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Understanding the current American model of health insurance, changes to come and where IR fits in 

07-18-2017 02:42 PM

Zachary Berman, MD, and Karan Patel, MD, MPH, SIR-RFS Advocacy Committee  e-IRQ exclusive

Approximately eight years ago anxiety and frustration overtook the medical community regarding the changes that the Affordable Care Act (ACA), or Obamacare, was going to enact. Many of these same emotions are revisited with the current proposal of the American Health Care Act (ACHA), a revision of the ACA or colloquially known as “repeal and replace”. While substantively shorter in verbiage than the ACA, the AHCA creates many important changes to the overall healthcare community.1 One of its main goals is to address the growing costs of American health care, which already is approximately 18% of the overall gross domestic product (GDP) and is only expected to grow over time.2  Given the recent passing of the new health care bill in the House, now more than ever it is important to understand the possible changes and how this may affect Interventional Radiology (IR).

To break this down into manageable portions, we will start with a bird’s-eye view of the American health care system, then describe the issues that the ACA was trying to fix, discuss the ACA’s shortcomings and the goals of the current ACH and its overall impact on the health care system, and finally speculate on possible changes that IR is likely to see. For the sake of simplicity, we will focus on the fiscal effects of the ACA and AHCA and save ethical debates for future discussion.

The American health care system is predominantly composed of three main sources of payments: Medicare, Medicaid, and private insurance. Private insurance represents a 33% stake in all health care expenditures, while Medicare and Medicaid represent 20 and 17% shares, respectively. In 2015, Medicare costs were approximately $646 billion and private insurance expenditures $1.1 trillion.2 All three areas saw increased spending since the adoption of the ACA, especially Medicaid which grew approximately 12%. In total, approximately 29% of all health care spending is by the national government, 28% by households, 20% by private businesses, and 17% by local governments.3 While these numbers may seem daunting to understand, it is important to get a global picture that Medicare and Medicaid, the government sponsored healthcare programs, make up a sizable portion of the total market and contribute to about a fifth of all government expenditures (and health care is the highest single item in the government budget).

The problem which the ACA tried to fix was the 16-20% of Americans who were uninsured in 2010.4 Importantly, the uninsured rates were as high as one in every three for those who made less than $50,000 per year. For these people, a catastrophic illness could lead to bankruptcy and lost income for hospital systems. Additionally, 55% of the total uninsured population were under the age of 35, a demographic which uses one third the amount per year that someone older than 65 would. In an ideal world, economics would explain that if the total population of uninsured was lower, and more healthy people under the age of 65 were to join the insurance pools compared to their more expensive 65+ year-old peers, then there would be lower premium prices as health care expenditures were spread out. Getting these young healthy members to balance out the sicker patients was the crux of the ACA.

To accomplish this goal, the ACA proposed an individual mandate which stated that if you did not have insurance you would need to buy insurance or face a financial penalty by the government. This was arguably the single most contentious part of the ACA. For those who could not afford insurance, a subsidy was provided by the government based on annual income. This mandate lead to an approximate 7-10% reduction in the uninsured population.

Unfortunately, the penalty for not having insurance (also dependent on income) peaked around $800 per year for someone who made less than $50,000. The cost of insurance through the markets was considerably more, with very high deductibles for the cheapest healthcare plans. Due to this many overall healthy young people decided to not have insurance and just pay the “small” penalty. Additionally, there were provisions which allowed a person to sign up for healthcare whenever they wanted. So if a person was overall healthy and then became sick, they would only then start paying for a plan. This caused a disproportionate amount of generally healthy patients to sign up for insurance only when they needed it.

In short, a higher number of patients who use larger proportions of the health care joined the health care system (lowering uninsured numbers), but a large proportion of uninsured Americans remaining were the people who would lower the overall insurance costs - one of the main goals of the ACA. Because of rising costs, many people who previously had insurance saw increased premiums and deductibles to cover the increased cost of the total insurance pool.

At the heart of the matter is that, if a government policy could find a way to get healthy people under the age of 65 to purchase health insurance then the “exchange markets” would make fiscal sense and premiums/deductibles would decrease.

The current health care legislation passed in the House serves a few goals. First, eliminate the personal mandate (that one must either have insurance or pay a fine). Second, stop federal subsidies for state Medicaid expansion. Third, allow individual states to determine if certain aspects of the ACA should remain. This includes mainly the restrictions on what each health care plan should pay for (hospitalizations, lifetime caps, etc.).

Without the individual mandate to incentivize people to buy insurance, there will be refundable tax credits instead of subsidies (from $2,000 to $4,000 depending on age, not income).

Additionally, there will be a penalty for having insurance and letting it lapse and then re-signing up. For example, a patient who had cancer which was treated and in remission, may feel that years later they didn’t want to spend money on insurance anymore and cancel their health insurance policy. If this person had a recurrence of cancer, they would re-sign up without penalty; again lowering the percentage of “healthy” patients in the insurance pool.

Lastly, and one of the most consequential changes is eliminating the Medicaid expansion. As part of the ACA the national government offered to state governments that if states wanted to expand their Medicaid  programs the government would match dollar for dollar the expansion. Thirty-two states, including D.C., opted to take this offer. If the current plan were to be enacted as is in congress currently, then this program would end and states would have to decide whether or not to continue to spend the additional money on Medicaid (having to double their contribution and perhaps increase taxes or reduce state expenditures). From this area, many predict that a large portion of Medicaid patients who gained insurance (approximately 14.5 million people as estimated by the Department of Health and Human Services5) through the ACA would then lose their insurance if states don’t increase their contributions.

While the AHCA is substantial in its own right, it is important to also consider that this only affects two of the three main portions of health care expenditures (Medicaid and the private insurance sector), this leaves Medicare and its greater than $600 billion annual cost with 5% increasing year cost untouched, which is reported to be addressed in subsequent bills.

So, now what? How does this affect your health care system? How does this affect Interventional Radiology?

Then answer, as it often is, is complicated. For instance, Medi-Cal (the California version of Medicaid) added 264,295 new patients since the adoption of the ACA. To handle these new patients the health care systems had to increase staffing. As an example, two of the largest private health systems in San Diego added the equivalent of more than 1,000 employees with many new outpatient facilities.6 As one can imagine, this is not an anomaly, and most areas

The Affordable Care Act was important when it passed, as it was the first large health care reform in decades. As with something that involves a fifth of the government's expenditures and has the potential to affect many millions of American’s lives, this topic continues to require additional attention as it will affect all fields of medicine, Interventional Radiology not excluded. It is important that we as a field continue to have a seat at the table and a voice in the conversation to enact these reforms.


  1. Kessler, G. (2013, May 15). “How many pages of regulations for ‘Obamacare’?” Washington Post. Retrieved from
  2. The National Health Expenditure Accounts (NHEA). Retrieved from


  1. The National Health Expenditure Accounts (NHEA) fact sheet. Retrieved from


  1. “Overview of the uninsured in the United states: A summary of the 2011 current population survey”. Office of the assistant secretary for planning and evaluation. Department of Health and Human Services. Retrieved from


  1. Uberoi, N. Finegold, K. Gee, E. “Health Insurance Coverage and the Affordable Care Act, 2010-2016” ASPE Issue Brief. Retrieved from


  1. Sisson, P. “From Patients to Hospitals, Much at Stake in Obamacare Debate” San Diego Tribune (2017, March 11) Retrieved from


  1. “CMS Drug Spending” Center for Medicare and Medicaid Services. Retrieved from


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