Economics 387
Chapter 22
Health System Reform
Goals of Reform
• Expand Safety net – for groups outside
Medicare/Medicaid purview
• Cost Containment
• Quality Care
• Choice for Patients/Providers
• Simplify Administration
Possible Options for Reform
• Access to Care
– Individual vs Employer Mandate
– Employer mandate
• Employers provide health insurance to
employees
• Possible impact on wages
Possible Options for Reform
• Access to Care
– Individual vs Employer Mandate
– Individual mandate
• Individuals obligated to buy own insurance
• Possibly subsidized
• Could be acquired through employer or in
marketplace
• Insurance employer separation
Possible Options for Reform
• Access to Care
• Single Payer vs Multiple Payer
• Single Payer
– One insurer
– Could reduce administrative and other costs
– Less variety
Possible Options for Reform
• Access to Care
• Single Payer vs Multiple Payer
• Multiple Payer
– Multiple insurers
– More variety
Possible Options for Reform
• Quality of Care
• Pay for Performance Incentives
• Report Cards
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
• Health Insurance Market Key Provisions
• Consumer Protections
– Elimination of lifetime limits on coverage
– Eliminate pre existing conclusion restrictions
– individual and group health plans must provide
coverage to any applicant,
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
• Health Insurance Market Key Provisions
• Coverage of Preventive Services
– for a range of preventive health services without
requiring any patient cost-sharing
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
• Health Insurance Market Key Provisions
• Extension of Coverage to Young Adults
– extends dependent coverage to young adults up to
age 26 beginning in September 2010
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
• Health Insurance Market Key Provisions
• Health Plan Benefit Design
– setting uniform standards for covered benefits and
cost sharing
– Certain essential benefits must be covered
• Ambulatory patient services, emergency services,
hospitalization, maternity care, prescription services etc
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
• Individual and Employer Requirements
• Requirement for Individual Coverage
– Beginning in 2014, the ACA requires individuals to
have minimum essential coverage or pay a penalty
– Premium Subsidies
– CBO estimates 4 million people paid a fine in 2016
• ($695 or 2.5% of income)
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
• Individual and Employer Requirements
• Employer Requirements
– large employers are required to provide coverage to
full-time employees or face a penalty
– 50 or more employees
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
• Social Insurance Expansions
• HEALTH INSURANCE MARKETPLACES
– health insurance Marketplaces (also referred to as
Exchanges) where individuals and small businesses
can purchase insurance.
– financial assistance
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
• Social Insurance Expansions
• Medicaid Expansion
– expanded Medicaid eligibility to adults with
income at or below 138% FPL
– States currently have the option to expand Medicaid
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
• “Three legged stool”
• 1st Leg
– Insurance companies offer coverage to all with
premiums based on age (not health status)
– Premiums could be prohibitively expensive
– Could leads to exits
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
• “Three legged stool”
• 2nd Leg
– Mandate that all carry insurance
– Broad distribution of health risks
– “Community rated” pricing
THE PATIENT PROTECTION AND AFFORDABLE
CARE ACT (PPACA) OF 2010
• “Three legged stool”
• 3rd Leg
– Affordability
– Subsidies (tax credits, cost sharing) to improve
affordability
ACA Outcomes
• Health Care Access
– Decrease in the proportion uninsured
– Affordability still a challenge for some uninsured
groups
– Improved health care access with insurance
ACA Outcomes
• Health Care Access
ACA Outcomes
• Health Care Access
ACA Outcomes
• Health Care Costs
– Increased insurance enrollment => increased use of
healthcare => increased costs
– Reforms aim to/could potentially slow the rate of
growth of health care costs
ACA Outcomes
• Dependent Coverage
– Extensive research on this topic
– Increase in insurance coverage, measures of health
status
ACA Outcomes
• Dependent Coverage
–
–
–
–
Barbaresco, Courtemanche and Qi
Compare 23-25 years olds with 27-29 year olds
Before and after the dependent coverage change
Increased likelihood of insurance coverage and
reporting regular source of care
– Increased likelihood of reporting excellent health
ACA Outcomes
• Dependent Coverage
–
–
–
–
Antwi, Moriya and Simon (2013)
Take up of parental coverage
Increased labor market flexibility
Reduced prevalence of full time employment
– Antwi, Moriya and Simon (2015)
– Increased use of hospital care and mental health
services
Recent Changes
• Individual Mandate repealed
• Repealed cost sharing subsidies