President Obama, the AMA & large health systems – 17 winners and 8 losers under the ACA

The Affordable Care Act's impact on different segments in the healthcare arena is fascinating, especially as the contours of the ACA become clearer.

The following listed entities convey our thoughts on who came out winners and who struggled under the ACA. We would love to hear your comments and thoughts on our opinions in the comments section below.

Here are 17 winners and eight losers under the ACA.

17 winners under the ACA

We see around 17 different classes and subclasses of parties that can be viewed as winners under the ACA. There are, of course, differences of opinion on these sectors and many others that are not discussed here. We will start with the following:

1. Large health systems and regionally dominant healthcare systems. More and more it takes a certain amount of scale to take on risk and advantage of certain opportunities while withstanding certain pressures under the ACA. Further, the complexity needed to run a health system has increased, which has made it harder to rely on smaller leadership teams, smaller technology teams and a whole number of other things that require serious critical mass. These issues have been accelerated under the ACA. In general, regionally dominant health systems often have increased leverage with payers and have strengthened under the ACA.

2. National hospital chains. The national chains of hospitals and health systems have also done well under the ACA to date. They have ended up with a somewhat increased pool of insured patients, and yet, have not experienced noticeable decreases in payment per services. Like the regionally dominant chains and the other hospital chains, national hospital chains do better in situations where they have a reasonable degree of market clout. For example, some of the national chains make a vast proportion of their profits in those areas where they often have significant market strength. In contrast, the national chains' hospitals often struggle as they are small, rural or semi-rural and/or not dominant in an area.

3. Young adults under 26. The ACA allows individuals to remain on their parents' insurance up to the age of 26. This has been extremely helpful for certain people coming out of college who have not found full-time jobs or simply have better insurance coverage through their parents. It now seems that young adults stay on parents' phone plans and insurance plans for years.

4. Revenue cycle companies. Revenue cycle companies have been one of the unexpected beneficiaries of the ACA. As the revenue cycle becomes more complex and divided into multiple parts, both large and small companies are finding all kinds of niches in the revenue cycle world. Due to the mix of high-deductible plans, other variation of insurance plans, consumer payments and the overall complexity of billing, there are seemingly more and more spots for companies to position themselves in all aspects of the revenue cycle.

5. President Barack Obama. Whether you agree or disagree with his politics or policies regarding the ACA, we view President Obama as a winner right now. President Obama's approval ratings remain high, and overall, he seems to be viewed favorably by most of the American public — even if the ACA itself may not be deemed a winner in the long term. At the time of this article's publication, 51 percent of the American public said they approve of the way he is handling his job as president, according to the Gallup poll.

6. Health information technology & data analytic companies. These types of companies have prospered due to changing trends in how healthcare is financed and due to movement toward larger healthcare systems. Companies like Epic and Cerner have grown to new heights. Other companies in the HIT area, whether athenahealth, McKesson and others, have also grown significantly. Finally, there are a tremendous number of companies now providing health IT consulting services with respect to the ACA.

7. Large companies that sell to health systems. Larger companies have thrived under the ACA in terms of those that sell to health systems. As the market moves toward larger health systems, there are less points of entry with respect to sales. Larger companies seem to have an advantage in selling to large systems. In essence, as health systems get bigger, they often want to deal with a smaller number of suppliers and thus large companies have an advantage in staying in the game.

8. People with pre-existing conditions. People with pre-existing conditions are core beneficiaries of the ACA. This is one of the great things that is wildly popular about the ACA, regardless of party lines. In the old days, people of my generation remember that you could not take a job if you had a pre-existing health condition unless you went to a large company that offered health plans that would cover you. Thus, unless you got a job with a large company, you were basically uninsurable. The next generation now has a different level of insurance options — even absent a full-time job with a large company.

9. Lower income families. Generally, low income families have benefited from new opportunities to buy insurance and the subsidies that they receive for insurance. This is countered somewhat by the decrease in amount of payers participating in the healthcare exchanges. On balance, however, we believe that low income families have benefited from the ACA.

10. Consultants and lawyers. Needless to say, consultants and lawyers of all sorts, with all the change that has come with the ACA, have done well over the last several years. At some point, this should slow down. But currently, it has been a great opportunity for lawyers and consultants.

11. Pharmaceutical and device companies. Notwithstanding the constant rhetoric against pharmaceutical and device companies, from what we can tell, they continue to thrive under the ACA. (See What’s fueling drug sales? Obamacare and expensive med, by Aimee Picchi, April 14, 2015, Money Watch and Sales of medical devices soar since Obamacare’s passage, by Robert King, July 31, 2015, Washington Examiner. Also: "Net sales of medical devices, which include products ranging from surgical gloves to pacemakers, increase from about $95 billion in 2005 to $136 billion in 2014, a 43% increase over the period, according to a report from the Government Accountability Office.) Further, many of them are expanding into different aspects of business, vertically and horizontally.

12. The uninsured. Under the ACA, approximately 16 million to 20 million people gained health insurance coverage. RAND estimated 22.8 million newly insured, minus 5.9 million who lost coverage, for a net gain of 16.9 million. Regardless of exact number, this marks a serious dent into the number of people who were uninsured before. Yes, it will cost trillions of dollars, but this group of nearly 17 million people have benefited.

13. Epic and Cerner. These are the two largest HIT companies in the EMR arena. Each one has doubled down on its business over the last several years and benefited from the consolidation into larger more complex health systems.

14. States that expanded Medicaid. As of early 2016, 31 states and Washington, D.C., had expanded Medicaid. By and large, states that expanded Medicaid have received subsidies from the federal government and have been able to take care of some of their population that was not covered before. There is a question over the long-term as to whether, as cost-sharing shifts to these states, they will still be considered winners under the ACA. For now, they seem to be winners.

15. Those betting against the United States. To an extent, if one is shorting America or betting against America, there is an argument that you stand a decent bet given the ACA. As the country has become more fragile economically due to the ACA's costs and the nation's debt, it likely leaves the country more fragile overall. There are, of course, different perspectives on this issue.

16. Urgent care firms. Urgent care has grown tremendously — both before and after the Act — as people look for convenient cost-effective options to emergency rooms. Interestingly, emergency room visits are also up in many states.

17. Telehealth. Telehealth is quickly gaining traction as providers look for efficient ways to see patients. It is convenient for patients and can make much more effective use of provider time.

8 losers under the ACA

While there are several winners under the ACA, there are clearly several losers as well. A short summary of who we see as losers to date under the ACA is as follows.

1. Smaller and independent hospitals. Generally, and you can categorize this in separate categories, smaller independent hospitals have been losers under the ACA. We constantly see rural hospitals, critical access hospitals and small urban hospitals struggling to stay afloat. There have been dozens of hospital closures in the last two years and the picture for small hospitals, as the exchange business becomes more and more challenging, becomes bleaker. Thus, by and large, we view the ACA as a negative thing for many of these small hospitals.

2. Independent medical practice. Again it is becoming more and more important to be regionally dominant in whatever you do, and as a practice, you either have to be dominant or lean to survive and thrive. More and more, given the complexity of running a healthcare practice, it is hard to be just "lean." Thus, the great focus is on being dominant. It is hard to be dominant as a small practice. Thus, you see the evolution of super groups and very large groups in all kinds of specialties. However, you see less and less of the independent small practice.

3. The FTC-DOJ. The FTC-DOJ, as consolidation has been the name of the game under the ACA, has generally taken a back seat. Now, in the last two years of the Obama administration, they are fighting back aggressively. But by and large, the FTC-DOJ was initially largely toothless for the last few years as consolidation ramped up significantly.

4. Taxpayers and savers. Largely, the ACA has led to higher tax rates, taxes on passive income and the government adding more debt. This has led to the government expanding the amount of dollars available, which has made those dollars out there less valuable. In turn, this has led to interest rates being at relatively all-time lows for a very long period of time. For savers and taxpayers, these are generally negatives, and some would argue a wealth transfer from those that are paying for the ACA to those that are getting subsidies under the ACA.

5. The Republicans. The Republican party currently seems to in a bit of disarray, although they continue to do well at the state levels in many states and hold a majority at this time in Congress and the Senate. When we look at the party itself, it seems somewhat splintered and a little bit out of whack. President Obama played hardball in passing the ACA. The Republicans rebounded with congressional victories. Now, as the ACA has become the law of the land, it seems as though there isn't a clear vision of where the Republican Party has to be other than anti-President Obama and Hillary Clinton. The party may need to return to a concept of party members resonating clarity as to its core views.

6. The American Medical Association and physicians. Here, physicians are suffering from higher levels of burnout than ever before. As physicians' incomes increasingly come into play, they are more reliant upon hospital employment and it is harder to be in an independent practice. Moreover, the AMA, which, in part backed the ACA and provided the presidential leadership with some "political cover" on the physician side, found itself with lower membership for a longer period of time than ever before and probably less power among its constituents and in Washington, D.C. (The number of dues-paying physician members dropped 10.5 percent from 2009 to 2010, reflecting the schism in opinion/values at the time of the ACA's passage, for instance.) Membership has rebounded, but some believe the rebound is largely attributed to residents and medical students.

The American Hospital Association, in contrast to the AMA, has seemed to do a better job remaining as the primary voice of hospitals. There are some other terrific hospital associations like the Federation of American Hospitals and Physician Hospitals of America, but the AHA did not lose nearly the clout that the AMA did.

7. People who pay retail for insurance. Generally, those who pay retail for insurance have seen insurance costs rise and, more importantly, the entire cost of healthcare rise. In the pre-ACA days, for a family of four, coverage might be $800 to $1,000 a month, plus a small deductible. Now insurance costs are $1,000 to $1,200 a month, but deductibles are now four to five times what they were before. The real cost of coverage for a family of four becomes $17,000 to $20,000 or more versus $12,000 to $13,000.

8. States that didn't expand Medicaid. Generally, we view the states that didn't expand Medicaid as current losers under the ACA. This has become a hardcore political issue in many states. By not accepting Medicaid expansion, the states have not accepted a certain amount of federal dollars. At the same time, they held true to what might be viewed as certain bedrock principles and avoided the situation where you have a benefit that they might never be able to take back when federal subsidies are reduced.

We think the overall discussion of who is a winner and a loser under the ACA is still in play. It continues to be fascinating, and is ever-changing.

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