Insight, analysis & opinion from Joe Paduda


Obamacare – status update

Here’s where we are with the implementation of PPACA aka Obamacare.

1.  Several states have either rejected the Medicaid expansion or are waffling. Expect most to decide to take the money; hospitals, physicians, and their lobbyists are working overtime to make sure this happens.  It’s a no-brainer; the feds are paying all of the cost for the first five years, 95 percent for the next five, and 90 percent thereafter.

2. A new tax to subsidize lower-income folks’ Medicaid goes into effect January 1. Most of the new revenue (85 percent) derives from the top 1 percent of taxpayers, with lower-income people getting most of the benefits. for Medicaid and insurance subsidies.

3. The growth of Accountable Care Organizations is quickening – but some are ACOs in name only, while most are ACO 1.0. While there’s much skepticism about the eventual ability of ACOs to control costs/improve outcomes, I’m convinced they will do both.

This from David Harlow:

“…we’re at the leading edge of a significant disruption built around the Affordable Care Act’s provisions on ACOs and related initiatives: a sea change in the way health care is conceptualized, and radical change in delivery and payment systems.  We’re ahead of the curve on these issues in Massachusetts, with a law passed this summer that will move us into ACOs for all — not just Medicare beneficiaries — and away from fee-for-service medicine, and a local Blue Cross-Blue Shield plan known as the Alternative Quality Contract that has been working on this basis — budgeted caps with quality kickers — for several years already. It’s the latest form of pay for performance, or value-based payment.”

4. The feds will charge insurers who go thru Federal Exchanges 3.5% of premiums. This is likely quite a bit more than private insurers were figuring.  If nothing else, it will increase pressure on governors who until now have rejected operating their own Exchange; expect insurers in the 21 states that have rejected exchanges to increase pressure on their governors to set up their own state-run exchanges.

5. There’s much angst in the insurer community over definitions of benefits – which are set by each state – and the cost of providing those benefits.  States with few mandates may well see costs go up significantly, especially for younger folks with individual coverage (who now must more heavily subsidize older members).

Lastly, there’s a whole lot of uncertainty surrounding implementation of Obamacare/PPACA, along with a lot of prognostication about costs, coverage, and impact on providers, employers, and taxpayers.

One thing to remember; if private insurers had controlled costs, we wouldn’t be talking about Obamacare.

4 thoughts on “Obamacare – status update”

  1. Good Word Joe.

    “One thing to remember; if private insurers had controlled costs, we wouldn’t be talking about Obamacare.”… is your closing thought.


    Now…they (Insurance Co’s.) WILL come up with flexible and more affordable plans to compete. It has become part of the ‘human condition’ that everybody ‘waits’ until forced to due something. LEADERSHIP & SERVING THE COMMUNITY has lost its way to excessive profits and the search to ‘stretch the limits’ of reasonability.

    You ARE the Howard Cosell of blogging. ‘Telling it like it is’. 🙂

  2. I struggle with such a simplistic last statement. The issue is larger than blaming insurers. We need to also impact:
    – malpractice and outragous legal fees
    – federal spending waste within the system
    – excessive regulations
    – over use of diagnostics and treatment
    I wish it was as simple as one entity to blame but I think excessive costs are much more far reaching than just insurers.

    1. Robin
      Thanks for the comment.

      I’d suggest that there are indeed many reasons/challenges/issues inherent in cost control. Allow me to address your points individually

      – malpractice and outragous legal fees – the claim that med mal and associated costs are a major contributor to medical expense has been debunked here and elsewhere. Search on this site for medical malpractice for more.

      – federal spending waste within the system – that is not germane, as I was speaking about insurers selling policies to individuals and employers.

      – excessive regulations – like, what exactly? How do “excessive regulations” drive up costs? Yes, mandated benefits do add cost, but besides that, what regulations?

      – over use of diagnostics and treatment – this confirms my contention. If insurers had controlled “over use”, we would not need Obamacare. At the end of the day it was and is insurers’ responsibility to deliver optimal care at competitive cost. They failed.

      Regardless of the excuse they failed.

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Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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