Part 13: How Different Are the BCRA and ACA?

Expanding hospital-based acute healthcare system would only further increase the cost and burden due of ill-health. On the other hand, effective disease control and prevention programs will reduce the need of hospitals. 

Most Americans are generally healthy; their lack pf participation in the healthcare insurance-market would markedly increase the premiums of those who would be purchasing plans from new exchanges. This possibility is likely to materialized, even though the Better Care Reconciliation Act (BCRA) allows people to purchase insurance across state lines. Therefore, it is necessary to incentivize this large group of healthy people to stay in the insurance pool. The lower the number of people in the market, the higher the premiums for those in the market.

Meanwhile, lowering the maximum income level that would kick-in for healthcare subsidies from 400% to 350% of the household federal poverty levels will further reduce the individual premiums of low income families. As the BCRA is written now, younger people will pay a smaller share of their income but older people will end up paying more for their coverage.

To offset this, a substantial tax credit has been attached to low-income families, those who live in areas that have high medical costs, and older Americans. Nevertheless, the most vulnerable, the elderly and the sick, are not taken care of properly in the current version of the BCRA. This is unfair and must be rectified before the Senate votes. 

Ways to curtail premium increases in the high-risk pool:

In the absence of subsidies, the high-risk pool of individuals inevitably will have high premiums and deductibles. A better option to control premiums for this pool of beneficiaries is to direct them to purchase from a “group insurance” plan. For most individuals in this high-risk pool, obtaining healthcare insurance as an individual beneficiary or a couple may not be affordable. However, if they are informed and empowered to obtain health insurance through a large group insurance program, such as AARP or AAA, the premiums can be affordable. 

Thus, the BCRA must facilitate and perhaps incentivize/subsidize this group insurance process, which may not need significant governmental subsidy. Healthcare insurance companies that sell insurance plans to the pubic under the ACA, annually make a profit of more than $15 billion a year. Thus, there is no reason to further subsidize these underwriters. Instead, subsidies should be provided to people with significant pre-existing conditions, high-risk pool, elderly, and the disabled.

This is in parallel to large corporations, universities, and federal- and state-based agencies insuring high-risk pools through their group insurance plans. Because of the large volume of payees in group insurance schemes (otherwise healthy, low-risk people obtaining insurance), the risks to the underwriters are dilute in order of magnitude. This allows insurers to provide coverage for a high-risk pool of individuals at a lower cost. 

Curtailing the rise of premiums and making BCRA financially sustainable:

In the current system, in the absence of governmental subsidies, people with higher health risks (e.g., the elderly) face insurance premiums that are too high. In the United States, the (very)high-risk pool is about 1% of the population, but those in the pool consume 23% of healthcare costs. Thus, risk mitigation through multiple means is necessary to limit premiums, as seen with the successful risk-sharing model in the State of Maine. 

In general, 50% of the population is categorized as “normal” (having standard or “expected” risk) and should pay the standard premium. Those who have less-than-average risk for illness (no excess health risks) could be offered a discount (for example, 15% less than the standard premium), whereas those with moderate or high risk should be offered a premium that is 15% and 30%, respectively, higher than the standard (or some such percentage). The structure and the percentage contributions should be modified to achieve the goals and allay risks, as determined by the Congressional Budget Office calculations.

To assure financial sustainability, a new potential payment model of compulsory contribution of 5% of the base salary paid into a private/personal health insurance fund and a prorated scale of subsidies can be included. Those who are unemployed would have an equivalent percentage amount deducted from unemployment benefits. To be fair to all, another option could be for the uninsured (self)employed persons purchasing insurance to pay back 50% of the premiums to the government for the period they opted to be uninsured.

Shifting incentives to keep people healthy:

Another way to reduce healthcare costs is to shift incentives from an acute-hospital–based, specialty-care model to a disease-prevention model.  This needs to be accompanied by adjustments to the federal budget to shift funds from acute care to preventative care. The disease prevention budget concentrated in the Centers for Disease Control and Prevention (CDC) is not the solution.  

To be effective, funds for the preventative budget and preventative actions should be spread across the country, implemented by individual states. Keeping people healthy would ensure they receive better care early in a disease process and thus at the lowest cost. Such a plan can be monitored with the use of robust outcome metrics focused on effective care management for vulnerable segments, which would further reduce healthcare costs. 

To prevent disease and keep people healthy, a model based on a paradigm shift that strives for a focused, chronic-disease–management program is needed. Using rigorous evidence-based best practices and a cost-effective system with built-in measurable clinical and economic outcomes would further decrease U.S. healthcare costs with time while improving the quality of care. 

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Professor Sunil J. Wimalawansa, MD, PhD, MBA, DSc, is a physician-scientist, social entrepreneur, process consultant, and educator. He is a philanthropist with experience in strategic long-term planning, cost-effective investments and interventions for preventing non-communicable diseases, globally. 

The author has no conflicts of interest and has received no funding for this work [https://wimalawansa.org; LinkedIn-Wimalawansa]. The author can be reached via [email protected]

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