2formattedfororlandoasismanuscriptTeachingtheAffordableCareActtoAspiringHealthcareAdministrators.doc

The Best WritersTeaching the Affordable Care Act to Aspiring Healthcare AdministratorsGregory A. MooreProfessorHealth and Human PerformanceAustin Peay State UniversityClarksville, TN 37044AbstractAs the first major healthcare law in half a century the Affordable Care Act of 2010 represents a major change in the healthcare system in the United States. Not since Medicaid and Medicare were enacted in 1965 has any legislation been this comprehensive and far reaching in the healthcare field. University departments of public health, health administration, and related areas have an obligation to students to have been incorporating the teaching of this new legislation into health related courses like healthcare Economics, finance, management, human resources, and law. Like any change, there is a learning curve to mastering the elements and provisions of this legislation. Additionally the controversy related to the politics and ideology of the passage and implementation of the law has created misinformation, uncertainty, and other additional barriers to learning and teaching the law.The purpose of this manuscript is to determine what the law is and how it should be taught in courses for students aspiring to become healthcare professionals, primarily administrators. The paper addresses the content, elements and provisions of the law. The implications of this legislation for administrators are examined. Resources instructors can use are included. The paper is about teaching the law. It is not about the value of the law or its expected life, having been voted on numerous times for repeal by one branch of Congress. The paper is about how this legislation might change the way managers will need to manage, but not about the efficacy or popularity of the act. However, the nature of the law, how it passed, and its implications serve as opportunities for teaching aspiring managers about the impact this law can have healthcare on management.Background and PurposeWhat is so special about incorporating the teaching of new legislation like the Affordable Care Act into the teaching of healthcare? Is it not like the other legislation we have had in the last fifty years? The Affordable Care Act (ACA) of 2010 is the first major healthcare legislation in the United States in half a century. It represents a major change in the healthcare system in the United States. Not since Medicaid and Medicare were enacted in 1965 has any legislation been this comprehensive and far reaching in the healthcare field. Teitelbaum and Wilensky (2013) observe that after decades of inactivity the U.S. passed a national health reform law that provides near-universal coverage and has seemingly made health insurance both an obligation and a right.University departments of public health, health administration, and related areas have an obligation to students to have been incorporating the teaching of this new legislation into health related courses like healthcare Economics, finance, management, human resources, and law. Like any change, there is a learning curve to mastering the elements and provisions of this legislation. Additionally the controversy related to the politics and ideology of the passage and implementation of the law has created misinformation, uncertainty, and other additional barriers to learning and teaching the law.The purpose of this paper is to determine what the law is and how it should be taught in courses for students aspiring to become healthcare professionals, primarily administrators. The paper addresses the content, elements and provisions of the law. The implications of this legislation for administrators are examined. Resources instructors can use are included. The paper is about how to teach the law. It is not about the value of the law or its expected life, having been voted on 50 times for repeal by one branch of Congress (Walsh, 2014). The paper is about how this legislation might change the way managers will manage, but not about the efficacy or popularity of the act. The nature of the law, its passage, and its implications will serve as opportunities for teaching aspiring managers about the expected trends in healthcare management.Not all, but substantial portions of the ACA of 2010 will be discussed in this paper. The primary purpose is to discuss how the legislation should be taught, not what is in the law itself. However, websites will be mentioned as sources for teaching and from which students or consumers can learn more about the law itself.The paper will begin with a discussion of the contents and provisions of the ACA, then discuss the role of the Supreme Court with the law, how the ACA is financed, its impact on the deficit, and end by addressing the implications of these elements and realities for managers.Provisions and Benefits of the ACATeitelbaum and Wilensky (2013) provide us a non-partisan discussion of the content and provisions of the ACA (Teitelbaum and Wilensky, 2013). The ACA neither requires a single payer or government ownership of providers. Nor does the legislation make healthcare a constitutional right. However, it can accurately be described as substantial reform in the insurance industry (Teitelbaum and Wilensky, 2013). Websites to learn more about the ACA include the Kaiser Family Foundation at and the federal Department of Health and Human Services at . We next address the elements of the law needing special attention from healthcare administrators.The Individual Mandate or Pay a PenaltyWe begin with the requirement that individuals are to have health insurance by 2014 or pay a penalty of $95 or 1% of one’s taxable income as additional tax. This amount grows to $695 or 2.5% of one’s taxable income by 2016. Some lower income individuals are exempt from this penalty. (Feldstein, 2011a; Teitelbaum and Wilensky, 2013)The State Health Insurance ExchangesThis provision creates in each state a federal or state coordinated market where individuals and businesses can buy health insurance from private insurers. The Secretary of Health and Human Services can ensure the scope of the benefits and set standards for a typical employer plan. Insurers cannot discriminate on the basis of age, disability, or expected life. Plans are layered by premium and deductibles. (Feldstein, 2011a; Teitelbuam and Wilensky, 2013)Premium and Cost-Sharing SubsidiesThe ACA offers, according to Feldstein (2011a) and Teitelbaum and Wilensky (2013), a schedule of tax credits and subsidies to individuals intended to make the cost of health insurance from private insurers more affordable in the state exchanges. The details of these benefits to consumers are outlined in these sources, but are beyond our scope. Their existence is relevant to managers, however.Employer MandateGenerally, and with some delay in implementing parts of this provision by the administration, employers with more than 50 employees have three options: (a) providing healthcare insurance to employees and not pay a penalty, or (b) provide health insurance not considered affordable and pay a penalty, or (c) not provide health insurance and pay a penalty. (Feldstein, 2011a; Teitelbaum and Wilensky, 2013) Teitelbaum and Wilensky (2013, pp. 173) provide a detailed quantitative outline of the options and penalties for employers.Provisions in the Insurance MarketA number of provisions in the insurance market began in 2010 and others have come into place as planned as of 2014. Both Feldstein (2011a) and Teitelbaum and Wilensky (2013) identified these provisions to be planned changes in the insurance market:a. Guaranteed issue and renewability provides that individual and group plans may not exclude or charge more to individuals based on preexisting conditions or health status.b. Premium rates may vary based only on age, geographic area, family composition, and tobacco use.c. No annual dollar limits may be placed on coverage.d. Prevention services shall be provided at no cost, including some immunizations and assessments.e. Insurers of small group plans who spend less than 80% of premium dollars and large group plans who spend less than 85% of premium dollars must provide a rebate to enrollees.f. Dependents up to age 26 may stay on their parent’s plans.Initiatives to Improve Quality of CareA number of initiatives designed to improve the delivery and quality of healthcare are being implemented via the ACA. One effort is the National Quality Improvement Strategy and another, the Patient Centered Outcomes Research Institute. Other funds are intended to promote prevention, public health, employer wellness programs, and medical education reforms that promote primary care training and reduce shortages. (Teitelbaum and Wilensky, 2013)The Supreme Court and the ACAThe Individual MandateThe individual requirement to have health insurance or pay a penalty became known as a mandate and was challenged in the Supreme Court. The distinction between it being a mandate or a tax was key to the decision (Liptak, 2012)The Tenth Amendment authorizes, but does not obligate the states to provide healthcare for its citizens. The federal government’s role in health, education, welfare, and policing a state is limited. The federal government can regulate economic activity under the Interstate Commerce Act, but not mandate that economic activity. Opponents argued the mandate was unconstitutionally forcing consumers to “eat broccoli” or requiring an economic activity and clearly not within the Interstate Commerce Clause, and therefore outside the role of the federal government. The Supreme Court rejected the Commerce Act position voting 5-4 (Liptak, 2012). Proponents viewed the mandate as essential for the overall law to work (Teitelbaum and Wilensky, 2013).If the requirement to have health insurance had not been construed to be a tax, a legitimate federal role, Chief Justice John Roberts may not have seen fit to vote with the other four justices who became the majority in supporting the requirement as constitutional (Liptak, 2012).Mandating the States to Expand MedicaidWhile the individual requirement to have health insurance or pay a penalty was intact after the Supreme Court scrutiny, another provision did not survive without modification. The ACA required all states to participate in Medicaid expansion or face losing all their federal financial participation in that program. All states now voluntarily participate in the federal Medicaid program in large part to leverage their state dollars. For every dollar spent by the state, the federal government matches about two dollars toward subsidizing the cost of providing low-income residents with healthcare under rules set or approved by the federal government. The courts have ruled this type practice to be constitutional and compliant with the Tenth Amendment as the states are enticed, not coerced or forced, to participate (Wing and Gilbert, 2007, pp. 161).The intent of the expansion in the ACA was to reduce the cost of federal subsidies in the exchanges to cover this lower income population. Many would be eligible for Medicaid if the states expanded it. The Supreme Court ruled that the ACA requiring the expansion or removing federal dollars was coercion and not constitutional. The states were provided by this decision the ability to opt out of the Medicaid expansion (Liptak, 2012).While most states participated in the expansion 19 have not and five are debating what to do. The Court decision has resulted in a consequence described in a blog by Drew Altman (2014). Altman (2014) describes how moderate-income individuals are provided subsidies as planned to make their health insurance affordable. However a gap exists in those states not participating in the expansion from no income up to about $11,000 as these individuals were to have been added to Medicaid so no subsidy is available. Many of these states are of a political party opposing the ACA. Even the federal government’s offering to finance the expansion without state dollars, i.e. 100% federal funding has made no change in the states’ positions, leaving 4.8 million individuals in the gap, one million in Texas alone. (Altman, 2014)Additional Challenges to the ACA in the CourtsHobby Lobby and others challenged the ACA requirement that employers include birth control contraceptives in the standard insurance plan offered by employers (Totenberg, 2014). While there is an opt out alternative for employers to pay a penalty rather than offer the insurance, the employer believes as a corporate legal person their religious right has been restricted unconstitutionally. The Court in an opinion written by Justice Samuel Alito for the majority attempts to limit the opting out of the insurance provision only to closely held family corporations thereby not expanding the rights of corporations overall. Alito refers to the Religious Restoration Act passed by Congress in the 90’s that allows religious belief to be a basis for an individual not to be compelled by government to comply with a requirement unless government can show a compelling interest in doing so. The Court determined the government failed to have a compelling reason for overriding the right of an individual or corporation to not comply with a requirement that contraceptives be provided to employees under the Affordable Care Act’s standard insurance provisions. (Posner, 2014) This opinion will likely serve as a basis for further challenges to the ACA and its mandates on employers and insurance companies.The Supreme Court issued an opinion June, 2015 that federal health exchanges, like those run directly by the states, can continue to offer subsidies for persons obtaining health insurance in the federal exchanges. The Court ruled that a challenge to the Affordable Care Act’s language omitting a clear statement that federal health exchanges were meant to offer subsidies for health insurance did not mean Congress did not intend to do so, given the context of the law. Drew Altman (2015) notes that Chief Justice John Roberts’ opinion included the observation that Congress was trying to improve health insurance markets, not destroy them.Financing the ACA and Impact on DebtA variety of financing mechanisms will be used to finance the ACA. A few key ones are identified by Teitelbuam and Wilensky (2013) and Feldstein (2011) and summarized as follows:a. Savings in Medicaid payments to providersb. Changes in the income tax code, like limiting the deduction for health costsc. Tax on some health insurance plans, especially generous ones for individualsd. Tax on tanninge. Tax on medical devicesf. User fees on health insurers and the prescription drug industryThe ACA Reduces Federal Debt While Repeal Increases DebtThe non-partisan Congressional Budget Office (2010) concluded that while the legislation is scheduled to cost $949 billion over 10 years, it will have a net gain over expenses and reduce the federal deficit by $124 billion over that same period. In a letter to Speaker of the House of Representatives John Boehner, providing an estimate for HR 6079 the Repeal of ObamaCare Act, the CBO (2012) concluded that repeal would add $109 billion to the federal budget deficit over 2013-2022. As one reviews the content and provisions of the law, its net financial effect is to reduce the federal government’s debt.Implications for ManagersHaving examined the ACA, what do these provisions mean for the aspiring manager in the healthcare field? These are the implications for managers accompanied with references to the specific provision or provisions.Opportunities for New Business Models in the Insurance IndustryManagers in the insurance industry will continue to promote a new business model since the implementation of the ACA. The ACA’s individual mandate encourages expanding enrollments, not restricting them. Features in the ACA like no denial of insurance for preexisting conditions, no annual dollar limits, and limits on premium rate setting will require insurers to seek other ways to lower costs than limiting enrollment.The requirement for insurers to pay rebates if expenditures for care do not meet the 80% or 85% levels presents a challenge for managers. On one hand, there is a penalty, a rebate to enrollee, for not spending that level of premium dollars on care. On the other, an insurer will not want to spend much beyond the 80% or 85% requirement that applies. Controlling costs for care is needed, but more targeted than open ended. The safe area to control costs is in administration. Reducing administrative costs may become an even more important area on which to focus cost cutting given the ACA’s care expenditure requirements.The mechanism to control those costs may prove to be different in the post ACA era. The individual mandate and Medicaid expansion are keys to success in making this adjustment. Insurance companies can be victims of adverse selection. Those individuals with the greatest health care need and who will need insurance the most, are likely to be the ones to enroll. (Feldstein, 2011c, p. 82) Prior to ACA insurance companies could use mechanisms like disenrollment for not reporting preexisting conditions, or setting annual dollar limits, price increases for the most needy, or even denial. Without a mandate those who will balance the enrollment, using insurance less, will not enroll. With a mandate a more normal curve of enrollees is possible. In place of the pre-ACA mechanisms higher enrollments of a diverse population spreads the risk. Those managers who market for higher enrollments for a population matching a normal curve can still offer affordable premium prices and control costs. The costs of enrolling the older, less healthy can be offset by enrolling the younger, more healthy.Managers will need to exploit new markets for the previously uninsured. Since insurance policies are more standardized in minimum required benefits under ACA, price competition by controlling costs, rather than differentiating policies, may be more successful. The health insurance exchanges are 50 individual markets, therefore 50 opportunities for those managers seeking to test price competitive premium models.Employer Insurance MandateManagers in any field, including healthcare, will need to determine if they should offer health insurance to their employees or not. This will require putting pencil to paper and learning the ACA’s business tax credits and other rules on employers providing health insurance to employees. There may be some tax advantages to doing so, just as it may be economically sound to provide it or forego provision given access to the health exchanges.Advocacy and Creativity in Medicaid ExpansionAt some point 19 to 24 states may begin seeking creative ways to take advantage of the federal financing by participating in the Medicaid expansion, now an option in the ACA. Some states not now participating may want to do so without that state appearing to be supportive of the ACA politically or ideologically. While the federal administration will need to approve any plan the states propose, the federal government is motivated to reduce its costs with more insured, and can close a glaring gap in the health insurance exchanges. A manager with a creative solution to this dilemma may find real and financial reward in doing so.The need for a manager to become an advocate for Medicaid expansion may also arise. Hospital managers have necessarily practiced price discrimination, or cost shifting, the latter being a more acceptable term, but not reality. When users of emergency rooms do not pay, the costs have been “shifted” to those who do by raising prices on the private pay and the insured. (Feldstein, 2011b, pp. 225-237) The ACA mandate and Medicaid expansion via the ACA was to address the need for this practice by providers. States opting out of the Medicaid expansion have created a gap in the health insurance exchanges for the lowest incomes. Individuals at the lower income levels are not eligible for the subsidies and Medicaid has not been expanded to be available for them to have affordable insurance. Providers will still provide the care, but not be reimbursed. Those managers who work in states without the expansion may be expected or asked to advocate for the expansion in networking or trade associations as it is in the interest of the providers to have the expansion.Organizations owning hospitals in different states are already seeing the effect of the Medicaid expansion and ACA in general. Shelley DuBois (2014) reported in the Tennessean recently that for-profit organizations owning more hospitals in states where Medicaid expansion occurred are seeing larger contributions in earnings relative to those organizations owning more hospitals in states that did not expand Medicaid.Addressing the Impact of Taxes and Fees on Targeted ProvidersThose medical device providers and tanning salons experiencing new taxes and pharmaceuticals and other organizations paying new fees required by the ACA would welcome managers who can find ways to modify the taxes and fees or help the organizations increase revenue or reduce costs to compensate for the negative financial impact.Sharing in the Funding, Goals, and Strategy of the ACAQuality initiatives in the ACA indicate its goals and strategy. Quality improvement means more and less costly prevention and less expensive treatment. The ACA intends to discover best practices and share, not force, them among those collaborative providers and systems (Teitelbaum and Wilensky, 2011). Those managers who share in these ideas and approaches may find it more comfortable with the changes and be more likely to grow professionally in some organizations as the effect of the ACA becomes more prevalent. Managers may also find opportunities in exploring new funding in areas like medical education reform and employer wellness programs.Scanning the ACA environmentThe ACA represents cautions for aspiring managers. As the Hobby Lobby lawsuit suggests, there are still challenges to the ACA. These challenges can become setbacks or improvements in the law depending on your perspective. Managers who scan the legal and economic environment will likely discover challenges and modifications in this law, and these can represent opportunities or threats, or both, to you as a manager.Summary and ConclusionThe ACA is changing the role of healthcare organizations and managers. Goals of the ACA are prevention, collaboration, and expansion. Organizational specialization without coordination will not be rewarded. New managers will have opportunities to participate in insurance markets in new ways, where few today now in the field can claim to be an expert. Managers in the ACA environment will need to reduce administrative costs, but targeting care expenditures. Provider advocacy to expand Medicaid in some states may go along with marketing to increase enrollment without restriction. The ACA has expanded opportunities and will call for new strategies for managers to advocate, create, and act in new ways.ReferencesAltman, Drew. (2014, April 1). 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