Engineering Inc. - September/October 2015 - (Page 40)

Guest Column BY PAT FEYEN Affordable Care Act: Who It Helped and Hurt T he Patient Protection and Affordable Care Act (aka ACA or Obamacare) was signed into law on March 23, 2010. The first five years of the ACA have included a much-criticized website launch and multiple Supreme Court battles, but the primary experience for most Americans has simply been confusion. The ACA doesn't just affect hospitals, doctors and insurance companies; it impacts every business in America, including architectural and engineering firms and the companies they serve. This review of the first five years of the ACA is intended to clear some of the fog and forecast what the next five years might hold. This June, the Congressional Budget Office (CBO) released The Budgetary and Economic Effects of Repealing the Affordable Care Act, which includes the CBO's latest scoring of the financial impact of the ACA. According to the report, "repealing the ACA would increase federal budget deficits by $137 billion from 2016 to 2025." The same report shows that the ACA has added $1.658 trillion in new spending. How can a law add this much new spending and still decrease the deficit? Let's say the ACA dug a hole of $1.658 trillion in new spending in the yard. According to the CBO, the total effect of the ACA is that there is no new hole in the yard but that there is actually $137 billion in dirt, or dollars, left over. Here's how the CBO gets there. * The coverage expansion spending is offset by $502 billion in new taxes, fees and penalties that create revenue to help pay for the ACA. * After accounting for the revenue sources, the net impact of the coverage expansion is a $1.156 trillion hole in the yard. * The $1.156 trillion "hole" in the deficit is filled by spending cuts and new taxes and fees that are unrelated to the ACA health coverage provisions. Medicare was the primary source of spending cuts and new taxes. * After filling the "hole" with Medicare savings, the surplus comes from new fees on health insurance companies, pharmaceutical manufacturers and medical device companies. The ACA requires funds from nonrelated sources to cover the cost of the coverage expansion. The combination of Medicare cuts and new Medicare taxes is $1.148 trillion in "dirt" to fill in the ACA financial hole. Medicare reductions included in the ACA are pro40 ENGINEERING INC. SEPTEMBER / OCTOBER 2015 jected to cut Medicare spending by $802 billion from 2016-2025. The report also shows that "high-income surtaxes" that were implemented as Medicare taxes through the ACA will generate $346 billion in additional government revenue. The net result is that the ACA created a $1.148 trillion swing in Medicare financing over the next decade. The health insurance coverage expansions within the ACA were primarily financed through Medicare reimbursement cuts and Medicare taxes. Understanding this vital economic link also provides a window into how the ACA has affected primary health care stakeholders, from federal and state governments to hospitals and employers. I assign a grade to how the ACA has impacted the various stakeholders. An "A" means it has been beneficial, and an "F" signifies a disastrous result. Federal Government - Grade A+ The federal government was facing the financial tsunami of an aging baby boomer population, decreasing labor force participation, and health care inflation within Medicare that consistently outpaced revenues and the economy. The ACA dramatically reduced payments to hospitals, skilled nursing facilities and home health care providers; added new Medicare taxes; and linked the future funding of Medicare to growth in the GDP. The near-term impact has been negative net hospital inflation in Medicare since 2008. The per beneficiary Medicare hospital insurance cost had reached $5,179 in 2008 and was projected to reach $6,734 by 2016. The latest Medicare estimate is that the 2016 cost will be $4,992. The dramatic Medicare financing improvement through the Medicare reimbursement reductions and new taxes included in the ACA have significantly improved the federal government's finances. State Governments - Grade B ... so far The ACA's most significant impact on states has been the establishment of Exchanges. The Supreme Court overturned the ACA provision that forced states to expand Medicaid and gave states the power to determine whether or not to expand Medicaid eligibility according to the ACA rules. Through the ACA, the federal government covers 100 percent of the costs of Medicaid expansion for 2014 through 2016, with a scheduled reduction to 90 percent from 2020 forward. In spite of this financial incentive, 21 states have still not expanded Medicaid eligibility. Many of the states that have resisted expansion are concerned that the federal government will not always honor its commitment to fund its share of the expansion costs. Hospitals - Grade B Hospitals have faced financing cuts through the ACA and through sequestration. The gap between what Medicare and what private insurance pay for hospital services has spread. According to the

Table of Contents for the Digital Edition of Engineering Inc. - September/October 2015

Engineering Inc. - September/October 2015
Contents
From ACEC to You
Market Watch
Legislative Action
Unlocking the Ocean’s Secrets
Positive Impressions
Low Water, High Hopes
International Corruption
Leading the Way, Lending a Hand
Guest Column
2015 Fall Conference
Guest Column
Guest Column
Business Insights
Members in the News
Mergers and Acquisitions

Engineering Inc. - September/October 2015