ACA Title I, Sec. 1102. Reinsurance for early retirees. “Ugly” – Unnecessary and unwise. This section provides federal authority to establish a national temporary re-insurance fund to handle excess individual loss claims between $15,000 and $90,000 for those over 55 and prior to Medicare coverage. Up to $5 Billion annually is authorized. This amounts to a slush fund that can be tapped by any health insurer that meets the requirements of the regulations. This seems to be a questionable use of federal tax dollars to cover a risk that is neither well documented, well understood or really needed. In addition I don’t think we want to be encouraging early retirement for anyone. Particularly for those under 65. Therefore, it’s my opinion that this provision is of limited practical value, contributes to the federal deficit ($16.4+ trillion) and thus fits clearly in the “Ugly” category and is likely to be justified by …”why not …it looks and sounds good on the surface.” This is another provision that needs to be repealed in my opinion.

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ACA Title I, Section 1004 – Effective dates: “Ugly” – Way too ambitious! The effective dates for Section 1001 – 1003 are by law …”on or after the date that is 6 months after the date of enactment of this Act, except that the amendments made by sections 1002 and 1003 shall become effective for fiscal years beginning with fiscal year 2010.” This is a good example of legislative and administrative over-reach. These effective date provisions deal with some incredibly important facets of health insurance design and operations and they should have been linked to the federal rule making process. Instead they have opened up situations where implementation is uncertain or unclear. I know Congress is impatient to fix the problem of health care and health insurance accessibility and financing, but this type of legislative haste usually turns out to be counter productive. It also further reinforces the mistaken assumption that ….”your health insurance is your health!” Bad thinking and bad health policy.

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ACA Title I, Section 1003 – Ensuring that consumers get value for their dollars: “Ugly” $250 million a year grants to determine “unreasonable” premium increases. This section requires the federal government with $250 million of annual grants to states to determine which health plan premiums are “unreasonable” and to remove the offending health plans from exchanges. How will government staff determine what is “unreasonable”? State insurance commissioners have historically had a very difficult time assessing appropriateness of health plan premium levels and when the process of rate review has then become highly politicized it usually has led to a significant decrease in the number of insurers and the movement of health insurance markets to monopoly and oligopoly pricing patterns. Spending up to $250 million a year on grants to the states is like throwing more money at the problem without having any semblance of a long term solution. What market sector has this approach worked in? None, that I know of. This section is “ugly” and should be eliminated and a provision for reporting of premium patterns to the federal government imbedded in another section of the Law concerning the new role of state insurance commissioners.

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ACA Title I, Section 1002 – Health insurance consumer information: “Bad” and overkill. This section provides $30 million of annual grants to states to set up groups that will supposedly fix problems consumers have with health plans and providers. This sounds good on the surface, but it would be better if consumers exercised this ability themselves with health insurers and providers and since so many more health plans are supposed to be offered why not let the market and consumer demand fix the problems – like virtually all other market sectors. I am afraid this is another example of the Democrats (Since no Republicans voted for the Law) love of government involvement or “statism.” Just another layer of regulatory largesse. On top of that there are no regulatory remedies or “teeth” in this provision so….. it is largely perfunctory or an example of a $30 million window dressing because we can’t trust health plans or health care providers to do the “right” thing.

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ACA Title I, Section 1001 Amendments to the Public Health Service Act: Nine mostly “Good” coverage improvements for the consumer with one “Bad” element. This section contains nine amendments to the PHS Act that all benefit the consumer, however these changes to insured individual and group plans also eliminate most of the cost control devices that insurers have traditionally used to minimize the “moral hazard” of health insurance, thus plan costs will necessarily increase for all insurers due to these changes.

Sec. 2711. No lifetime or annual limits. (“Good” but increases plan cost and re-insurance costs)
Sec. 2712. Prohibition on rescissions. (“Good” if rescissions for non-payment of premium are allowed)
Sec. 2713. Coverage of preventive health services. (“Good” if connected to incentives to actually get preventive care)
Sec. 2714. Extension of dependent coverage. (“Good” – extends coverage to more of the currently uninsured)
Sec. 2715. Development and utilization of uniform explanation of coverage documents and standardized definitions. (“Good”- supports price competition among plans)
Sec. 2716. Prohibition of discrimination based on salary. (“Good” – brings more equal treatment across the work force)
Sec. 2717. Ensuring the quality of care. (“Good” – requires reporting on quality metrics)
Sec. 2718. Bringing down the cost of health care coverage. (Some “Bad” because it removes the ability for insurers to cross subsidize needy groups and it will likely limit the financial stability of insurers and their ability to maintain adequate reserves.)
Sec. 2719. Appeals process. (“Good” if it is not made to be too onerous)

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I have been waiting for three years for somebody to conduct an in-depth review of all of Obamacare, but not seeing anyone else willing to do so, it’s time to take up the gauntlet. Therefore, the purpose of our in-depth analysis of Obamacare or the Patient Protection and Affordable Care Act (PPACA), or in its shortest form …. the ACA, is to analyze all the changes contained in the Law into one of three categories. The first category is “Good”, this label is reserved for those changes that can contribute in a positive way to two major goals; one, the improvement of the health of the American population and two, the long term control of health care costs. The second category is “Bad” and this label will be used with changes that need some major revision(s) in order to accomplish the two major goals. The major revision(s) will be described here in brief. The third category is “Ugly” and it is reserved for legislative changes or policy features that need to be removed from the legislation in order to assure that both goals are fully accomplished. Tomorrow we will start the formal review.

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A new series on the wellness aspects of the ACA called “Obamacare Revealed: The “Good”, the “Bad” and the “Ugly” starts this week with five posts a week. To get in on the action, please like our Chapman Institute Facebook page at or follow us on Twitter at @WellnessCzar. Each day’s short posting will have a link to this blog for a much longer discussion of each element of the Law.

This in-depth look at each proposed change contained in the ACA is based on how each initiative will likely affect the health of the U.S population, the long term management of health costs and how the wellness industry will likely be effected. The series will start with each section of the Law and will move in order through the more than 400 health system initiatives contained in the legislation.
Follow just the highlight “tweets” and when you are interested in the detail click on the link to our blog and read further. Also feel free to post your comments.

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