Former CMS Chief: 'Oversubsidized' PPACA is 'Asking for Trouble'

Philip Betbeze, for HealthLeaders Media , May 16, 2014

Tom Scully, a former administrator of the Centers for Medicare & Medicaid Services is no fan of the healthcare reform law, but has found one thing to like about it: "It draws incentives away from volume-based reimbursement to quality-based because the government has its money at risk."


Trotter

Tom Scully,
Former CMS Administratior

Tom Scully is no cheerleader for the Patient Protection and Affordable Care Act.

"The problem with the ACA is they massively overfunded it," he says. "You can't create an entitlement that goes to 400% of the poverty level. That represents 60% of Americans."

Now a general partner at private equity firm Welsh, Carson, Anderson & Stowe, and general counsel at law firm Alston & Bird LLP, Scully says that oversubsidization is one reason the health insurance exchanges, despite the well-publicized problems with healthcare.gov, eventually exceeded expectations on enrollment.

The exchanges finished the open enrollment period with a total of around 8 million enrollees nationwide. But that's nothing compared to what will likely happen down the road, says the former administrator of the Centers for Medicare & Medicaid Services under President Bush from 2001–2003.

'An Enormous Problem Going Forward'
"The ACA will be way more popular going forward and people will sign up in droves because of reasons I don't like: because they're oversubsidized," he says. "Once the smoke clears in another year, I think the thing will be way too big and will be an enormous problem for us going forward. But people like free stuff."

He's talking about whether the federal government will be able to afford the new entitlement. But another issue, whether enrollment will skyrocket and destabilize the employer-based healthcare system, is settled in his mind: It will.

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