EBSINS Blog How the ACA is so disruptive


April 21, 2017

How the ACA is so disruptive

Ways in which the ACA Encourages Disruptive Innovation

Looking at the ACA through the lenses of disruptive innovation, we see several aspects of the law that open the door for disruption. These include the following items:

    • Individual Mandate
    • Employer Mandate
    • Accountable Care Organizations (ACOs)
    • Wellness Programs
    • CMS Innovation Center

The Individual Mandate, which essentially requires all Americans to maintain health insurance, will bring a large population of currently uninsured individuals into the primary care system. We anticipate that this will increase demand on an already-burdened system and create space for new care delivery models that leverage less-credentialed practitioners to deliver care for more routine health concerns. Such business models are present already in retail health clinics that allow nurse practitioners to treat patients in convenient locations such as neighborhood pharmacies. This innovative approach both relieves the burden on traditional clinics and makes quality care more affordable and accessible for thousands of patients.

The Employer Mandate, which requires all employers with 50 or more full-time-equivalent employees to offer health insurance benefits, increases the financial demands on employers to provide health care coverage for their employees. As employers look to manage expanding health care costs, there will be greater demand for alternate models of health insurance. Some employers will be more proactive in providing their own health care services, looking only to insurance companies for catastrophic care coverage or no coverage at all. This could facilitate a substantial disaggregation in the insurance industry and open opportunities for new and disruptive entrants to provide health services to employers as well as for entrants in the insurance industry to provide new forms of coverage.

Accountable Care Organizations (ACOs), which are expected to proliferate under the ACA, were created with the goal of aligning the conflicting interests in the care delivery value network. By making providers responsible for the cost and quality of the care they deliver, these programs are architected to improve health care quality and financially incentivize providers and payors to keep patients healthy, rather than simply treat them when they are sick. If executed successfully, such a system would yield a coherent value network that could enable disruptive business models in care delivery to flourish.

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