The Uncertain Future of Obamacare and the Healthcare Industry

Kate McCarthy
Senior Analyst
November 16, 2016

The results of the United States Presidential election came as a shock to almost everyone – even Trump supporters. Most prepared for a Clinton win, which would have meant that even if the Republican party held onto the House and the Senate, there would still be a relative balance of power across party lines. In that scenario, the future of Obamacare, and the healthcare industry at large, was certain to stay the course. But a Republican Congress and Presidency, makes that future less certain.

Republicans have talked about repealing the Affordable Care Act for six years, backing their words with actions, sending numerous bills through Congress to amend and/or repeal the Act. These efforts failed under the Obama administration, which implemented the Affordable Care Act, expanding access to health insurance to over 20 million previously uninsured lives. In the last six years, the annual increase of health spending has slowed to equal the rate of gross domestic product (GDP). The healthcare cost savings from 2010-2020 should exceed $1 trillion. More importantly, as payers and providers have adjusted their businesses to the New Healthcare Economy, we have seen improvements in quality outcomes including a 25% reduction in hospital readmissions.

So what happens now? Congress can repeal the Affordable Care Act, in whole or in part. At a minimum, they will amend it. A whole scale repeal would create real challenges, particularly for insurers. Without coverage expansion and insurance mandates, the risk pool would likely return to a higher risk group with the healthy and young opting out of coverage. It would be difficult for insurers to continue to stabilize premiums in this scenario. But the United States has no history of taking enacted benefits away from its citizens-even when parties have disagreed on their merit and feasibility. As recent as George W. Bush’s second term, politicians backed away from Social Security reform when faced with constituent backlash. But amendments should be smaller, including things like tort reform, something Republicans lobbied for in 2009. Other possibilities include: giving more power to states to decide how to handle coverage expansion and mandates; adjusting subsidies; modifying taxes for both individuals and employers, and more.

Uncertainty can breed anxiety and fear, but it also creates room for opportunity. Amendments to or a full rejection of the Affordable Care Act does not change the imperative for payers and providers to deliver better quality care at a lower cost. Change is certain, but forward momentum on these efforts must continueHealthcare organizations must prepare now to ensure success in any scenario.  What does this mean for healthcare organizations?

  • Mastering big data must be the top priority for healthcare firms. In order to not only do more with less, but successfully pivot to broad scale change, organizations must arm themselves with the data that drives insight into cost, population health, and patient and consumer engagement.
  • Healthcare firms should continue to invest in consumer engagement. One could think that if the exchange marketplace closes, organizations can revert to a trapped-customer model that focuses more on cost levers than customer satisfaction. But the fee-for-service model drove costs to an unsustainable level. Engaging patients in preventative care, wellness, and predicting those patients most at risk has a defined ROI – with or without the Affordable Care Act. Customers and patients want the tools and transparency to engage with payers and providers with ease. Healthcare organizations must continue to engage in digital transformation efforts like mobile to deliver a personal, highly contextualized experience to their customers in order to win in cost, quality, and loyalty.
  • Healthcare leaders should remember the industry has pivoted before.  The industry has moved from fee-for-service, to HMOs, back to fee-for-service and into shared risk in the last 25 years all while integrating changing regulations, increased security requirements and facing a more demanding customer.  Leverage the skills, people, technology and culture that allowed you to succeed before. Those tools will come in handy as we face change again now.
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