The Affordable Care Act: Twelve Years Later
Now is the time to further study evidence-based medicine and shared decision making models to improve healthcare quality and lower costs.
By Kevin Kimberlin (Originally published by Health Affairs)
Getting healthcare right has been one of the largest challenges for the U.S. Now, 12 years after President Obama signed the Affordable Care Act (ACA) into law, an estimated 24 million more Americans have gained health coverage. But was the ACA as transformative as it could have been?
A white paper published Feb. 2022 by FAIR Health reported on data from two national surveys revealing “one in four adults aged 65 and older skip care due to high costs” and 25% of that same demographic “never” know the cost of healthcare services prior to receiving a bill. The surveys’ findings also highlight the need for shared decision-making tools and resources.
There is no question that passing of the ACA law allowed individuals to receive first time health coverage at a low cost, but health care is now unaffordable for many middle-class people and families who don’t qualify for federal subsidies or Medicaid. The Kaiser Family Foundation reported “the average premium for a mid-level plan for a 40-year-old who doesn’t qualify for a subsidy climbed to $462 a month in 2020 from $273 in 2014.” And the law has done little to address soaring prescription drug costs and high deductibles.
Unlike most industries where supply drives down prices, healthcare supply creates its own demand. The more available doctors, the more visits to see these doctors; the greater the patient monitoring, the higher the use of therapeutic procedures. However, such increases often show no statistical change in outcomes. This results in the anomaly of wide geographic variation in treatment patterns. This problem remains the direct result of a system that delegates health decision-making to doctors who do not always use evidence-based models or a shared decision-making approach that includes patients in the middle of the care process.
A healthcare system based on evidence is not new. The evolution began 50 years ago with Dr. John Wennberg and his colleagues at The Dartmouth Institute for Health Policy and Clinical Practice. Their seminal research and subsequent data comparing the effectiveness of various treatment options identified a “savings of up to 30% [approx. $700 billion] of Medicare spending might be possible.” The Institue’s Dartmouth Atlas Project stated that “… patient decision aids and shared decision-making have shown an average 20% reduction in rates of several operations, depending upon the treatment.” By giving patients insight into the trade-offs of various treatment options, they could make decisions based on their own values and preferences, and Wennberg understood this.
To further test and advance his theories, Wennberg co-founded patient education company Health Dialog with Spencer Trask & Co. to translate and distribute scientific data to patients. Health Dialog conducted the largest ever randomized controlled trial of care management (174,120 subjects) where patients were placed at the center of their health decisions. The company’s data published in The New England Journal of Medicine showed a “targeted telephone care-management program was successful in reducing medical costs and hospitalizations in a population-based study.” Cost of that patient intervention program: $2. Savings realized: $6 (both per patient, per month). This pioneering study validated evidence-based care at scale.
Wennberg’s work, considered controversial at the time, did not go unnoticed. Economist Peter Orszag, President Obama’s chief health care adviser, was an early champion of Wennberg’s theories. Appointed by Obama as head of the Congressional Budget Office, Orszag “advocated for evidence-based medicine as cures for rising medical costs.’’ (R. Suskind) Considered by many to be the architect of Obamacare, Orszag set out to implement Wennberg’s thesis of comparative effectiveness into the fabric of what would become the ACA, with cost savings foremost in mind.
Unfortunately, the Administration and Congress bowed to special interest group pressure. A foundational principle of Obama’s (and by extension Orzag’s) health care act — eliminating unnecessary costs to pay for wider health care coverage and affordability — was entirely stripped from the final bill. Instead, while health care affordability and accessibility increased for many who previously could not afford it, insurance rates for small business owners and middle-income families increased dramatically.
And now, the global pandemic is further swelling healthcare costs. Peter G. Peterson Foundation estimates in 2020, the year-over-year uptick in national healthcare costs as a share of gross domestic product (GDP) was more than 2 percentage points, noting this is the largest increase since 1960. In 2022, the financial burden for healthcare insurance for middle class families who don’t qualify for tax credits in Affordable Care Act coverage is predicted to rise even further.[1] One startling estimate worth revisiting, and first reported before the ACA was passed into law, notes that without reform, Federal health costs alone would consume 37% of the U.S. GDP by 2050.
Determining COVID-19’s impact on healthcare costs has just begun. In 2020, national healthcare spending increased by nearly 10 percent to $4.1 trillion, largely due to the spike in federal spending in response to the pandemic.[2] In addition to patient care, federal funds were spent to help hospitals alleviate the fiscal impact of revenue loss due to delays in non-urgent care, pay for costs for supplies associated with COVID-19 safety protocols and fund vaccine development and distribution. Future projections on healthcare spending must take into account the long-term complications that may arise in Americans who contracted and survived COVID-19. “Long Haulers” or those living with post-COVID syndrome may face chronic respiratory, cardiac and neurological problems.[3] How will the burden of their care be paid for?
The answer may lie within Wennberg’s early work and his strategy for savings.
Empowering the patient increases healthcare quality while cutting costs. A shared decision-making process can help patients understand the risks, benefits, and outcomes of treatment options, clarify their own values and preferences for treatment, prepare for discussions with their physicians, and follow through with those decisions. This approach allows well-informed patients to receive exactly the right amount of healthcare–no more, no less than what they actually need. Dr. Wennberg’s insights and theories provide a clear path to delivering affordable health care to all Americans.
[2] https://www.healthaffairs.org/doi/10.1377/hlthaff.2021.01763
About the Author
Kevin Kimberlin is the Chairman of Spencer Trask & Co., an advanced technology development firm. Mr. Kimberlin has distinguished himself by partnering with and backing leading scientific minds, including Jonas Salk, Walter Gilbert, John Wennberg, and Robert Langer, in the beginning of their respective ventures. He has also co-founded or first funded several companies that have changed the medical landscape and revolutionized global communications. Mr. Kimberlin received his undergraduate degree from Indiana University and earned his MBA from Harvard Business School.
