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California v Texas – Threats to the ACA and Its Financial and Human Cost as Seen in the North State

The Affordable Care Act (ACA), passed by a hair when the Democrats had control of all levels of the Federal Government, was the most impactful piece of healthcare legislation since the implementation of Medicare and Medicaid in the 1960s. Unfortunately, over the course of current history, the events around the ACA and its impact on the delivery and payment for healthcare in our country has been a political football. Up until the ACA, over 40 million US residents were uninsured. Since the implementation of the ACA, that number has been more than cut in half.

At my Community Health Center, where our mission is to care for the otherwise medically underserved, our ratio of those without health insurance hovered around 23% for a very long time prior to the ACA. This rate of around 23% was also the estimated rate of our medically uninsured in Shasta County with a likely higher rate in the very rural counties around us. While my Health Center, like all Community Health Centers, do many things to make primary care affordable for the medically uninsured (like offering a sliding fee scale discount, and major reductions in costs for lab, x-ray, medications), we often hit the wall if you need specialty care and/or hospitalization or other seriously expensive interventions. If you were lucky or diligent enough to seek it out, you could avoid/mitigate these crushing bills by trying to qualify for “charity care” if such a program was made available to you.

Then the ACA was brought to life. Most of the expansion in the North State was through the growth of Medi-Cal, and a subset was through a heavily subsidized private option through Covered California. As we speak, the rate of uninsured in our region now hovers around 6-8%. For Health Center providers like us, when a patient is covered by health insurance, there is so much more we can do to help our patients, particularly those with serious acute and chronic health conditions. I would also add that the ACA had other impacts, including allowing parents to keep their adult children on their coverage until age 27 and prevented insurance companies from discriminating against patients with pre-existing conditions.

Unfortunately, under the present Republican Administration, attacks on the ACA have never stopped. In fact, the whole program came within one vote (the late Senator John McCain) of being disassembled. Even the Supreme Court came within one vote (Chief Justice Roberts) from killing the entire program the last time the ACA was heard before the highest court in the land. That said, many Republican-led states have challenged the ACA following a move by mostly Republicans to eliminate a provision of the ACA that requires everyone to have coverage or pay a tax penalty; this was called the “individual mandate.”  The legal theory goes that if you eliminate this provision, then all of the ACA’s provisions are then null and void.

Now this issue is again in front of the Supreme Court with two sides at odds, those representing Republican states, like Texas, including our current Federal Administration and those representing Democratic states like California. The difference this time is that the Supreme Court, with recent and often controversial appointments by the Trump Administration, has flipped decidedly more conservative. Some of the new members of that court have already been extremely critical of the ACA in their previous lower court roles so it would not be a big reach to think that they will think differently now. In short, the fate of the ACA is again hanging in the balance creating an uncertain future. Interestingly the current ACA case is titled “California v Texas”. If the ACA should be invalidated by the courts, financially the State of California will lose around $25 billion ($17.5 for Medi-Cal and $7.7 for Covered California) but let’s look at it from the lens of far Northern California and then down to Shasta County.

Having said all of this, let me share with you some additional data from our regional non-profit Medi-Cal Managed Care plan called Partnership Health Plan of California. This managed care plan covers 14 counties in the North State, covering 575,000 individuals. I have been fortunate to sit on its Board of Directors. Each County in the plan has seats on the PHC Board. This is part of the transparency and connection to our communities that PHC has. I have been privileged to be a part of this plan as I believe it has been a driver of health care system improvement for residents of very modest means in our region.

More to the point today, what I am sharing with you is information that puts more of a human face on the statistics and the political heartburn we have around this issue. Partnership’s data shows that in our far Northern Region we have over 165,000 residents who qualified for coverage as a result of the expanded provisions of the ACA (remember, this is a new group outside of the traditional Medi-Cal). Of those residents, about 81,000 had claims for various behavioral and medical conditions in calendar year 2019 that totaled over $572 million. Of the 81,000 in the PHC region, an estimated 33,000 of those suffer from ongoing ailments, chronic problems, and diseases that to the “system” is identified as the “disease burden.”  So, what this means is that about a fifth of those covered under the expansion Medi-Cal elements of the ACA have active health care issues (medical and mental health/behavioral health) that would otherwise put an added a financial burden on our health care system. Just so you know, the medically uninsured eventually do make it into our health care system, often too late or enter the system at the most expensive and most impacted parts of our system like the hospital Emergency Rooms.

The consequences of putting off care can be devastating to an individual or family as well. It also comes at a cost to both the uninsured persons (remember personal bankruptcy) and to the health care system that must cost-shift to payers, typically private payers, to make up for those losses driving up health care costs to employers and to individual policy holders. To bring it even closer to home, about four years ago Partnership Health Plan had done its own analysis of what the loss of the ACA would mean to each county including Shasta. For Shasta County, the direct loss of Medi-Cal revenue would be about $81 million and the loss of local business revenue was estimated to be $147 million. The residual loss of direct and indirect jobs was estimated to be over 900. If you project four years forward since this analysis, there is little doubt the cost and the collateral damage would be much higher. Beyond the financials are the real hurt that will befall those who had coverage, particularly those with serious healthcare needs, and now will likely float back to the ranks of the medically uninsured. In Shasta County, the expanded ACA funded Medi-Cal population is around 18,000 of the 62,000 PHC members. If you extrapolate those with ongoing disease burdens of this expanded ACA population you get 3,600 Shasta County residents with serious and ongoing health risk.

While we have heard a lot about getting rid of the ACA, we have not heard a lot about what will replace it. Presidential or “Executive Orders” on its own does not make health care policy. For example, you can’t just say, “Insurance companies, you can’t discriminate against people with pre-existing conditions” in just an Executive Order. There have to be real laws and regulations and a clear understanding of how the system will work and how will care be paid for.

If the ACA is not the way, then we need to hear what the real alternatives are, assuming there is even one in the works at all? Certainly in the absence of new legislation and regulations it is hard to see how the gutting of the ACA makes a lot of sense. While far from perfect, the ACA has greatly benefited our part of California. In the absence of a viable and effective alternative it is worth saving and perhaps even improving upon. Somehow we all need to get behind this. Now with the Supreme Court likely not a backstop to prevent the worst from happening to the ACA, the current election and who wins the Presidency as well as the Senate and the House will dictate in the healthcare space what happens next. In the end, the fundamental question is, “is healthcare a right or a privilege?” Where you fall on that answer makes all the difference.

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