The provisions of the Affordable Care Act (ACA) are wide-reaching, affecting consumers, businesses, health care providers, insurers, and the overall economy.
A recent symposium cohosted by the Atlanta Fed brought together experts from several fields to explore the new law and its potential impact. Panelists also discussed how the health care exchanges work in practice and identified some of the winners and losers in the rapidly changing landscape.
Health spending to grow faster
National health spending has grown at a slower pace in recent years—at times even slower than the economy—but the slowdown is largely cyclical, explained the Altarum Institute's Charles Roehrig.
Expanded coverage under the ACA will drive a 1.5 percent increase in health spending growth in 2014 and 2015, he estimated. By 2025, the yearly increase in health spending will outpace gross domestic product (GDP) growth by about 0.8 percent, prompting some difficult taxation and spending decisions, according to Roehrig.
The employer response to the ACA is another closely watched area. Although many employers have indicated that they might rely more heavily on part-time workers or drop health care coverage in response to the new law, many are taking a "wait and see” approach, explained McKinsey & Company's Jeris Stueland. In particular, they are waiting to see what their major competitors will do, she said.
Health care exchanges: how they work
Another panel, including experts from McKinsey & Company, RAND Corporation, and Segal Consulting, discussed an important element of the ACA—health care exchanges. At the time of the conference, about half of U.S. states had set up their own exchanges while the remaining states had federally run marketplaces.
In addition to providing access to coverage through outreach and sales, the exchanges are also designed to boost transparency, improve consumer choice, and increase competition. Indeed, the combination of public and private exchanges could potentially be large enough to put downward pressure on health care premiums and costs. Private and public exchanges function similarly; however, one key difference is who bears the risk of rising health care costs. In the case of private exchanges, employees and insurers shoulder more risk because employers are not obligated to increase their contributions as health care premiums rise.
Exploring the impact on health care industry
The two-day conference closed with a panel exploring the ACA's impact from the perspectives of health care providers, payers, and investors. UnitedHealth Group's Ted Prospect shared his insights on how payers are trying to control health care costs—for example, by identifying and bringing to market evidence-based models that can "have a meaningful impact over the long haul."
As with any major policy change, the ACA creates winners and losers. Elizabeth Weatherman, a partner at the private equity firm Warburg Pincus, is optimistic about the ability of transformative technologies such as genomics to improve care and reduce costs. Emerging services such as telemedicine, which uses electronic communications to exchange medical information, present new opportunities, too.