) increasing the number of Americans with health insurance would affect the ability of claimants to receive medical treatment for compensable injuries. Another way of understanding this potential dilemma is that the supply of medical professionals is not growing much (if at all) despite an enormously increased demand for their services.

Gruber concluded that the current shortage of available healthcare providers in some areas in the United States was a larger problem than the increased national demand for those services under Obamacare. His suggestion to alleviate that situation included liberalizing “scope of practice” laws to all registered nurses and physician’s assistants to perform some tasks that current laws only allowed doctors to perform.

A related point from the presentation was that any Obamacare-related longer wait times for medical treatment are a small price to pay for the benefits under that law. (Gruber had stated earlier that the average wait time had increased by the relatively short duration of four days under Romneycare.)

Gruber shared as well that the extent to which current levels of cost and/or claim shifting between the workers’ compensation and the general healthcare systems change under Obamacare would partially reflect financial incentives regarding each system.

According to Gruber, statistics showed that between 10 and 15 percent of workers’ compensation claims were questionable and that a percentage of those claims only were classified as such because the claimant lacked general health insurance. Gruber further noted the phenomenon of “Monday injuries,” which referred to seeking workers’ compensation coverage for harm that allegedly occurred at work at the beginning of the week but may have been partially or entirely attributable to off-the-clock activity during the preceding weekend, served as an example of debatable compensation claims.

An associated observation from the presentation was that the available reimbursement rates under the general healthcare system compared with the amount under a fee schedule or other workers’ compensation payment system might influence whether a healthcare provider classified an injury as arising out of the course and scope of the employment of the patient. Gruber predicted that Obamacare would prompt payors in the general healthcare system to increase their pre-ACA efforts to minimize the reimbursement rates that they must pay.

A supplemental thought regarding the concern about financial incentives and other benefits associated with shifting claims and costs from the general healthcare system to workers’ compensation was that making the latter look more like the former would reduce that trend. Another way of stating this is that lessening financial incentives to classify an injury or illness as a compensable event would reduce the practice of shifting the cost and administrative burdens related to that incident between the workers’ compensation and general healthcare systems.

Back to the Present

The fact that a man who played a significant role in creating Obamacare asserted that neither he nor the cab driver who bent his ear on the topic could accurately predict the composition of the workers’ compensation or the general healthcare system in five years stated a great deal about those who claimed an ability to make that prediction. Gruber did clearly show that political leaders who refuse to learn from the past are doomed to repeat it and thereby doom the percentage of us who require healthcare at some point in our lives.

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