Human Capital & Careers

Modify, Not Replace, the ACA: Corporate Health Leader

Save the good and revise the bad, says Brian Marcotte of the National Business Group on Health
National Business Group on Health and Brian MarcotteDecember 14, 2016

The Affordable Care Act should be “substantially modified,” not “repealed and replaced,” in order to preserve the public exchanges and insurance reforms under the law.

Brian Marcotte

Brian Marcotte

A complete repeal of the ACA, even with a long transition period, could trigger a death spiral in the public exchanges, as insurers exit to avoid being the “last man standing.”

That said, there are clearly elements of the ACA that should be repealed, such as the excise tax on employer plans, the employer mandate, and reporting and administrative requirements. All of those have placed unnecessary burdens and costs on corporations that were already providing affordable, quality health-care coverage for their employees.

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The excise tax (or Cadillac tax) on employer plans, for example, would siphon off more and more dollars from employers and employees over time. That’s because it’s indexed to the Consumer Price Index rather than medical inflation, which has been increasing at a rate of three to four times CPI each year. The tax would affect more employer plans over time, as health-care costs escalate, unless it were repealed or indexed to medical inflation.

The increasing instability and growing costs for coverage on the state exchanges, and the political sustainability of the financing mechanisms, do call into question the long-term viability of the ACA. But completely repealing the ACA and changing (again) how consumers access health care without reforming how health care is delivered will not address the escalating cost of coverage or the long-term affordability of health care for Americans.

More focus must be given to transforming health-care delivery to eliminate perverse financial incentives that drive up the cost of care without improving quality.

The reforms should:

  • Accelerate the move away from fee-for-service toward paying for value
  • Remove financial incentives for hospitals and physicians to prescribe more expensive treatment in more expensive settings when lower-cost alternatives of equal or better quality are available
  • Step up antitrust efforts to prevent excess health-system consolidation that merely drives up costs
  • Revisit the patent and exclusivity rules that result in unwarranted price hikes for prescription drugs ‎and stifle innovation
  • Enact comprehensive health-care legal reform to reduce costs associated with defensive medicine

One man’s “repeal” is another man’s “modify,” depending on which side of the aisle you sit. Substantial change to the ACA is needed, but the public exchanges should be preserved and stabilized to provide continuity of coverage for the uninsured, which include part-time employees and retirees.

As Congress tackles these tough-but-necessary reforms, it must consider the unintended consequences a complete repeal could have on the millions of people currently covered by the exchanges and Medicaid‎ expansion.

Additionally, Congress must not impose added costs to employer-based coverage, and it must consider the need for delivery-system reform.

Brian Marcotte is the president and CEO of the National Business Group on Health, a Washington, D.C.-based nonprofit association of 420 large U.S. employers.