The healthcare game changer known as the Affordable Care Act will be two years old in just a few months. Like most toddlers, the law has demanded constant attention, and under no circumstances has the country been able to ignore it.
We're at the half way point between passage (March 2010) and implementation (January 2014) of the key provisions of the law the federal health benefits exchanges and the expansion of Medicaid provided they survive legal and political challenges. So it may be time to take stock of how the major stakeholders are faring as 2011 winds to a close.
- Health plans. A year ago, it was almost possible to feel sorry for them. The recession had wreaked havoc on growth in the commercial markets. Disaster was striking in the form of government mandates on medical spending. Some state governments were breathing down their necks on rate regulation. Today Many health plans have not only survived, but thrived in the past year. Investors have driven up share prices among the largest, publicly held plans by a range of 19 percent to a whopping 54 percent so far this year (in a down market, no less). The medical loss ratio rules are unlikely to be a game changer. And rate regulation may indeed drive some plans out of markets, but many others are finding new and interesting ways to grow, such as buying physician practices.
- Providers. That squealing sound you hear may be the sound of spinning tires on the way to the lawyer or the bank. Hospitals, physician practices and the organizations that support them have participated in an unprecedented merger frenzy over the past year. The run up to reform is one reason for the activity, but technology and demographics also play a part. Physician groups with a large base of well-insured patients are key targets, as are those with well-heeled Medicare beneficiaries. The losers among providers may be small shops in rural areas that have neither suitors nor resources to invest in the reform environment of the future. The winners are practices in large and medium-sized markets being targeted by hospital groups and health plans.
- Pharma. The jury is still sequestered on this one. Pharma has paid for additional branded drug access for seniors in the doughnut hole, but if the exchanges or Medicaid expansion falter, the big reform payoff may not occur. Even if the U.S. Supreme court strikes down the individual mandate, it's quite likely exchanges could still go forward. But the big bonanza via Medicaid is also up in the air. At the same time, states are doing everything they can to limit branded drug access amid budget difficulties. On the bright side, the aging population and its need for drugs will be a positive, with or without exchanges.
- Employers. The big ones continue to pull out all stops to control costs and keep employees healthy. Wellness coaches are the big tool in 2011-2012. Small employers, on the other hand, are struggling to fund benefits at all. Many of them will defect to small-business exchanges in 2014. The consolidation trend among payers and providers is not a positive for this group, however, because they need healthy competition to keep prices down.
The last group is consumers, or in this industry, patients. They may have never been at the center of healthcare. Financial health has primarily trumped personal health. We are slowly inching toward putting consumers at the core of the system Cigna even rebranded its company based on that premise but there's a huge disconnect on this one. Reform may help many consumers, but with its many levels of complexity, it will likely make it messier before it makes it better.