Challenges facing the United States of America in implementing universal coverage

An individual mandate requiring that all residents and documented immigrants have health insurance coverage.

Under most circumstances, failure to have coverage results in a financial penalty that - when the phase-out period ends in 2016 - will be US$ 695 per individual, US$ 2085 per family or - if greater - 2.5% of income. Enforcement will be challenging, however. The main method of enforcement is for the federal government to reduce a person's annual income tax refund. The federal government cannot put a lien on wages or financial assets.

Medicare is the largest public purchaser of health care and is funded by

a combination of payroll taxes, federal tax revenues and enrollee premiums and patient cost-sharing requirements.

All private health insurance plans offered in the exchanges will offer the same set of essential health benefits, which must include:

ambulatory patient services; • emergency services; • hospitalization; • maternity and neonatal care; • mental health and substance-use disorder services, including behavioural health treatment such as counselling and psychotherapy; • prescription drugs; • rehabilitative services and devices; • laboratory services; • preventive and wellness services and chronic disease management; • pediatric services.

• More than 90% of residents who have private insurance - approximately 150 million people - have obtained it through

an employer. • Such insurance is funded by a combination of employer and employee premiums and employee cost-sharing requirements.

The so-called Cadillac tax will be imposed on health insurance policies that

are very expensive

• Large employers must either offer health insurance -

by 2015 if they have at least 100 employees and by 2016 if they have 50-99 employees - or face a penalty

About 10% of employees - approximately 15 million people - have

individually purchased health coverage

The ACA will not bring about universal coverage;

it is expected that only about half of the residents who are currently uninsured will ultimately obtain insurance

• Scholarships and loans are being offered to encourage

more primary care physicians to work in underserved rural and urban areas, as well as various programmes to train and employ more nurses.

Experiments are to be conducted regarding

moving away from pure fee-for-service to a programme of bundled service payments.

The USA is currently the only high income country without

nearly universal health-care coverage

In general, the USA has not introduced global budgeting or

substantial federal measures to limit the supply of providers and technologies

. Each ACO must achieve quality standards in four overall areas:

(i) patient and caregiver experiences, (ii)care coordination and patient safety, (iii) preventive health, and (iv) populations with chronic diseases.

This less centralized approach generated a pluralistic system in which people may be covered by schemes resembling

(i) the public single-payer system of the United Kingdom's National Health Service - e.g. the Veterans Health Administration, (ii) statutory European social insurance - e.g. Medicare for the disabled and those older than 64 years, (iii) employer-sponsored private insurance; or (iv) individually-purchased private insurance policies

substantial income-related tax subsidies;

(ii) expansion of the existing Medicaid programme to everyone with income below 138% of the poverty threshold, in those states that have chosen to expand Medicaid eligibility; and (iii) the requirement that, by 2015 or 2016, a firm with at least 50 employees offers and helps pay for its employees' health insurance. For those who earn too much

For example, the Act (i) prohibits insurers from charging higher premiums because of a history of illness,

(ii) requires that insurers cover several preventive services - e.g. screening for abnormal blood pressure, high cholesterol, colorectal cancer and depression - free of any cost-sharing requirements, (iii) requires the subsidization of health insurance coverage for those who, although too wealthy to qualify for Medicaid, would otherwise have difficulty affording coverage; and (iv) promotes progressive financing mechanisms such as higher income and payroll taxes on individuals and families who have incomes above certain thresholds - e.g. US$ 200 000 and US$ 250 000, respectively, in 2013

enrolment in Medicaid is expected to increase by about a third by 2020.

As a result of the Affordable Care Act's expansion of income eligibility for low-income families and childless adults,

One model that received a great deal of attention was the Pioneer ACO Model, which included

32 ACOs from across the country - including some of those serving both Medicare and privately insured patients. In their first year, 18 of the 32 ACOs generated savings but the others generated losses. The indicators of quality were generally good. However, nine of the 32 ACOs chose to drop out of the model, which leads to questions about the model's sustainability

Currently, 48% of health-care expenditure comes from public payers,

40% comes from private payers and 12% is out-of-pocket payments by patients

Accountable care organizations (ACOs) are designed to provide coordinated care of good quality and to control expenditures, in a fee-for-service environment.

Although these are associations of providers, their use is being stimulated by public and private insurers. The Affordable Care Act encourages the formation of such organizations as part of the Medicare programme but they are also being used, selectively, by other payers.

Public insurance coverage: Medicaid

As drafted, the Affordable Care Act required that Medicaid coverage be expanded to everyone with an income below 138% of the federal poverty level. The federal government would pay 100% of the associated costs for the first few years and then 90% subsequently. However, as a result of a ruling of the Supreme Court, such expansion of Medicaid eligibility was made optional at state level. Just over half of the country's states expanded Medicaid coverage during 2014.

ACOs face several challenges in providing high-quality cost-effective care in a fee-for-service setting.

First, because ACOs generally rely on highly integrated systems, the consolidation of providers could lead to monopolistic pricing power that could raise costs. Second, there are concerns that, as a result of the financial incentives available, ACOs will put so much pressure on providers that quality could suffer. Finally, there is little evidence that independent providers who are linked together mainly through reimbursement incentives will be able to provide the same quality and continuity of care as health maintenance organizations that oversee the entire patient-care process.

The uninsured

In 2012, 47 million people in the United States of America younger than 65 years - approximately 18% of that age group- were uninsured. Young adults, minorities and those with low household income are particularly likely to be uninsured.

Medicaid and the Children's Health Insurance Program (CHIP

In 2013, before the main provisions of the Affordable Care Act were implemented, Medicaid covered about 59 million residents and the Children's Health Insurance Program covered about 6 million children. • Both programs are state-administered and historically have covered poor mothers and their children.

expansion of private insurance coverage return premium

Insurers must either return 80% of premiums in the form of health benefits or provide policy-holders with

The ACA is much more than just a health insurance law.

It touches on almost every aspect of the delivery of the health service and was designed to encourage more primary care, to promote a greater focus on quality and prevention, and to encourage doctors, hospitals and other providers to coordinate care through new entities called accountable care organizations

The possibility remains that there could still be a substantial rebound in medical expenditure if, for example, new blockbuster drugs are introduced or if the movement towards personalized medicine through genetic testing results in higher spending.

Moreover, it may become increasingly difficult to control costs as physician groups and hospitals consolidate to augment their market power in negotiations with insurers.

ACOs are required to have primary care providers but often also include hospitals and specialists

Most are based in large metropolitan areas and most are sponsored by physician-led groups. They work with insurers to develop reimbursement schemes that provide incentives to provide efficient, high-quality care to the population that they serve.

private payers

Most residents - including those with employer-sponsored health insurance, those with individual private insurance and the uninsured - are considered private purchasers of health care.

• Private insurers selling through the exchanges cannot reject an applicant due to health status or charge more to those with pre-existing medical conditions than to other applicants.

Premiums can vary based on age, smoking status and geographical location. No annual or lifetime-limits can be placed on the value of insurance coverage.

• The establishment of health insurance exchanges selling private insurance policies. Individual states can establish such exchanges.

Residents of a state that does not establish an exchange can purchase health coverage from a federal exchange. All exchanges must offer benefit packages that cover 10 essential health benefits although the exchanges have authority over many of the details. Uninsured individuals, families and small businesses can purchase insurance coverage on these online exchanges - often with the subsidies noted earlier.

Medicare people

Residents older than 64 years, the disabled and those with end-stage renal disease (about 50 million people are covered by Medicare

Subsidies - on a sliding scale - to aid uninsured individuals and families in the purchase of required private health insurance coverage through so-called health-care exchanges.

Subsidies are provided to individuals and families with incomes below 400% of the federal poverty level. In 2014, the federal poverty level was 11 670 United States dollars (US$) for an individual and US$ 23 850 for a family of four.

not clear how a policy like the ACA could keep premiums in check if residents were not required to purchase coverage.

The main concern is that healthier people will shy away from the exchanges and purchase health coverage only after they need it. This could make the premiums for people who need to purchase health coverage on the exchanges prohibitively expensive and result in the so-called premium death spiral.

To determine these financial awards, the performance of the ACOs is compared against benchmark costs.

These costs are initially based on the mean Medicare inpatient and outpatient expenditures - in the three years before the formation of the ACO - for each beneficiary assigned to the ACO. The benchmark costs are updated annually.

The relatively high costs and poor outcomes that characterize the performance of the United States' health system are the result of many factors.

These factors include poverty, a lack of universal health coverage, a general lack of focus on primary care and public health, high rates of accidents, violence and teenage pregnancy, and poor health behaviours - e.g. poor diets and an overreliance on automobiles for travel - that lead to obesity and lack of fitness.

The Patient-Centered Outcomes Research Institute was established by the United States' Congress to fund and disseminate evidence-based research.

To ensure that clinical rather than financial interests are prioritized, the institute is limited in its use of comparative effectiveness data and cannot use dollars per quality-adjusted life-year in its analyses. Public payers like Medicare are also constrained from using such cost-effectiveness data in their health coverage and reimbursement decisions.2

which has already occurred in some employer sponsored health plans in the USA, the annual increase in premiums results in

ever-increasing attrition among the plan's remaining, relatively healthy members until the plan becomes unsustainable

Medicaid is funded, via a

federal-state matching programme, using general federal and state revenues. The federal share, which varies from 50% to 74%, is inversely related to the per capita income of the state.

Under the Medicare Shared Savings Program that was established by the Affordable Care Act, ACOs receive

financial rewards if they are able to both provide high-quality care and control costs.

the ACA did not introduce any of the stringent spending controls

found in many European health systems.

Private insurance falls predominantly into three categories known as

health maintenance organizations, preferred provider organizations, and high-deductible health plans.

To keep premiums affordable, insurers have instituted

hefty cost-sharing requirements and put together narrow provider networks

Individuals and families with high annual incomes - e.g. above US$ 200 000 and above US$ 250 000, respectively, in 2013 - face

higher taxes on unearned and investment income and must pay higher payroll taxes to finance Medicare.

Access to primary care may be partly alleviated by the establishment of

patient-centred medical homes and accountable care organizations and by the greater use of electronic medical records, all of which are designed to create efficiencies and reduce the duplication of services.

Individual private health insurance is funded entirely by

premiums paid by enrollees and patient cost-sharing requirements.

The USA performs better than most high-income countries in terms of breast and colorectal cancer survival and 30-day mortality rates for acute myocardial infarction and ischaemic stroke -

probably because of high rates of screening for these conditions or their associated risk factors.4 In contrast, overall rates of cancer, low birth weight and infant mortality, and years of life lost in the USA all exceed the median values for countries in OECD.

An Independent Payment Advisory Board will be formed to make

recommendations to contain costs if growth in fee-for-service Medicare costs exceeds any corresponding growth in the gross domestic product by more than 1%. However, such recommendations can be overridden by Congress.

Medicare Advantage plans - e.g. for managed care - will experience

reductions in their capitation rates because of evidence that, on average, payments for such plans exceed their costs. The plans achieving high and low scores for quality will be given bonuses and financial penalties, respectively.

the ACA establishes a

requirement that nearly all legal residents should obtain coverage.

• Health-care providers who choose to organize into accountable care organizations have the opportunity to

share any savings they receive from Medicare and perhaps, eventually, from other payers.

Proponents of the ACA believe that the Act will have several major benefits

the exchanges will create additional downward pressure on costs - due to increased price competition and choice of policy - and make consumers more cost and quality conscious - by making it easier for them to understand and compare health insurance options.

Medicaid also covers disabled adults and, along with Medicare,

the low-income elderly who are often referred to as the dual-eligibles. Most state programmes cover the costs of long-term care for individuals who have used up all of their own incomes and assets.

Perhaps the major challenge facing the ACA in the coming years can be traced back to

the utter lack of cross-party political consensus. The performance of the ACA and its resulting

Smaller employers do not have to provide health coverage but

their employees are still subject to the individual mandate. Some small employers will receive tax credits if they offer such coverage

Elimination of the individual mandate would be tantamount

to a reversion to a system of voluntary insurance.

The Affordable Care Act specified that, within the Medicare programme, preventive services will be covered

without co-payment from the patient. -• Over time, the coverage gap for prescription drug coverage - the so-called doughnut hole - will be removed.

the number of American adults younger than 65 years who are uninsured is expected to fall to 31 million by 2020.

• As a result of the Affordable Care Act,

Three other public payers are funded by general federal revenues:

• Veterans Affairs, for military veterans; • Tricare, for active duty military personnel and their families; • Indian Health Services, for indigenous residents