Katherine Baicker Professor of Health Economics, Harvard School of Public Health Implementation of the ACA: Insurance Expansions and the Value of Care Two Goals of Health Reform • Covering the almost 50 million uninsured – Problem exacerbated by economy and rising costs – Goal of improving access and outcomes • Bringing spending growth under control – Private budgets: employees bear cost of HI – Public budgets: key driver of fiscal outlook; tax burden – Recent slowdown gives some hope, but causes unclear Not for Citation or Distribution 2 High Spending ↔ High Value? • Stemming spending growth focus of reform debate, but right metric? – Reasons we might want to spend more & reasons for concern • Consequence of low-value spending – Productive and allocative inefficiency – Strained public budgets, tax pressures • Underlying problem: disconnect between costs and benefits – Ample evidence that we could be getting higher value Not for Citation or Distribution 3 Higher Spending Does Not Necessarily Lead to Higher Quality 4 Implications for Reform • How does expanding coverage affect spending and value? – Expanding coverage: Incentives and subsidies • Mandate; Medicaid expansion; Exchange subsidies; Employer requirements; Insurance market reforms – Costs and benefits of insurance expansions? • Uninsured report worse access and outcomes • But causal effects hard to nail down – magnitudes and even signs uncertain • Better evidence from randomized controlled evaluation Not for Citation or Distribution 5 Utilization • Increased use of many types of care – Outpatient and Rx – Hospital – Emergency department • Implied 25-35% ↑ spending for Medicaid enrollees 6 Financial Strain • Reduction in collections, financial strain • No change in employment, earnings 7 Health • Large improvements in selfreported health • Clinical assessments: more mixed – Depression↓(diagnosis↑) – No detectable effect on BP, HbA1c, cholesterol 8 Implications for Reform • Expanding existing plans likely to generate mix of value • Aligning patient cost-sharing with value – For insurance • Private side: Reform tax code, regulations • Public side: Improve benefit design – For care • Cost-sharing tied to value of care; wellness (inherently paternalistic) • Private side: Value-based insurance design • Public side: Rationalize cost-sharing across silos; limit gap coverage 9 Not for Citation or Distribution Implications for Reform • Potential for ACA – Public side • Integrated plans like ACOs could facilitate patient choice and competition • Innovative coordinated care could improve value – Private side • Exchanges could promote competition based on value • Enrollment challenges threaten future risk-pooling and premium stability • Will have to wrestle with tough choices – Reform doesn’t pay for itself – Tough choices about whom and what services to cover/subsidize Not for Citation or Distribution 10