The Affordable Care Act in Post-Shutdown Washington: An Interview with Judith Feder

Judith Feder is a professor of public policy at Georgetown University’s McCourt School of Public Policy, a senior advisor to the Kaiser Commission on Medicaid and the Uninsured, and  an Institute Fellow at the Urban Institute. Widely recognized for her health policy expertise and dedication to public service, Dr. Feder has actively worked on health care reform in Congress, in the Department of Health and Human Services under the Clinton Administration, and as an academic and policy researcher. She sat down with Georgetown Public Policy Review‘s Dan Kinber to talk about the future of the Affordable Care Act. 

GPPReview (GPPR): Republicans shut down the government because they want to see the Affordable Care Act (ACA) repealed or its implementation delayed. At this point in the act’s implementation, what are the implications of such a delay, or a delay of the individual mandate? Were the Republican proposals a compromise?

Judith Feder: I think that the Republicans did not start out looking for compromise at all; they lobbed onto this strategy as a means of stopping the ACA. That was the stated objective of those who pursued the strategy, even though they were told by other Republicans that it wasn’t going to have any impact on the ACA, because most of the ACA is funded independent of appropriations. They could write a law that would repeal it, but they can’t get that through the Senate—they passed it in the House many times.

If they were to repeal the ACA, it would obviously be a disaster because it would pull back [not only] all the good things that people have already come to count on—for example, coverage of their kids up to age 26—but also all the expansion of coverage that is yet to come, regardless of pre-existing conditions. If they repealed or delayed the mandate, the concern is that is part of what will make people enroll,and we do want them to enroll. Whether or not people are sensitive to it because penalties are small in the first year remains to be seen, but we do know that the insurance companies are exquisitely sensitive, and all of their premiums are based on expectation of mandatory enrollment, which means a relatively broad enrollment, and we would be quite concerned that the only people who would sign up would be those who needed health care and that would of course undermine the exchanges.

For the most part, the states that are not expanding Medicaid are the states that currently limit eligibility for working parents to less than half of poverty level and do not provide coverage for adults without dependent children. Additionally, for people under 100 percent federal poverty line, the exchanges do not provide subsidies. How can this gap be filled? What is politically feasible?

The resistance to the implementation of the ACA in terms of the states’ unwillingness to implement Medicaid, but also unwillingness to actively implement exchanges, is very disappointing. And there is no question that there are going to be millions of people without coverage who could have been covered had the law been fully implemented. I don’t believe that resistance will be long-lived. I believe that the presence and availability of federal funds to cover so many people will lead to significant political pressure that will overcome what is largely ideological resistance. I think the lead in that pressure will be the providers who will still be faced with people who are seeking care and not able to pay for it when they could be paid under the Affordable Care Act. And, I think, in the next year or two, we will see that fall away, and we will see the Medicaid expansion become universal, if not almost universal. The fact it is not just the parents with low eligibility levels…. Remember that the most substantial group brought in by the Medicaid expansion are adults who are not parents of dependent children, who in most states, no matter how poor they are, don’t get Medicaid, so that expansion is critical.

Right. So how long do you see this resistance lasting?

I think we will see it fall by the wayside over the next couple of years. I think the ideological battle will hopefully fall away. Other things could happen. At the moment I don’t foresee the Republicans sweeping up the next elections. I think they will be held accountable for the shutdown, and I think this opposition will get old. I do think we are going to get over the glitches, and implementing and enrolling people. Therefore I think the Republican sweep is unlikely, but if that happens the law would be in trouble, and as long as politics do not take a major shift, I believe it is going to be over the next few years that we see the states coming in.

What is going to happen to the money initially allocated to those states now that it is not being spent on Medicaid?

It disappears in the base line. The Congressional Budget Office – and I suppose – I don’t know whether the Office of Management and Budget does it similarly, but they have projections of spending, and those projections are adjusted based on a variety of factors. The state resistance lowered the base line spending, but this is mandatory spending that is not subject to appropriations, which is why it is not affected by the appropriations-based shutdown – part of why – and so the money will be there, it just gets spent when the conditions change. The base line will show it being spent.

What is the impact on individuals who already get their insurance through their employers? To what extent would employers choose to drop coverage because they think that their employees are better off getting higher wages and purchasing insurance at the exchanges?

I think that the ACA does not change what fundamentally drives employer-sponsored health insurance: that workers expect to get coverage through their jobs. This is supported by a tax benefit, the benefit being that the premium our employer pays is not treated as taxable income to us. Workers with incomes above 250 percent of poverty, most workers, get greater benefit out of that subsidy than they would be eligible for under the ACA. As long as that subsidy is in effect, we will continue to want coverage through our jobs, and our employers likely will continue to offer it.

The ACA includes many cost-saving mechanisms. For example, competition among plans offered at the exchanges is expected to drive down insurance costs. Health care delivery reforms, such as the Shared Savings Program and Bundled Payments incentives that would improve care coordination, and the ACOs, all aim to reduce costs while improving the quality of care. Do you think that the ACA will be able to reduce health care costs? What can and should be done to bend the cost curve? What about the role of the Independent Payment Advisory Board (IPAB)? Some people fear that having a board dictate Medicare spending might impact the quality of care they receive. Are those fears justified?

Remember that the savings that the CBO counted or scored in the ACA were savings that overwhelmingly resulted from reductions in growth rates for Medicare payments under existing law. The other element, the major element of potential savings in the law, comes from changes in the way we pay providers to reward them for more effective and efficient delivery of care. CBO found IPAB too new to attribute substantial savings to because its growth and its effectiveness are too uncertain. Both however, I believe, will have a major impact on spending. Cuts that have already gone into effect in payment levels that would otherwise have gone out under Medicare have contributed to the dramatic slowdown in the Medicare cost growth. It is not the only thing driving it, but that is immediate savings, and I think that has had a tremendous effect particularly on hospitals.

The delivery system reform is new. I think there is tremendous uncertainty there, but if it is effective, and if it expands, it has the potential to save substantial amounts. By changing the way in which Medicare pays for care, it influences the whole system, and so I believe that we will see – although it will be gradual – changes in payments that will encourage more efficient use of the health care system. That said, there will be a lot of counter pressure from providers and their representatives in Congress to loosen the constraints on payments and to continue to provide what I would regard as excessive payments.

The IPAB was put in the law as a backstop, to hold Medicare growth to a specified level, or to use the excess above that level as a trigger for additional payment changes that would reduce the rate of growth. The projected rate of growth is now so low, has been so low, that the IPAB is not triggered. Not only has it not been appointed, but it’s not needed because the growth rates fall below that trigger. But should that trigger be exceeded, I think it is possible, politics allowing, that that board would come into play, and if it is authorized to make payment changes– that’s the only thing it’s authorized to do, it is prohibited from making benefit reductions or from formally rationing care–its tools are on the payment side, and I see it as a mechanism for enforcing changes in payment and delivery reform that Medicare is now experimenting with under the ACA.

What concerns me is that this growth lid applies only to Medicare. Medicare grows more slowly than private health care has and continues to grow more slowly. If too great a gap emerges between Medicare and private sector growth, you have an access problem for Medicare beneficiaries, and so if we are going to have a lid, which becomes like a budget, my belief is it ought to be on the whole health care system, not just on Medicare.

What could be improved in the way advocates of the ACA have informed that it can help people? Is there a framing issue?

I don’t think that the issue is so much framing. I think it is, in part, lack of information, compounded by a political environment, and that, I guess, is framing that is pounding them with this law as hazardous to your health. It is patently false. So if we are able to get information out, as to the availability of subsidies for adequate insurance, then I think people will enroll, because they just don’t know. So, the challenge is to get the information to the people who will benefit. And we will be interpreting over coming weeks what these early weeks of open enrollment in the exchanges really means, but the demand has been so substantial that, I think, if we make it available, they will come.


This interview was conducted at the McCourt School of Public Policy. 

Read more about Judith Feder here.



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