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ACA`s Impact on Your Health Insurance Costs

As you're likely aware, the Cadillac Tax is an attempt to engage consumers in reducing the costs of their own care. The Cadillac Tax itself will be a 40% tax on the difference between high-value health insurance plans and the maximums established by the Patient Protection and Affordable Care Act (PPACA).

This is designed not only to help finance the PPACA, but also to leverage individuals into purchasing health insurance policies that have very high deductibles and lower payment thresholds. By forcing individuals to pay more money out of their own pockets, the government hopes each of us will become consumers of healthcare and participate in creating a competitive environment that forces hospitals and doctors to increase quality, increase patient-customer satisfaction and reduce prices.

Whether people lack health insurance or forgo regular visits to their primary-care provider due to high deductibles, EMS systems are likely to continue being the safety net for millions of Americans. While an increased EMS-utilization rate can be a burden, it also provides a tremendous opportunity for EMS delivery-system reform.

The Spiraling Cost of Healthcare Insurance

Health insurance companies set their premiums based on how much they project they’ll need to pay for the healthcare of each of their policyholders. Naturally, the higher the costs, the higher the premiums. To simplify the process greatly, the companies calculate the average costs of providing healthcare to all policyholders plus a profit.

It’s well known that older policyholders will require more healthcare dollars and the younger policyholders require fewer healthcare dollars because the younger population is healthier. Of those enrolling for health insurance through the ACA state or federal exchanges, most are individuals between 45 and 65. Those older than 65 are eligible for Medicare.

This disproportionate number of more expensive policyholders is a key dilemma for the implementation of the PPACA’s health insurance reforms. (Centers for Medicare and Medicaid Services, National Health Expenditures Projections 2011-2021 [PDF])

Insurance companies are responding the only way they can: by increasing premiums. For the 2016 plan year, just a small sampling of anticipated increases includes:

  • New Mexico Blue Cross: 50% increase
  • Blue Shield of Tennessee: 36% increase
  • Care First in Maryland: 30% increase

What’s the Solution?

The federal government is trying to solve this problem by instituting higher penalties on those without health insurance. The government hopes that by increasing the penalties, more young, healthy individuals will enter the insurance exchanges.

Beginning in 2016, the penalty for not having insurance will increase to 2.5% of a family’s taxable income or $695 per adult, whichever is greater. This penalty will still be less than the cost of purchasing most health insurance policies, so the jury is out as to whether this financial incentive will solve the ACA’s problem.

Regardless, some solution must be found if the PPACA’s reforms are to continue. Keep in mind that the EMS system will continue to be a safety net for those without medical insurance as well as for those with insurance that now covers the cost of providing EMS care.

Staggering Increases in the Cost of Providing Healthcare

If that problem wasn’t challenging enough, the basic cost of healthcare has been rising at a staggering rate. According to the Centers for Medicare and Medicaid Services (CMS), total healthcare spending in the United States is expected to reach $4.8 trillion in 2021, up from $2.6 trillion in 2010 and $75 billion in 1970 (Centers for Medicare and Medicaid Services, National Health Expenditures Projections 2011-2021 [PDF]).

Cost increases are also worrying individuals with insurance as they continue incurring increases in their share of healthcare costs through rising premiums and deductibles increases. The average adult saw a 9% deductible increase in 2015 and an average overall deductible increase of 67% in the past five years.

One health insurance exchange survey found that 60% of respondents were more concerned about the financial impact of a healthcare issue than they were for funding their retirement; 58% of Americans reported foregoing or delaying medical care in the past year (Kaiser Family Foundation, Health Security Watch, June 2012).

With these increases in healthcare cost and deductibles, people may skip regular doctors’ appointments and end up using EMS systems as a safety-net in the best-case scenario or for preventable medical emergencies in worst-case scenarios. In either case, you’re likely to see higher EMS call volumes.

What about Quality?

Many of us would approve of these higher costs if the care provided was of the highest quality. But according to the Commonwealth Fund,

the U.S. underperforms relative to other countries on most dimensions of performance. Among the 11 nations studied … the U.S. ranks last, as it did in the 2010, 2007, 2006 and 2004 editions of Mirror, Mirror. Most troubling, the U.S. fails to achieve better health outcomes than the other countries, and as shown in the earlier editions, the U.S. is last or near last on dimensions of access, efficiency and equity.

These are wicked problems that require a solution. As the PPACA’s reforms evolve to address these problems, there’s no question that solutions and strategies will impact America’s EMS providers, our budgets and our EMS missions.

The PPACA has steered the American healthcare system in a new direction and placed a greater emphasis on healthcare quality and outcome rather than quantity of services provided. As the U.S. Department of Health and Human Services continues to promulgate PPACA regulations, fire departments need to stay ahead of the change.

The fire service must understand that change is coming for EMS. New EMS delivery options are emerging and will continue to emerge either to take advantage of the financial incentives to save the healthcare system money through a better quality of care or to comply with CMS’s mandates.

The new EMS delivery option called Mobile Integrated Healthcare (MIH) has already caught hold. The National Association of EMTs reported on over 135 developed and functioning MIH programs across the United States in May 2015 (PDF). The National Association of State EMS Officials conducted a study that found that 29 states had 1–25 agencies offering MIH services (PDF).

MIH is no longer a fluke but a trend designed to solve the inefficiencies inherent in the way traditional EMS is delivered.

Change is Coming

America’s fire service has changed when the need was proven: we did when 50 years ago our entire service delivery model was turned on its head when the singularly focused fire suppression industry adopted the paramedic and EMS. For those who witnessed that change, it can be described as nothing short of a groundbreaking moment in our profession.

It didn’t come easily and there were many detractors. Change is never easy. The PPACA will change EMS. Whether it’s an MIH program that allows us to deliver EMS with less cost or other innovative options, change is coming.

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