How Businesses Can Translate, Interpret and Ethically Exploit the Affordable Care Act

By Craig Lack, Special for USDR.

The Affordable Care Act, or the ACA, (aka Obamacare) is a catalyst for accelerating change brought about by the crushing cost of healthcare. We have reached the tipping point where all the players in a $3 trillion industry are desperate to find new footing, while their usual way of doing business is crumbling underneath them.

Don’t get caught up in the rhetoric of politics. Obamacare is just a symptom of the problem, it’s not the cause!

Everything in healthcare is undergoing change. Companies must also change – they must change the strategy, tactics and people involved in their decision-making process. The C-suite (CEO – CFO) understands this better than anyone. They know that in today’s economy taking measured risk is essential for profitable growth. Yet, many of them have assigned the responsibility of healthcare business strategy to managers who keep their feet on the brakes, repeating why change is risky every year. That’s why today, in a post-Affordable Care Act world, the strongest C-suites are advocating change for better healthcare strategies, not just safe ones.

Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.”

John Kenneth Galbraith

Making the Change, Taking One’s Foot Off the Break

One way to do this is to get the C-suite more involved in setting the business strategy direction for corporate healthcare. They need to evaluate the risks associated with the many healthcare opportunities they are facing. One of the first steps in doing so is distinguishing between healthcare risks that can be managed and risks that should be avoided. Avoiding unnecessary costs – like healthcare claims – is where value is created. Here’s why.

The new law under the ACA started as a 2,800-page question mark and now exceeds 28,000 pages. The Administration is literally creating and adapting the law as they go forward. The revisions and updates have been numerous and they will continue. That’s because the medical treatment industrial complex, also known as the healthcare industry, is one of the largest components in our economy – with a system built on illness and sickness as the revenue model.

But, we know beyond a shadow of a doubt that our sickness care model is totally unsustainable. Yet shifting hospitals and physicians practices away from a fee-for-service model, where they receive payments based on the volume of care delivered, will take years to become the norm.

Our current system is so perversely incentivized that hospitals and physicians receive even greater compensation when preventable infections and injuries are allowed to take place. Lest you think this is a harsh criticism, these facts are validated by government studies that indicate medical errors rank as one of the top five leading causes of death in America. Yet, we rarely hear anything about these facts.

Healthcare exists on a continuum. On one end we have buyers who want health insurance only so that a third party will pay their claims when they want or need treatment – like a buffet. On the other end, are people who are looking for an emergency backstop in the event of an unforeseen illness or accident. It should be obvious, there is no one-size-fits-all solution!

Businesses need to take steps to reduce, control and eliminate claims from their healthcare budgets. It all starts with corporate culture and the realization that employers must change the parent-child healthcare dynamic. The parent-child relationship exists where businesses still decide on what benefits, designs and choices there will be for the next twelve months, and then tell all employees that this is what the company has selected for them.

It’s time to consider a benefits partnership where the company facilitates the framework for the offering, but the employees choose what fits best for them. The communication resembles something more like ‘we are partners in healthcare and each of us will be rewarded for the good health of our team members.’ Contrast that against the usual legacy approach where employees are told ‘here is the new insurance coverage, go and consume because a third party pays the bill and good luck if you get sick – hope you catch it early!’

Three Ways For Organizations to Use the Affordable Care Act

1. Challenge the status quo legacy thinking of your benefit managers. The easiest way is to put a question mark at the end of their statements.

Ask them to explain the what, why and how of the latest rate increase. Be honest, benefits is not their only job responsibility and you can’t afford the learning curve after Obamacare. Top line revenue challenges, increasing operational expenses, shrinking margins and profits is the norm today. Reacting every twelve months to the supply chain’s rate increase is not how to manage healthcare after the ACA.

Pop Quiz: Do you think the benefits manager hires a broker/consultant that challenges her fear of change, or supports the status quo?

Ask them to explain why you have prepaid premiums versus a pay-as-you-go strategy. Ask them to explain the carrier’s rationale for another rate increase. Ask them how the broker/consultant proposed to reduce claims by 20%-40% in the renewal meeting.

2. How are you identifying, measuring and managing the modifiable risk factors in your employee population?

You can’t manage what you can’t measure. The ACA allows employers to create plan differentials where employees can qualify for different levels of benefits based on the outcomes of their biometric screen. For example, smokers that have high glucose, HBP and high cholesterol may pay higher out of pocket costs compared to the employee whose measurements qualify for a higher level of benefits. Think of it as finally being able to receive better health insurance because you receive the equivalent of a “good driver discount”.

Additionally, health promotion and preventive care is emphasized under Obamacare whereby employees can become eligible for incentives based on their participation, activities or outcomes in specified programs.

The ACA incentivizes promoting health — and not insurance!

3. Define for yourself why you invest in health insurance. Are you only concerned with managing a budget and trying to keep a lid on costs? Is health insurance just a financing cost so employees can access care and a third party will pay most of the bills for them?

Or, do you invest in health insurance so employees will have quality healthcare at a fair price where they can become good healthcare consumers armed with cost and quality resources. Are you monetizing good health with HSAs or HRAs? Employees can accumulate their own prefunded healthcare accounts through HSAs instead of paying health dividends to insurance companies. For too many employers, insurance companies profit off of the good health of the employees and then charge the company another rate increase every year.

The business of healthcare will never be the same after Obamacare. There is no way to avoid change, you’re either moving forward or going backward. Companies must look for new directions with new eyes and a new map because the old map was so 28,000 pages ago.

The new law provides many tools for controlling healthcare costs by promoting prevention, transferring risk where appropriate and avoiding risk entirely by eliminating adverse selection. Focus the conversation on how to reduce the demand for healthcare claims because that represents 85%-90% of the money invested in healthcare.


Craig Lack is a nationally-recognized healthcare expert, bestselling author, speaker and CEO of ENERGI. He is the creator of Performance Based Health Plans® which Inc. magazine said is “The next big thing.” He has appeared in national media including Fast Company, USA Today, radio and America’s Premier Experts, which aired nationally on major network affiliates. He’s a member of the National Academy of Bestselling Authors for achieving No. 1 bestseller status on Amazon.

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.

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