Affordable Care Act

Healthcare reform: Five trends to watch as the Affordable Care Act turns five

Signed into law on March 23, 2010, the Affordable Care Act has awakened the $2.9 trillion health sector. By energizing five fundamental shifts over the past five years, the ACA has given rise to a New Health Economy predicated on value. Health industry leaders must rethink strategies with an eye toward innovation as traditional ways of doing business shift toward a post-ACA system.
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Risk shift: Raising the stakes for all healthcare players.

Trend 1.  Risk shift: Raising the stakes for all healthcare players.

Primary care: Back to basics.

Trend 2.  Primary care: Back to basics.

New entrants: Innovators in the New Health Economy.

Trend 3.  New entrants: Innovators in the New Health Economy.

Health insurance: From wholesale to retail.

Trend 4.  Health insurance: From wholesale to retail.

States: Reform's pivotal stage.

Trend 5.  States: Reform's pivotal stage.
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Executive summary

Signed into law on March 23, 2010, the Affordable Care Act (ACA) continues to face legal challenges, implementation delays and the re-emergence of cost as a pressing concern. Yet even with those caveats, the law in its first five years has forged a path for major shifts in an industry that represents about 18% of GDP. Not since the Telecommunications Act of 1996, has a piece of legislation sparked such significant changes in a leading sector of the economy.

Though the groundwork was laid in advance of the law’s enactment, health industry business models and imperatives will likely never be the same post-ACA. Five trends – both directly and indirectly influenced by the ACA – have ignited this transformation.

  1. Risk shift: Raising the stakes for all healthcare players. The ACA added force to new payment models that reward outcomes and penalize poor performance such as high rates of readmission and hospital-acquired conditions. By championing models such as shared savings, bundles and pay for performance, the ACA has accelerated a shift in risk away from traditional insurers and onto providers, pharmaceutical companies and even consumers.

  2. Primary care:  Back to basics. Experimentation in new payment models and expansion of insurance coverage are making primary care once again the critical touch point.

  3. New entrants: Innovators in the New Health Economy. New entrants are rushing into the market to meet the demand for lower-cost, consumer-oriented care options in the post-ACA era. From data analytics to mobile technology, new businesses – as well as giants from other industries – are inspiring innovation and redefining value based on consumer preferences.

  4. Health insurance: From wholesale to retail. Rapid enrollment in the ACA’s public exchanges has demonstrated the potential of retail-style health insurance and spawned renewed interest in private exchanges. In doing more business directly with consumers, insurers must change their fundamental business model.

  5. States: Reform’s pivotal stage. States have emerged as key players in the reconfigured healthcare landscape. From the design of exchanges to the decision over whether to expand Medicaid, states have notable discretion in implementing the law.

With a major US Supreme Court case looming and shifts in the balance of political power, there is still the possibility that the ACA could be further revised or defunded. And new taxes and fees add to existing downward pressure on revenues. Despite the challenges, these key trends —accentuated and accelerated by the law—continue to push forward, building opportunities and risks within the New Health Economy.

Industry leaders must recognize that traditional ways of doing business are rapidly shifting toward a post-ACA system. While many healthcare players are walking the tightrope between old and new, eventually the “new” will become the “norm.” As such, each sector must be forward thinking and flexible. Paramount to remaining relevant is the willingness to innovate: to develop strategies that meet the demands of new healthcare consumers, to pursue alternative business models, to adopt new technologies and to take on new roles and activities.


The ACA Implementation Timeline

Health reform hit its stride in 2014

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ACA Implementation State-by-State:An interactive look at premiums, exchanges and Medicaid expansion
February 2015

Affordable Care Act: Up Next for Health Reform
February 2015

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