The Affordable Care Act, a.k.a. “ Obamacare,” which today opens its universally accessible health-care exchanges, has managed to put the government on the brink of a shutdown while adding fuel to the already blazing “political parties” fire.
Mainstream media has certainly taken full advantage of naysayers who predict the new system will catapult us further into the abyss of financial destitution.
Beyond the opposition, however, lie the logistics of Obamacare, which should be the focus for anyone who will feel its immediate effects. And unless you’re Mowgli from the Jungle Book, that is pretty much everyone living in the land of the not-so-free healthcare and home of the brave new consumer.
To better understand the subject from the vantage point of the health-care service provider and how we got here, I first called my father (Richard Douglas Iliff, MD), who has run a thriving private medical practice for more than twenty-five years in Topeka, Kansas. His not-so-surprising gut reaction? "If I were president-for-life, I would make health savings accounts, or HSAs, universal and mandatory. We have made morons out of Americans, and that is a crime."
He explained: “I had a patient who paid a $50 insurance co-pay for a drug that would have cost $10 if she had paid cash. When I pointed this out, she looked at me like I had an eyeball in the middle of my forehead. ‘How can I do that, when I have insurance'" she asked. "'Easy,'" he replied. "'You take out your wallet, remove a credit card or a $10 bill, and lay it in front of the clerk.'"
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While this may seem ridiculous, these types of doctor-patient encounters are often the rule rather than the exception. Consumers can be left dazed and confused about the exact nature of their health-care benefits, which seem to fluctuate and change with the frequency of stock prices. What’s worse is, consumers are neither motivated nor incentivized to, as my father would say, “shop for healthcare like you shop for groceries or automobiles.”
Beyond its promise to provide coverage for an overwhelming number of Americans, who were previously uninsurable or unable to afford it, what are the pros and cons of the new law, how will consumers and employers best take advantage of the health-care exchanges? Here's a breakdown:
"Until now, a barrier to starting your own business was interrupting health coverage for your family and first employees," says Jon Kessler, executive chairman of HealthEquity, a health-savings account administrator in Salt Lake City. Giving up guaranteed health coverage at work was a real risk, but the public exchanges remove this barrier. And even better for entrepreneurs, the exchanges offer HSA plans with modest premiums and big tax savings."
He also sees the health-care industry, per the law, as ripe with opportunity for entrepreneurs. Not only has the law changed the way Americans shop for and buy insurance through the exchanges, the emphasis on transparency will only expand in the years to come. This equals a big opportunity for entrepreneurs.
“Tech companies who put the consumer first in health will be best positioned for Obamacare," says Jenn Hirsch of MarkedPoint, a consultancy that works with healthcare-related technology companies. She points to WellnessFX as an example of a company that stands to benefit from the law. "The company allows consumers to bypass the existing insurance system and order a physical-like blood diagnostic directly," she says. "They have also pioneered the telemedicine laws to be available across the U.S.”
And for doctors -- in particular, primary care physicians, who are perhaps the most integral part of the system -- financial pros also exist. Dr. Iliff points out that the best health-care systems -- that is, those that offer the most bang for their buck -- are based on high-quality primary care. Obamacare promotes this general aim by its mandate of a free yearly preventive exam and associated tests approved by the U.S. Preventive Services Task Force. "That's a positive and will add roughly a 15 percent net increase in my yearly income,” he says.
Perhaps the most glaring downside to Obamacare is the overwhelming cost associated with subsidies, infrastructure and implementation. In preparation for the health-care exchanges, Obamacare appropriated billions in tax dollars to purchase electronic health records, or EHRs, for physicians. The goal maybe to bring health care recording systems into the 21st Century, but in practice the EHRs tend to reduce productivity for many physicians, and they still haven’t seen the adoption rates to justify the initial investment.
Compliance is yet another caveat to Obamacare. “Entrepreneurs and small business owners may not realize that they have new compliance requirements as a result of the new public exchanges," says Brian Poger, CEO and founder of Benefitter, a health-care software provider. One example is called a "notice of marketplace" document that informs employees about the marketplace, he says. "There are strict rules around how to comply with this notice, and in most cases, it needs to be sent via snail mail."
To help entrepreneurs cope with the changes, the Young Entrepreneur Council, an invite-only organization for entrepreneurs, has recently launched StartupInsurance. The program is geared toward young companies who often lack the human capital or bandwidth to dedicate to specific issues like healthcare policy changes.
“StartupInsurance connects the self-employed, their families and their employees to major medical health-insurance options that will be fully compliant with the Affordable Care Act by 2014, ensuring that those individuals who purchase qualifying plans avoid tax penalties,” says Scott Gerber, founder of YEC.
It seems clear to me that no matter what side of the Obamacare argument you’re on, one thing is certain: Opportunities for innovation abound. How do you think entrepreneurs will be part of the evolution?