The health care ‘iron triangle’ and the Patient Protection and Affordable Care Act

DIMINISHED QUALITY

If the PPACA improves access at constrained cost, quality of care may suffer from the increased strain on the most finite (and most demanded) resource in health care—a provider’s time. Much as a car factory that increases production without appropriate expansion may  turn out poorer quality vehicles, tasking a finite number of providers with caring for more patients may lead to poorer patient care. Not only has the PPACA increased the number of patients seeking care, it also has increased the administrative components of practicing medicine. Both outcomes lead to delays in care and increased out-of-pocket expenditures for patients.⁹

Paradoxically, the PPACA could decrease access, worsen quality, and raise costs

The PPACA also fails to address the mismatch between the supply of physicians and the increased demand for their services. First, the law provides no new funding for training or expanding the physician workforce. Second, the PPACA may expedite the retirement of physicians daunted by changes in the new health care environment, thus decreasing both patient and peer access to those with a career’s worth of knowledge.¹⁰ Adding insult to injury, the known shortage of primary care physicians (estimated to exceed 25,000 before the PPACA’s enactment) is predicted to worsen by an estimated 5,000 because of increased demand, further stretching an already thin workforce.¹¹

Patients may also experience a decrease in quality if their access to the best health care is in name only. There is no requirement that providers accept the insurance plans of those who gain coverage through the PPACA.¹² This is particularly relevant to the 11 million individuals projected to obtain coverage through Medicaid, as existing Medicaid participants routinely confront access issues when they need to see a specialist or, increasingly, a primary care provider.¹³

Quality declines if a change in insurance fails to cover existing necessary benefits or provides those benefits at increased cost. Federal taxing of “Cadillac” insurance plans, employers offering relatively less-generous coverage plans, and individuals opting for lower-tiered (eg, “bronze” or “silver”) plans in the health insurance marketplace when previously insured under higher-tiered (“gold” or “platinum”) plans all either diminish quality by decreasing the breadth of coverage or make obtaining coverage more expensive.^14,15

RISING COSTS

The PPACA is hardly an unfunded mandate. The federal government estimates spending $1.168 billion over 10 years on the insurance coverage provisions of the Act.¹³ While Congress’ pay-as-you-go rules require the PPACA to reduce federal expenditures, states (through new Medicaid enrollees) and individuals (through individual mandate penalties and the aforementioned “Cadillac” tax) will confront higher net costs.^16–18

Early indicators suggest that implementing the cost-reducing portions of the law may not be as feasible as intended. In a recent pilot of the PPACA’s accountable care organization concept, 32 organizations participated in the Pioneering Accountable Care Organization Model. While the Center for Medicare and Medicaid Services says that 13 of these organizations produced savings of $87.6 million in 2012, overall costs for these participants still increased 0.3% (albeit less than the 0.8% growth observed outside the model).¹⁹ Additionally, 7 organizations intend to switch out of the Pioneering model to a program in which they bear less financial responsibility, and 2 will leave the program altogether, suggesting that health systems are hesitant about care-management models that threaten a financial bottom line.

The recent decision to delay the employer mandate by 1 year will result in $12 billion of lost tax revenue and additional charges, largely through the loss of $10 billion in penalties to employers.²⁰ Out-of-pocket spending caps on deductibles and copayments, due to take effect in 2014, were also pushed back 1 year, which will increase costs for some with expensive or chronic illnesses.²¹ The medical device tax is a similarly unpopular (but revenue-generating) component that could yield to political pressure, further increasing the cost of the PPACA.²² And it remains to be seen whether the Independent Payment Advisory Board, which has theoretical control over expenditures for the sickest patients, will retain the authority to rein in costs.

AS IRONCLAD AS EVER

The PPACA is a game-changing law, one that will revolutionize the practice and delivery of health care. Some argue that its implementation has already succeeded in bending the cost curve (ie, reducing the rate of health care expenditures), though critics counter that the reduction may have been a byproduct of the Great Recession and did not actually lower costs.²³ Others contend that the PPACA is responsible for a renewed interest in practice redesign and rethinking of the ways in which medicine is delivered. While interest in reducing costs appears to be at an all-time high, and while such enthusiasm may succeed in reducing per capita costs of care, a long-term absolute reduction in the amount spent on care as a result of these efforts will remain conspicuously absent.

The PPACA is an ambitious law that cannot overcome economic realities

The reality remains that the PPACA is an ambitious law that cannot overcome economic realities. Almost certainly, it will succeed in decreasing the number of uninsured Americans, who have two new avenues to obtain insurance: Medicaid expansion and the health insurance marketplace. Both can absorb applicants who lose employer-subsidized insurance plans. In addition, patients, providers, and politicians will readily reject compromises to quality. While the permutations of potential threats are nearly infinite, any observed decrease in the quality of care resulting from the PPACA will prompt brisk legislative action by lawmakers to rectify perceived deficiencies.

To assuage short-term concerns about access and quality, the path of least resistance will be to delay cost-containing measures and to spend money to remedy perceived deficiencies of the PPACA. Such delays have already occurred—as seen with the spending caps on deductibles and copays—and may potentially be extended to the individual mandate itself. Given lawmakers’ well-documented inability to constrain the powers of the purse, the Achilles’ heel of the PPACA will be a never-ending spiral of rising costs. The health care iron triangle remains as ironclad as ever.

Acknowledgment: The author would like to recognize Devdutta Sangvai, MD, MBA, for his assistance in reviewing this manuscript, as well as his work as associate program director of the Management and Leadership Pathway for Residents training program.