How the Affordable Care Act will affect doctors

Tevi Troy Senior Fellow, Hudson Institute
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Just over two years ago, President Barack Obama signed the Affordable Care Act (ACA), a law purported to increase access to health care and to “bend down” the health care cost curve. A great debate over the implications of that law, especially in the areas of coverage, affordability, and quality of care, has arisen. Furthermore, a series of political and legal challenges have generated uncertainty about the law’s prospects within the health industry and at the state level. Despite this, the Department of Health and Human Services (HHS) has already issued over 12,000 pages of regulations elaborating on the original 2,700-page law, leading to more uncertainty regarding how appointed and career federal officials will determine the exact shape of the law’s final requirements. All of this uncertainty raises real concerns about how the new law will impact the most crucial actors in any health care reform effort: doctors.

Doctors are demonstrably nervous about the new law and how it will affect their incomes, their access to technologies, and their professional autonomy. According to a survey by the Doctors Company, 60 percent of physicians are concerned that the new law will negatively impact patient care. Only 22 percent are optimistic about the law’s impact on patient care. Fifty-one percent feel that the law will negatively impact their relationships with patients. These statistics raise questions about how and whether doctors will participate in the new system.

From an economic perspective, the Obama health law has reduced the number of available options for finding additional budgetary savings to pay for the Sustainable Growth Rate (SGR). The law would impose planned annual reimbursement cuts of over 20 percent on doctors, and further challenges the prospect of fixing the SGR. In its promise to cover an additional 32 million Americans, the Obama health law will grow the Medicaid rolls by 16 million. Medicaid reimbursement rates are lower than those doctors get from privately insured patients. Consequently, imposing these lower reimbursement rates on a growing number of patients will only exacerbate access issues in the future.

Physicians also worry that the new law will interfere with their practice of medicine by shifting decision-making authority from doctors to government officials. The establishment of strict guidelines that prevent doctors from making decisions based on their personal interactions with patients, known as “uniformity of practice,” is a long-standing concern. Yet, a number of provisions in the new health law, particularly the Independent Payment Advisory Board (IPAB), bring the prospect of committee-based medicine much closer to reality. This 15-person board will be charged with controlling Medicare spending by making payment and practice decisions that will oftentimes tie doctors’ hands. Similarly, the $10 billion Center for Medicare and Medicaid Innovation gives the HHS secretary and the CMS administrator enormous power not only to experiment with new payment and delivery systems, but to impose the results of the experiments without external verification.

Reactions to these new constraints could vary. Doctors could choose to create boutique practices and demand cash from patients up front in order to avoid dealing with government or insurance companies. Others will depart from individual practices and join larger groups, particularly hospitals, which have more leverage with insurers and more staff to handle the increasing paperwork burdens. According to a report by Accenture, this is already happening: the percentage of doctors owning their own practices is dropping, and expected to continue dropping, from almost half in 2005, to 43 percent in 2009, and to a projected one-third in 2013. Under the ACA, however, this trend may intensify.

Another concern is whether certain doctors, in light of the bureaucratic constraints and rejiggered economics of the new law, would continue to practice at all. Given the looming physician shortage, there is not a lot of room for error. As the Association of American Medical Colleges noted, by 2020 we will already need 91,500 more doctors than we are projected to have — 45,000 from primary care and 46,500 surgeons and specialists.

The ways in which the administration interprets the Obama health law will have far-reaching implications for physicians and their patients. Many of these changes, while worrisome, are predictable, and government officials and health care administrators can prepare for the expected consequences. Many others, however, are less predictable, including the possibility that the supply of doctors will not be able to meet the demand, or that dedicated professionals will lose the incentive or flexibility to create new cures, or that talented individuals will choose not to pursue medical training at all. If these outcomes occur, we may never know what the ultimate consequences might be, and who will be left waiting for the treatment or the cure that never comes.

Tevi Troy is a Senior Fellow at Hudson Institute and a former Deputy Secretary of Health and Human Services. This article is adapted from his new report The Secretary Shall: How the Affordable Care Act Will Affect Doctors.