Former FDA Deputy Commissioner Scott Gottlieb Discusses the ACA

Tampa—For 2015 and 2016, former FDA deputy commissioner Scott Gottlieb, MD, expects the enrollment numbers in the state and federal government insurance exchanges to remain around 8 million. When the results of the 2016 presidential election and the future of the Patient Protection and Affordable Care Act (ACA) are known, however, Dr. Gottlieb predicts an influx of exchange enrollees.

Dr. Gottlieb, who spoke at the AMCP meeting, said he does not believe the ACA will get repealed because too many people are already benefiting. Instead, if a Republican wins in the next presidential election, he expects the new president to revise the ACA. In 2012, Dr. Gottlieb worked on Mitt Romney’s presidential campaign. Numerous conservatives critiqued Mr. Romney for not criticizing the ACA and not making the law a major issue, but Dr. Gottlieb said the ACA was popular in the polls they conducted.

No matter who ends up in the White House in 2016, Dr. Gottlieb said the exchanges will remain because they are “too good of a benefit” for many low-wage and middle-wage workers as well as for companies, particularly in the retail and services industries. The exchanges are especially helpful for people earning between 100% and 150% of the federal poverty level who are eligible for cost-sharing subsidies to afford their insurance.

Impacts on Employee Health Benefits

For instance, he said a family of 4 earning between $30,000 and $40,000 per year typically spend $6000 on their employer-sponsored health plan. If they instead buy coverage through the exchanges, they will receive subsidies and spend around $2000 for insurance, while the employer will only receive a $2000 penalty for not providing coverage.   

“The idea that [companies] will not move their employees into the exchange is hard to believe,” said Dr. Gottlieb, who worked for the FDA from 2003 to 2007 under President George W. Bush. “I can tell you [that] the unions are extremely concerned [about] this, because they realize a lot of those union benefits are going to go away because the industrial companies are going to have to move their employees into the exchange. Not only because it is going to save them money and put their healthcare costs on a fixed trajectory, but it is frankly too good of a deal for the employees in terms of the magnitude of the federal subsidies that they would get at those income ranges not to put [employees] in the exchanges.”

If more people are covered on the insurance exchanges, Dr. Gottlieb said the commercial insurance business would shrink to 50 million to 60 million lives, most of whom are high-wage earners. Since the ACA’s passage, health plans have already undergone changes, such as narrowing their provider networks and restricting formularies. Dr. Gottlieb said the most significant change over the past few years has been the advent of private health insurance exchanges run by health insurers or consulting firms, such as Aon Hewitt.

With the private exchanges, health insurance is transitioning from a defined benefit to a defined contribution similar to the movement from pension plans to 401(k) plans for retirement. Companies provide their employees with a fixed amount of money to purchase coverage, and they can decide the best plan for them. It is unclear if the plans offered on the state and federal government exchanges will differ from those in the commercial market or private exchanges.

“The insurers will tell you that the plans will be the same, that the plans that you will see in the commercial segment will be basically the equivalent of a silver plan [on the government exchanges],” Dr. Gottlieb said. “I frankly find that hard to believe. I think it is going to be very challenging to have the networks that can simultaneously serve both the government lines of business and the remaining commercial market.”

Shifting Role of the Physician

The ACA has also led to changes for physicians, who are now usually employees instead of entrepreneurs running their own practices. By next year, 80% of physicians will be employed by hospitals or health systems, according to Dr. Gottlieb. He said it is not just primary care physicians who are becoming a part of big systems. Approximately half of cardiologists have sold their practices to hospitals, but they have not received the large up-front payments that specialists earned in the 1990s when practice management companies took over doctors’ offices. Specialists who sell their practices now typically receive a 5-year contract at their current payment rates.

Dr. Gottlieb said the benefits of shifting physicians to employee status are that hospitals and health systems can have more control of providers, but he added that data shows providers are less productive when they are salaried employees with set hours.

“If you believe the only way to solve our long-term healthcare challenges is to get more healthcare for every dollar of [gross domestic product] that we spend on it, the last thing that we probably want to be doing is reducing the productivity of our physicians and provider workforce in this country,” Dr. Gottlieb said. “I think there is a view that this is all good news in Washington. I think it is somewhat short-sighted. It is going to certainly raise local costs, [and] it is going to reduce productivity. I think there is this sort of naïve vision that we can just take the Mayo Clinic and Geisinger and replicate it all across the country without recognizing that healthcare is a very local endeavor. There are very particular things to local markets that are going to impede those models from working everywhere.”

Dr. Gottlieb said the growing sentiment among some White House and Department of Health & Human Services employees that hospitals that form ACOs can start becoming insurance companies and offer plans directly on the exchanges is “terribly naïve.” He noted that hospitals attempted to do this before in the 1990s, but they failed to become effective insurance companies.

Provisions in the ACA also include payment reforms and a shift toward capitation and more financial risk for providers. Both political parties are interested in changing physician payments, and Dr. Gottlieb mentioned that many of the reforms were started in a Republican White House under former President Bush and former FDA commissioner and Centers for Medicare & Medicaid Services administrator Mark McLellan. He noted that there is bipartisan support for altering the sustainable growth rate calculation used to pay doctors under Medicare.

“As much as you hear criticism of some of the consequences of these payment reforms from Republicans on Capitol Hill, the reality is they fully embrace these payment reforms,” Dr. Gottlieb said. “[Payment reform] is something that is inevitable regardless of what happens to the [ACA].”

Potential Future Revisions to the ACA

If changes are made to the ACA in 2016, Dr. Gottlieb said a model could be the Senate bill introduced in January by Republicans Richard Burr, Tom Coburn, and Orrin Hatch. The legislation is similar to the ACA, and Dr. Gottlieb said Republicans in the House of Representatives would not pass the bill. However, it also allows for state-based regulation of insurance, subsidies based on income and costs, and states to automatically enroll people in free catastrophic plans.

If Republicans hope to change the ACA, they also need to change their messaging and marketing tactics, according to Dr. Gottlieb. “You never hear politicians say every poor person in the country should be promised a luxury car, but you do hear people say that every person, regardless of income, should have the opportunity to access healthcare,” Dr. Gottlieb said. “There is something different about healthcare. There is a moral dimension to it. I think conservatives did not do a good job [of] talking about those general terms in the past. I do not think you are going to see that mistake repeated.”